BudgIT has launched the 2021 edition of the State of States report, with Rivers State, southern Nigeria, topping the overall fiscal performance ranking.

The civic-tech organisation focuses on fiscal performances of both federal and state governments in Africa’s most populous nation.

The report, titled, Fiscal Options for Building Back Better, said Rivers State performed best with regard to prudence in managing its fundamentals.

Two states, Ebonyi and Kebbi, made the top five category for the first time based on both states’ internally generated revenue (IGR) growth as recorded by the National Bureau of Statistics (NBS).

Ebonyi State, southeast Nigeria, grew its IGR by 82.3 percent from N7.5 billion in 2019 to N13.6 billion in 2020, while Kebbi State, northwest Nigeria, grew its revenue by 87.02 percent from N7.4 billion in 2019 to N13.8 billion in 2020.

‘For this year’s report, we examined states’ fiscal health using four metrics namely: the ability of states to meet their operating expenses with IGR and VAT; states’ ability to cover their operating expenses and loan repayment with their total revenue; how much fiscal room states have to borrow more; and the degree to which each state prioritises capital expenditure with respect to their operating expenses’, the organisation’s Chief Executive Officer, Gabriel Okeowo, said.

‘Ebonyi State grew its IGR by 82.3 percent from N7.5 billion in 2019 to N13.6 billion in 2020, while Kebbi State grew its revenue by 87.02 percent from N7.4 billion in 2019 to N13.8 billion in 2020.

‘Meanwhile, Ogun State (now 19th) and Kano State (now 22nd), dropped out of the top five category due to a sharp decline in their IGR in 2020’.

The total debt burden of the 36 states increased by N472.63 billion (or 8.78 percent) from N5.39 trillion in 2019 to N5.86 trillion in 2020. According to the report, this was driven largely by exchange rate volatility which saw the value of the naira jump from N305.9/$1 in 2019 to N380/$1 as of 31 December, 2020.

The report also noted that states, such as Lagos, Kaduna, Edo, Cross River and Bauchi, with the highest foreign debt were significantly hit due to negative exposure to exchange rate volatility.

Furthermore, 19 states, including eight oil-producing states, saw a year-on-year decline in their capital expenditure, while 17 states were still able to improve their investment in capital expenditure, from 2019 levels despite fiscal constraints induced by Covid-19.

The report advised states to block financial leakages that could further drain the little available revenue or future revenue.

Source: BudgIT

Photo source: Eutrophication and Hypoxia

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