Connect with us

News

State Governments Revenue To Be Strained over High Debt-To-Revenue Ratio

Published

on

Eniola Olayemi

 
The revenue of the states in the country will be further strained in the coming months owing to their rising debt portfolio and cost of servicing those debts.

This is coming on the back of the latest report on the states’ internally generated revenue by the National Bureau of Statistics (NBS), tagged, “Internally Generated Revenue at State Level”, which showed a high debt to revenue ratio for the first half of 2018 (H1’18).

The report showed that total states’ Internally Generated Revenue, IGR, grew by 27.7 percent year-on-year (y/y) to N579.40 billion from N453.83 billion in H1’17.

Of the 36 states, 28 states grew their IGRs, while states such as Ebonyi, Anambra, Benue, Abia and Kebbi recorded declines in IGR by 21.79 percent to N2.46 billion, 21.62 percent to N7.07 billion, 18.86 percent to N6.06 billion, 12.29 percent to N6.98 billion and 10.85 percent to N2.03 trillion respectively in H1 2018.

Lagos retained its number one spot, with an IGR of N196.4 billion, up 16.9 percent y/y and Rivers State recorded N60.9 billion, the second largest state by IGR.

The report showed that not much changed in terms of revenue sources as federation account allocation inflows continued to account for more than 70 percent of the total revenue (FAAC + IGR) for most states. Net federation accounts allocation to states grew y/y by 65.14 percent to N1.23 trillion in H1 2018 from N0.74 trillion in H1 2017 amid increases in production and price of crude oil.

The states’ total debt stood at N4.78 trillion in the year under review, comprising of N1.30 trillion external debt and N3.38 trillion domestic debt.

The high debt to revenue ratio, according to economy watchers, will put more pressure on fiscal operation of the states and also make implementation of capital expenditure more difficult.

In his reaction, Mustapha Wahab, a research analyst at Cordros Capital Limited, explained that adding growing debt to servicing cost and to the already depressed state revenues will put pressure on their fiscal operation. He said: “Currently a number of states can’t cover their recurrent expenditures on the back of insufficient FAAC allocations despite gains from higher crude prices relative to last year and significantly low internally generated revenues.

“Adding growing debt service cost to the already depressed state revenues will further put pressure on fiscal operations of the federating units, the impact of which will not only make capital expenditure, CAPEX, implementation a tall order but overhead spending also.”

According to him, the situation would mean growing risk of default on interest and principle payment for the states. He urged the states to increase their IGR to reduce the impact of declining crude oil price. “With IGR to FAAC ratio remaining abysmally low, states government must ramp up internally generated revenues to reduce the impact of volatile oil earnings on fiscal performance by significantly expanding the tax base and considerably monitoring revenue generating state owned corporations to effectively block all loopholes,” he said.

Cowry Asset Management, a Lagos-based investment banking firm, said: “Given states’ IGR of N579 billion and net Federal Accounts Allocation of N1.23 trillion in H1 2018, ‘dependency multiple’, FAAC to IGR, was 2.13 times.

In spite of the y-o-y increases in IGR and net Federation Accounts Allocation to the states by 27.7 percent and 65.14 percent respectively, the states’ average total debt to gross revenue still remained high at 2.75 times in H1 2018.

“We opine that high debt to gross revenue ratios of the states would further increase their debt servicing costs which in turn would burden future generated income of the affected states going forward, given that most of the borrowed fund would have gone into recurrent expenses such as payment of salaries.”

In a report titled, “State of States IGR in H1’18: Creating more “Lagos” across Nigeria”, analysts at United Capital Plc, another investment banking firm, emphasised the need for the state to up their IGR in line with Lagos State while expressing concern at the underwhelming performance of other states.

They also pointed out the need to expand the revenue base across states, saying that it would reduce dependence on FAAC inflows, which is largely exposed to the vagaries of the oil market. Increasing the revenue base of the states, according to them, would limit future fiscal crisis. “In addition, this would boost the credit ratings of states and enhance their ability to finance developmental projects,” they said.

“Further analysis of the IGR report indicated that Pay As You Earn, PAYE, is two times the size of FAAC inflow in Lagos and 1.1 times in Ogun States, implying that both states are significantly benefiting from a dominant formal sector relative to other states. Hence, to create more “Lagos States” across the country, there is a need for a concerted effort to develop the formal sector in the rest of the country. Put differently, tax authorities in other states may need to find creative ways to boost revenue from the informal sector going forward,” they asserted.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

New NiMet Management Under Prof. Anosike Has Prioritized Capacity Development, Over N140Million Spent In 1st Quarter Of 2024…Dr. Nasiru Sani, Director Of Human Resources

Published

on

What Is The Focus Of The New NiMet Management With Regard To Human
Capital Development?

Dr. Nasiru Sani, Director Of Human Resources Management and Administration (DHRM), NiMet.

A lot is going on at NiMet at the moment. Across all the Directorates, not just in the area of capacity building. Shortly after the appointment of the Director General and Chief Executive Officer, also Nigeria’s Permanent Representative with World Meteorological Organization (WMO), Prof. Charles Anosike, he organized a management retreat for the newly appointed Directors and other senior management staff.

That workshop was quite enlightening. We discussed vision and goal alignment. It was drilled down to the various directorates how what we do at NiMet must always align to what the Tinubu government is trying to achieve, linking it with the Aviation sector roadmap of Festus Keyamo, SAN, the Honourable Minister of Aviation and Aerospace Development. Starting with Tinubu government’s 8-point agenda for economic recovery; food security; poverty eradication; growth, job creation; access to capital; inclusion; rule of law; and fighting corruption, down to the performance bond the Minister of Aviation and Aerospace Development, Festus Keyamo, SAN, signed with Aviation Agencies Heads and their Directors in February 2024. Development of human capacity is a key deliverable in the performance bond.

The DG/CEO, Professor Anosike, and the management team have prioritized capacity development, and are working so hard at the same time to reposition the agency. So many initiatives are ongoing in the agency, but specifically looking at the HR Directorate that I head, in the first quarter of 2024, the agency has spent over one hundred and forty million naira (N140M) training over 100 staff members. This month of May, senior staff will be embarking on another round of training focusing on leadership and performance management, while junior level staff will be trained in ethics and performance management.

Capacity development has become a culture under the new management. The staff say that this is unprecedented and we are seeing the effects already. Staff morale and motivation are higher. Productivity has increased in line with the federal government’s performance management metrics. We are strictly tasked to ensure accurate reporting of weather and climate information.

There are new tools, software and ways of analyzing weather patterns. Through training, our staff are able to adopt these new methods and perform their roles effectively and efficiently.

What Is The Mandate Of NiMet?

The Nigerian Meteorological Agency (NiMet), is a Federal Government of Nigeria agency charged with the responsibility to advise the Federal Government on all aspects of meteorology.

NiMet is also tasked to project, prepare and interpret government policy in the field of meteorology; and to issue weather (and climate) forecasts for the safe operations of aircrafts, ocean going vessels and oil rigs.

With climate change and weather patterns changing, our work has become more critical. Individuals and organizations rely on our weather forecasts, predictions and alerts for their planning.

This year in particular has been very hot and our hardworking scientists and meteorologists have been so busy ensuring that these climate and weather information are disseminated to the public via our social media platforms, website, text alerts etc.

We are also pleased with the partnership that our DG/CEO has brokered with national TV stations and newspapers to broadcast and transmit the weather information.

We also partner with local radio stations including FRCN and the BBC. Our staff were on BBC native language programmes recently sensitizing the public about NiMet’s seasonal climate prediction (SCP).

As A Scientific And Technical Agency, Do You Have Challenges Attracting Staff To The AgencyThe work we do at NiMet is very technical and we work in a scientific environment. We have the most dedicated and professional staff. However, as people retire, gaps are created in the workforce requiring the need to in-fill new talents.

There are a few universities offering meteorology and related courses in Nigeria. NiMet has a training school at Oshodi, Lagos, and the MBMisT institute in Katsina.

These institutions train and re-train our staff plus outsiders interested in studying meteorology.

There are always ready availability of talent pool from these internal and external institutions to chose from whenever there is need, and the relevant federal government agencies grant NiMet the approval to employ new staff.

Continue Reading

News

NiMet DG/CEO Anosike Tasks Staff On Transparent Processes At 2024 Budget Retreat

Published

on

NiMet DG/CEO Anosike Tasks Staff On Transparent Processes At 2024 Budget Retreat

AJAGBE ADEYEMI TESLIM

SPONSORED BY: H&H

The Director General, Chief Executive Officer of The Nigerian Meteorological Agency (NiMet), Professor Charles Anosike, has asked Directors and staff of the agency to ensure strict compliance to budgetary provisions.
Professor Anosike was speaking at the Budget Retreat of the agency on Monday, 6th May, 2024.

While declaring the retreat open, Professor Anosike said; “The NiMet Budget Retreat is fundamental for the new management and staff. It is an opportunity for us to improve our budgetary practices and also to discuss the 2024 budgetary provisions”.

Continuing, Professor Anosike tasked the Directors and senior staff of the agency who participated in the retreat to listen, participate and contribute to the robust discussions.

“Anticipated outcome of the retreat is that all will embrace performance-based budgeting which will lead to transparent and accountable budgetary processes.
This will help management and staff to achieve our set goals during the budget year, in line with the performance bond signed with the Minister of Aviation and Aerospace Development, Festus Keyamo, SAN”, Professor Anosike concluded.

Continue Reading

News

ASR AFRICA COMMENCES CONSTRUCTION OF 500-CAPACITY LECTURE THEATRE AND FACILITIES WORTH 250 MILLION NAIRA FOR ADAMAWA UNIVERSITY

Published

on

AJAGBE ADEYEMI TESLIM

SPONSORED BY: H&H


The Abdul Samad Rabiu Africa Initiative (ASR Africa) commences the construction of a 500-capacity lecture theatre and wash facilities for the Adamawa State University, Mubi.

L-R: Nakama Keri, Multilateral Coordination Specialist, ASR Africa; Dr. Ubon Udoh, MD/CEO, ASR Africa; Dr. Stephen A. Lagu, Ag. Vice Chancellor, Adamama State University; Engr E. B. Filli, Director, Physical Planning & Devt., and Mallam Aminu Aliyu Alkali, Registrar at the Groundbreaking Ceremony in Mubi, Adamawa State.

This project is coming after the nomination of the institution as a recipient of the ASR Africa Tertiary Education Grant Scheme (TEGS), by the Board of Directors of the Abdul Samad Rabiu Africa Initiative.


Speaking at the event, the Acting Vice Chancellor of the University, Dr. Stephen A. Lagu, expressed his appreciation to the Chairman of BUA group and ASR Africa, Abdul Samad Rabiu, for the rare philanthropy gesture towards the university.

He stated that the intervention of the Chairman would reduce the physical infrastructure deficit at their new campus and promote sanitation and hygiene in the university.

L-R: Dr. Ubon Udoh, MD/CEO, ASR Africa and Dr. Stephen A. Lagu, Ag. Vice Chancellor Adamawa State University at the groundbreaking ceremony of the Abdul Samad Rabiu 500-capacity Lecture Hall with other facilities.

He added that the choice of the 500-seat lecture theatre with the four boreholes at different locations within the campus was identified and agreed to by the relevant organs of the institution with the ASR Africa team.


Dr Ubon Udoh (MD / CEO, ASR Africa), in his remarks, congratulated the institution for qualifying for the nomination by the Board of Directors of ASR Africa.

He stated that the rigorous selection process which includes stringent criteria such as the quality of service delivered by the university and the pedigree of graduands from the institution at the national and international levels, proves that the university is keeping up with its vision as a leading institution of learning in the region.

He encouraged the management and students to ensure proper use and maintenance of the facilities as a show of appreciation for the grant given to them.


The Tertiary Education Grant Scheme of the Abdul Samad Rabiu Africa Initiative is part of the efforts of the Chairman of BUA Group and ASR Africa, Abdul Samad Rabiu to give back to the African continent and make a lasting impact in education as a means of uplifting and restoring the dignity and lives of Africans.


About ASR Africa
ASR Africa is the brainchild of African Industrialist, Philanthropist and Chairman of BUA Group, Abdul Samad Rabiu, the Abdul Samad Rabiu Africa Initiative (ASR Africa) was established in 2021 to provide sustainable, impact-based, homegrown solutions to developmental issues affecting Health, Education and Social Development within Africa. 

Continue Reading

Trending

Copyright © 2021 All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from August24news.com
This Website is designed and Managed by: August 24 Communications Nigerian Limited (RC: 798585)