The Nigeria Governors’ Forum (NGF) at the weekend reported that Sokoto State recorded the most impressive performance in its Internally Generated Revenue (IGR), growing its direct assessment revenue exponentially from a mere N7.5 million in half year 2020 to N519.5 million, representing 6,824% growth in the corresponding period of 2021
Other states with improved IGR accruals in the period under review were Niger State, which grew its IGR from N1 million to N2.07 billion in MDA revenue, indicating 1,951% growth; Jigawa, N1.4 billion to N3.8 billion, or 157% growth; Kogi N444.8 million to N3.6 billion in Other taxes, representing 728% growth; Osun, N53.3 million to N253.7 million in other taxes, indicating 376% growth; and the Federal Capital Territory (FCT), N2.6 billion to N19.4 billion in other taxes, indicating 604% growth.
Giving these figures at the weekend during a workshop for journalists in Abuja, the Senior Programme Manager, Nigeria Governors Forum (NGF), Help Desk & States Fiscal Transparency, Accountability And Sustainability Technical Assistance (SFTAS TA), Mr. Olanrewaju Ajogbasile, explained that improvements in the states’ IGR and brighter fiscal outlook of the sub-national government was largely based on the SFTAS reforms in the last two years.
He disclosed that overall, during the period under review, a total of 34% annual growth rate was recorded between half year 2020 and half year 2021 with Ministries, Departments and Agencies’ (MDA) revenues, Other Taxes and Direct Assessment recording the highest growth year-on-year at 82%, 74% and 71% respectively.
In his paper presentation at the forum titled ‘Improving Internally Generated Revenue (IGR): Trend And Emerging Reforms’, the fiscal expert noted that even when Nigeria was still recovering from a combination of adverse fiscal and macroeconomic conditions that had exerted strong pressures on the fiscal sustainability of its national and sub-national governments, it had become more imperative for state governments to maintain fiscal sustainability given the boom and bust cycles the Nigerian economy experiences
According to him, with the total states’ IGR and FCT shrinking by 2.1% (NGN28.15 billion) between 2019 and 2020, the adverse fiscal pressure had been primarily due to over dependence on the Federation Account Allocation Committee (FAAC) transfers which is constantly threatened by the increasing volatility in oil prices and mounting subsidy payments.
Ajogbasile listed perceived weakness of the subnational governments’ fiscal system as including weak social contract between citizens and the government continues to threaten legitimacy of taxation; weak transparency and accountability by Government and SIRSs; misunderstanding of tax law(s) and incomplete revenue codes; multiplicity of taxes, fees, levies and charges; poor collaboration between the SIRS and identity management ministries, departments and agencies; and multiplicity of taxpayer identification systems, amongst others
Reflecting further on the IGR tax reforms at state level from 2019 to 2022, the Senior Programme Manager noted that over the years, states had made steady progress in reforming the tax environment and system to improve Internally Generated Revenue (IGR) through the adoption of Treasury Single Account (TSA) and Cashless Policy; improved collaboration between the SIRSs and identity management ministries, departments and agencies; and establishment of Joint State Revenue Committees to improve collaboration between the State, Local Governments and in-State revenue generating MDAs.
Other factors he listed as contributing to the fiscal success recorded by the subnational governments are that SIRSs were being granted financial and administrative autonomy to enable increased capacity in delivering their mandate; increase in technology adoption for revenue monitoring and collections – enabling online payment of taxes, fees, levies and charges and improved collaboration between SIRSs, trade unions and associations.
Ajogbasile concluded that in order to consolidate on the modest achievements in terms of the improving fiscal policy efficiency at the state level, the state governments must continue to work with the federal government and other stakeholders in the implementation of the SFTAS Technical Assistance Project in order to achieve its broad objectives.
