Some assumptions were made in the computation of the metrics that formed the basis of this article. As against the six geopolitical zones in the country, Lagos State, which is generally part of the south west geopolitical zone was made to stand alone. That increased the number of the regions to seven which are Lagos, South West (SW), South-South (SS), South East (SE), North West (NW), North Central (NC) and North East (NE). Apart from Abuja which is not a state and was not part of the analysis, all the 36 states were considered in this write-up.
The treatment of Lagos State as a region on its own follows its emergence as the fifth biggest economy in Africa. Also, its IGR figure usually distorts analysis and as such prevents researchers from having a clear understanding of the true performance of the other five states in the SW region.
Gross monthly federal account allocation committee (FAAC) which comprises the net allocations to states and debt payments was referred to as FAAC throughout the article. Additionally, FAAC figures considered therein excluded allocations to local government areas in each state and all the figures were sourced from the National Bureau of Statistics (NBS) and BusinessDay Research and Intelligence Unit (BRIU).
Some of the metrics adopted to evaluate the productivity of the seven geopolitical zones include the viability index and IGR collection per hour. The viability index measures the amount of resources a state can generate internally. This was computed as the ratio of IGR expressed as a percentage of the total revenue generated by a state or region.
At half year 2018, the 36 states of the federation received N1.375 trillion as revenue from the Federation Account Allocation Committed (FAAC). This comprised N1.19 trillion as net FAAC revenue and N180.79 billion expended on debt repayment. In other words, 13 percent of the total FAAC to all the 36 states from January to June 2018 went in the way of debt repayment, where other statutory obligations were met with 87 percent.
When measured by the amount of resources that each region received, Lagos State got N76.56 billion as gross FAAC, representing 5.6 percent of the gross FAAC shared among the seven regional economies in the federation. The north central region got N164.72 billion, representing 12 percent; while the north east region received N265.93 billion, which also amounted to 12 percent of the gross FAAC from January to June 2018.
The north west geopolitical zone got N224 billion representing 16 percent of the total FAAC shared within the period. The south east received N137.6 billion which translated to 10 percent of the total revenue shared among the sub national governments during this period. With N465.24 billion, the south-south received 34 percent of the gross FAAC while with N141.47 billion; south west received 10 percent of the gross FAAC shared during the period.
Debt repayment or servicing comprises the repayment of the external debt, domestic loans and other obligations. The seven regional economies paid N180.79 billion for debt servicing between January and June 2018. Lagos State paid N17.04 billion, representing 9.4 percent of the total debt repayment. The north central region paid N21.4 billion to account for 12 percent while the north east, with N18.3 billion accounted for 10 percent of the amount all the regions paid out for debt servicing.
The north west geopolitical zone paid N24.3 billion representing 13 percent of the amount paid for servicing debt; south east paid N12.7 billion to account for 7 percent of the debt repayment fee, and that was the least among the geopolitical zones. South –south paid N51.7 billion for debt servicing, representing 29 percent while the south west paid N35.4 billion to account for 20 percent of the overall amount paid in servicing debt between January and June 2018.
The 36 states also generated N544.18 billion revenue through the internally generated revenue (IGR) mechanism. Thus the national viability index, a metric that shows how much a state can generate internally out of the total resources it needs for efficient operations stood at 28 percent. Seven states outperformed the national viability index. Lagos State topped the national viability index by scoring 72 percent, indicating that it could generate N72 out of every N100 it required for smooth operations during the first half of 2018. Ogun State scored 62 percent; Rivers, 40 percent; Enugu, 32 percent; Kaduna, 31 percent; Kano and Kwara states, 30 percent each, while Oyo State scored 28 percent.
The worst performing states were Ebonyi, Taraba, Zamfara, Gombe, 9 percent each; Bayelsa and Kebbi, 7 percent each; and Yobe 6 percent.
By regional economies, Lagos State scored 72 percent; North Central, 18 percent; North East, 10 percent; North West, 19 percent; South East, 21 percent; South-South, 22 percent and South West, 34 percent. This shows that Lagos State is the only region which has the capability to generate more than half of the resources it needs for efficient functioning internally.
With 82.3 million as the country’s labour force, and assuming that an average employee worked for 8 hours in 125 days in the first half of 2018, the national IGR per hour stood at N6.61. Six states outperformed this metric. They are Lagos, Rivers, Ogun, Delta, Edo and Kwara in that order. Lagos State employees generated IGR worth N27.97 per hour in the first half of 2018. River State workers collected N14.35 per hour in the same period. Ogun State workers also collected N14.31 per hour in the first half of 2018. Delta State workers generated N10.28 per hour while workers in Edo and Kwara State generated N7.06 and N6.73 per hour respectively.
The worst states on the scale of the IGR per hour are Zamfara, Ebonyi, Ekiti, Yobe, Kebbi, Borno and Taraba. Each of these states generated less than N2 per hour within the reference period.
Based on the regional economic performance, Lagos State retains its IGR per hour at N27.97. Workers in the north central region generated N3.27 per hour during this period. In the north east, it was N1.83 per hour that employees in that region generated as IGR per hour at half year 2018. The north west generated N3.71 IGR per hour while workers in the south east generated N3.07 per hour. The south-south geopolitical zone generated N8.64 IGR per hour and their counterparts in the south west generated N5.43 per IGR per hour. Only Lagos and south-south generated above the national IGR per hour within the reference period.
The major implication of our findings is that the call by the Nigerian Labour Congress(NLC) that all the 36 states of the federation should pay same amount as the minimum wage may be driven mainly by populism as against economic indices.
TELIAT SULE
