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How three regions account for 71 percent of Nigerian economy

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The Nigerian economy realised N1.103 trillion from internally generated revenue (IGR) in 2018. At the rate of N360/$, the total revenue generated would amount to $3.07 billion. The story is not in which state generated what; it is in the fact that over seventy percent of the total IGR came from three regions. This has implications for so many things. Internal migration or inter-state relocations will continue until some equilibrium is reached because as human beings, Nigerians will continue to move to regions or states where there are more economic opportunities.

Knowing the regions that contributed the most to the total IGR required that we regrouped the states in Nigeria along seven geopolitical zones or regional economies. The 36 states in Nigeria (Excluding FCT Abuja) were divided into seven economies or regions, with Lagos State, the commercial nerve centre of the nation and Africa’s fifth biggest economy treated as a region on its own. The essence is just for a more comprehensive analysis with a period of reference between 2016 and 2018. Thus, we have Lagos, South West (SW), South East (SE), South-South (SS), North Central (NC), North West (NW) and North East (NE). The major parameters adopted are the internally generated revenue (IGR), its growth rates among states, regions and the share of each regional economy in total IGR.

Beyond the fact that the 36 states in Nigeria made N1.103 trillion as internally generated revenue (IGR) in 2018, which was 17.83 percent higher than N936.47 billion IGR made in 2017, we can also unveil more insights into the financial performance of states in Nigeria; including the IGR figures as they revealed a lot of weaknesses that states or regions must urgently addressed.

For instance, within the south east regional economy, why should Enugu State generate more IGR than Anambra, which is an industrial state with many billionaires? Still, in the south east, Abia State has very vibrant SME clusters within the Aba market, and assuming we measure the size of a state economy by its IGR,  Enugu State’s economy will be bigger than Abia and Ebonyi states combined (using 2018 IGR).

In the south west regional economy comprising Ogun, Oyo, Ondo, Osun and Ekiti states; the combined 2018 IGR of Ondo, Ekiti, Osun and Oyo states is N66.27 billion, much lower than N84.55 billion IGR realised by Ogun State last year.

Oyo, Enugu and Kaduna states were the capitals of the then western, eastern and northern regional governments. In 2018, Kaduna State accounted for 24 percent of the IGR from the north west regional economy. Enugu State accounted for 29 percent of south east regional economy. On its part, Oyo State’s share of south west regional economy was just 16 percent, meaning that the state made the least contribution to regional growth in 2018 among the states that were the defunct regional capitals.

Sokoto, Ondo, Imo, Jigawa and Gombe states show prospect

During the reference period, that is, from 2016 to 2018, the national IGR growth rate was 15.96 percent. Nineteen states outperformed the national IGR growth rate while 17 states trailed the outperformers.

Sokoto State recorded the highest IGR growth rate among the states during the period. It grew its IGR by 98.40 percent in 2017, and further recorded 108.03 percent growth in 2018, thus ending the 3-year period with an IGR growth rate of 103.22 percent.

Ondo State posted 25.83 percent IGR growth rate in 2017, and 126.83 percent increase in 2018,  thus it ended the period with a 76.33 percent IGR growth rate.

Imo State’s IGR grew by 16.69 percent in 2017, and 117.26 percent in 2018. Its 3-year IGR growth rate was 66.98 percent. Jigawa State recorded 63.57 percent IGR growth rate within the 3-year period, while Gombe State grew its IGR by 59.26 percent. These are the five states with the highest IGR growth rates between 2016 and 2018.

How much of the total IGR did each region realise?

If the IGR of each region were to denote its economic size, then Lagos State, which contributed 37 percent of the total IGR in 2016; accounted for 36 percent in 2017 while in 2018, 34 percent of the total IGR made by the 36 states came from Lagos, would automatically occupy the first position.

It is followed by the south-south regional economy. In 2016, this region realised 24 percent of the total IGR of the 36 states. It also made 23 percent of the total IGR in 2017 while in 2018; the SS region contributed 23 percent of the total IGR made by the 36 states in Nigeria.

The SW region contributed 14 percent of the total IGR in 2016; this was followed by 13 percent in 2017, and in 2018, the contribution of the region stood at 14 percent. So, if economic vibrancy in Nigeria is captured by the amount of IGR state governments make, the Nigerian economy is just among three regions-Lagos, South-South and South West; the rest are not in the equation. The three aforementioned economies, Lagos, SS and SW, contributed 75 percent of the IGR in 2016; 72 percent in 2017, and 71 percent in 2018.

This is because, the north central accounted for just 7 percent of the IGR each year from 2016 to 2018. The north east accounted for 4 percent of the total IGR in 2016; three percent in 2017 and another 4 percent in 2018. No doubt, the north west didn’t rest on its oars during the period. From 8 percent share in 2016, the region increased its share of the total IGR to 11 percent each in 2017 and 2018.

In spite of this, the three economies in the northern region-NW, NE and NC, when combined, resulted in 19 percent in 2016; 21 percent in 2017, and 22 percent in 2018; is not as big as the south-south regional economy which contributed 24 percent of the IGR in 2016, and 23 percent each in 2017 and 2018. But the northern economy is slightly bigger than south west regional economy (excluding Lagos), which accounted for 14 percent of the total IGR in 2016; 13 percent in 2017; and 14 percent in 2018.

 Recommendations

An overhauling of state’s IGR collection scheme

There is a need for some states to overhaul their IGR collection mechanism. Ordinarily, one would have expected a state such as Anambra to be the leading IGR state in the south east. That is not the case today as Enugu State is clearly in the lead.  Anambra State, with the Onitsha and Nnewi industrial estates, needs to increase it tax base so that those that have the means to pay taxes truly pay. Similarly for Abia which is reputed for the Aba market and its astute entrepreneurship base. In 2017, it was reported that Aba traders exported N1 billion worth of goods weekly. That amounted to N52 billion in that year.  With much trade promotions by the state government, Aba market is now a force to reckon with, and as a result, we do not expect that export revenue in 2018 will be lower than its level in 2017.  This implies that even if the state government imposes 5 percent tax on N52 billion, it would have generated about N2.6 billion as direct assessment tax. However, Abia State Government generated just N750 million in 2018 as direct assessment tax. This is a far cry when compared with N1.05 billion that Edo State generated as direct assessment revenue; N2.45 billion in Imo; N1.59 billion in Kwara; N5.14 billion in Ogun; and N3.58 billion in Oyo State.

Furthermore, for regions, particularly the northern regional economies not to continue in the shadow of the southern regional economies, the National Assembly needs to change the constitution to a point where  states and regions will be allowed to develop at their own pace. This includes allowing states greater access to mineral and other natural resources in their domains.

2 Comments
  1. More Doors says

    You forgot also to add that most of the Anambra billionaires pay their taxes in Lagos and other states , where the economically reside.

    Solution: Effective macroeconomics engineering to ensure balanced and innovative distribution of fiscal deployments across the country.

    Their is no need to create state sponsored emergency billionaires from one side of the country or allow state governors and politicians to control the amount of money at their disposal, which they handout to their peeps and girlfriends, causing inflationary effect on the Naira.

    Fiscal development of eastern ports to create a different economic hub from Lagos and the south west.

    I know I have just wasted my time.

  2. Amara says

    Well thought but don’t expect much from anambra and IMO state until political promised of oguta ,onitsha, sea port in place and working

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