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.

News

Nestlé Trains Over 1,000 Children on Sustainability

Published

on

AJAGBE ADEYEMI TESLIM
Sponsored by: H&H

Nestlé Nigeria is helping over 1,000 children, beneficiaries of Nestlé for Healthier Kids
(N4HK) program in six primary schools in Ogun State and the FCT to imbibe a
sustainability mindset at an early age.

In collaboration with the International Climate Change Development Initiative (ICCDI),
Nestlé Nigeria is training the primary five learners on a more sustainable approach to
managing and recycling waste in a bid to enable them become better stewards of the
planet.


This is one of the initiatives to support the company’s ambition of ensuring that none of
its packaging, including plastics, ends up in landfills as litter, or in waterways, rivers or
oceans.


In a statement announcing the kick-off of the training at Methodist Primary School 2,
Ago-Oko, Abeokuta, Ogun State, the Corporate Communications and Public Affairs
Manager of Nestlé Nigeria PLC, Victoria Uwadoka said, “Nestlé Nigeria is committed to
driving more sustainability awareness to help protect the planet for future generations as
embedded within our purpose at Nestlé.

We are therefore delighted with the collaboration of all stakeholders including the Ogun State Ministry of Environment, Ogun State Ministry of Education, Science and Technology, Ogun State Universal Basic Education Board and
the Special Adviser to Governor on Education on this shared objective.”


“As multiple researches have proven, habits imbibed early in life are more likely to remain
with us into the future.

Therefore, training children on the importance of protecting our environment is a strong contribution towards ensuring more responsible management of post- consumption waste as they grow, taking us closer to achieving a waste free future.”


Elaborating on the objectives of the training, Mr. Olumide Idowu, founder of the international Climate Change Development Initiative said, “The sustainability training is designed to equip the children with the requisite knowledge and support, enabling them take responsibility in school and at home.

Everyone, including children, needs to be
involved in this huge task of protecting the environment.”.

The Chairman, Ogun State Universal Basic Education Board (SUBEB) Dr Femi
Majekodunmi represented by the Board Secretary, Mr. Olalekan Kuye, commended
Nestlé Nigeria for the laudable initiative aimed at enhancing sustainable environment friendly practices within public primary schools in the state.

He stated that training learners on waste management and recycling will ultimately contribute positively to a safe
and hygienic environment.


In her comments, The Special Adviser to the Ogun State Governor on Primary and
Secondary Education, Mrs Ronke Soyombo appreciated Nestlé’s consistent contribution
and investment in education within the state.

She stated that the expected outcomes of
the training are positive behavioral change to enhance environmental sustainability and
in addition, the opportunity for learners to be upskilled on the conversion of waste to
useful items.


In 2021, over 150 children in 2 primary schools in Ogun State benefited from the
Sustainability Training. This year, the program has been scaled up to 6 N4HK beneficiary
schools, 4 in Ogun State and 2 within the FCT.

The schools include – Methodist Primary
School 2, Ago-Oko, Abeokuta, Oke Ona United Primary School, Abeokuta, NUD Primary
School, Owode and All Saints Primary School, Owode. The schools in the FCT are UBE
Primary School Kuje and Science Primary School, Kuje.


Nestlé for Healthier Kids (N4HK) is a flagship initiative which aims to help 50 million
children globally lead healthier lives by 2030.


In Nigeria, N4HK incorporates a school-based nutrition education program, which helps
children imbibe healthy habits including good nutrition, active lifestyles through adequate
physical activities, good hygiene practices and healthy hydration.

Continue Reading

News

Aura by Transcorp Hotels Wins Tourism Innovation Award

Published

on

AJAGBE ADEYEMI TESLIM

Sponsored by: H&H

Aura by Transcorp Hotels, the online booking platform which allows people to book hotels and short let apartments, experiences, and order food anywhere in Nigeria, has received a Special Recognition Award for Tourism Innovation at the 5th edition of the Nigeria Tourism Awards.

According to the organisers of the award, the recognition is aimed at celebrating industry icons who have contributed to the growth of tourism in Nigeria.

“We are proud to receive the Special Recognition Award for Tourism Innovation less than a year after our official launch. With aura by Transcorp Hotels, we cater to the three major things people think about when they travel – where they stay, what they eat, and things to do.

With our verified accommodation – hotels and apartments – and carefully curated experiences, we have over the past 10 months shown people reasons to travel within the country, whether for business or leisure, solo or as a family or group,” said Ifeoma Okafor-Obi Business Development Director, aura by Transcorp Hotels.

“With just a few clicks on our platform, users can be on their way to enjoy their best staycation ever, visiting hidden gems in different parts of the country and staying in hotels and apartments that feels like home, Okafor-Obi added.

Also commenting on the recognition, Dupe Olusola Managing Director/CEO Transcorp Hotels Plc, owners of aura by Transcorp Hotels stressed that the platform has proven to be a tool for revolutionising domestic tourism in Nigeria.

“World over, governments use domestic tourism as a tool to eliminate poverty, generate employment, improve economic growth, upgrade infrastructure, as well as support and develop local and national pride.

As Nigeria’s leading hospitality company, we have set the pace in providing a platform that shows people beautiful places to travel across Nigeria, and gets the perfect place to stay, improving the attractiveness of different destinations in the country,” the MD/CEO added.

“It is quite encouraging that our investment in aura by Transcorp Hotels to support the development of domestic tourism has not gone unnoticed.”

aura by Transcorp Hotels provides a great selection of exquisite properties at the best prices, carrying out verification on all listings on the platform to ensure 2 / 2 that guests are choosing from the right pool of options, and in keeping with the known high standards of the parent company Transcorp Hotels Plc.

To enjoy access to unique accommodation, food and localised experiences listed on aura by Transcorp Hotels, users must register at aura.transcorphotels.com. They can also download aura by Transcorp Hotels on Google Play and Apple App Store.

Aura by Transcorp Hotels is very easy to use, but should users need any support, they can reach out via WhatsApp (+234 812 003 000) or the dedicated customer experience number 01 3434499.

About aura by Transcorp Hotels
Aura by Transcorp Hotels is an online platform that helps you book accommodation, order great food and everything you need for memorable lifestyle experiences.
Download Aura on Google Play or Apple App Store. You can also visit aura.transcorphotels.com

Continue Reading

News

Act Now to Avoid Another Violent Protest Worse Than End SARS in Lagos: NURTW to Sanwo-Olu

Published

on

Ajagbe Adeyemi Teslim
Sponsored by: H&H

The National Union of Road Transport Workers (NURTW),Lagos chapter has called on the Lagos State governor Mr Babajide Sanwo-Olu to prevail on the suspended chairman of the union Alhaji Musiliu Akinsanya, to vacate the union’s office to avert another looming protest worse than End SARS.

Speaking through the caretaker committee chairman of the National union in Lagos state, Comrade Fatai Adeshina popularly known world wide as Akeweje Egbeda during a press conference in Lagos on Wednesday ask the governor to act fast.

Speaking with newsmen, Akeweje asked the Governor to instruct the embattled Lagos park management chairman popularly called MC Oluomo to vacate the office in accordance with the national body’s directives.

It will be recalled that the association has forwarded a letter to the state Governor on a proposed peaceful protest slated for tomorrow Thursday 19 of May, 2022.

The peaceful protest is slated to pick up from the Governor’s office in Alausa Ikeja, Lagos down to the NURTW state office at Agege, Lagos.

Akeweje told our correspondent that the embattled chairman of the union Alhaji Musliu Akinsanya aka Mc Oluomo has been told to vacate the office since April 2nd this year but has remained in the office in defiance to the instruction of the national leadership of the association.

Akeweje is calling on the to prevail on him to avoid possible breakdown of law and order that will engender serious security breach

According to Akeweje, “NURTW is the authentic body for transport business in Lagos state, we are all experience members of the union from different branch’s and unit in Lagos state, we are also card carrying members of the All Progressive congress (APC) under the leadership of our father who is Asiwaju BOLA AHMED TINUBU our incoming presidency come 2023.

Commenting on the protest, NURTW National Chairman, Alhaji Tajudeen Baruwa confirmed the proposed protest by its Lagos branch urging them remain peaceful even in the face of provocation.

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)