There is a fast-paced push to revolutionise internally generated revenues in Kaduna State, northwest Nigeria, and the bold move is beginning to deliver handsome results, according to government data.
The state governor, Nasir el-Rufai, set out three years ago to grow the state’s meagre IGR by four times by 2023 when his second term will end and data just released by the National Bureau of Statistics (NBS) show that he is well on his way to attaining the heights he set for his administration.
Kaduna had an IGR of just N11.53bn when the governor was elected in 2015 and the state occupied the 13th position on the national chart.
Between 2018 and 2019, Kaduna, with an estimated population of 12 million, grew its internally generated revenues from N29.44bn to N45bn, a 53 percent increase in a single year.
Between 2016 and 2017, Kaduna grew its IGR by 55 percent, delivering N26bn in IGR in 2017.
All this means citizens of Kaduna can realistically expect the government to better fund social and infrastructure programmes leading to a better standard of life for the people, according to one economist.
This allowed Kaduna to jump over its large neighbor, Kano state which has a population of nearly 20 million, to become the sixth largest IGR state in the country after Lagos, Rivers, FCT, Ogun and Delta.
“The tremendous growth seen in the state’s IGR is not unconnected to the aggressive government’s stand on tax collections,” said Boboye Olaolu, sub-Saharan economist at Lagos-based CSL Stockbrokers Limited.
Olaolu, who spoke with BusinessDay on phone, Tuesday, said since the state signed the tax codification and consolidation law in 2016, aimed at restructuring tax collection within the state by centralising and automating tax collection, the state’s revenue from taxes has continued to rise.
“Kaduna has also succeeded in harmonising primitive taxes that have been collected at the local government level through the creation of an e-platform that has made payment of taxes easy and effective,” Olaolu said.
“Meanwhile, we expect the government to bring in efficiency and optimisation into the state ministries so they can be revenue-generating agencies rather than an embodiment of cost, as this would help complement the gains seen in taxes,” he said.
Investigation by BusinessDay showed that the huge jump in Kaduna was well planned and the execution was delivered to safe hands.
The key pillars of the raise in the IGR strategy include the professionalisation of the state’s inland revenue service, the infusion of technology and a robust know-your-people scheme which involved the enumeration of households in the state.
For this to happen, the state’s inland revenue law was amended by the House of Assembly and in the process the state was able to compress the multiple taxation platforms which helped it to plug leakages in revenue collection.
Governor el-Rufai brought in vital expertise from the private sector and received valuable help from DFIs to clean up the old process and transform it into a go-to state in Nigeria.
According to one senior official who worked on the project, the key goals were “to institutionalise the revenue platform; grow the state’s revenue profile by four to five times by 2023 and to raise the credibility of the revenue generation process”.
“Kaduna clearly has a strategy,” said Johnson Chukwu, CEO of Cowry Asset Management Ltd.
He explained that since coming into office, Governor el-Rufai’s approach has been on building a tax base and improving the attractiveness of the state as an investment destination.
“If you recall, when Abuja airport was closed down, the state governor used that opportunity to attract a lot of investments and economic activities, even though many of them might not have lasted,” he said.
He described El-Rufai’s Kaduna revolution as comparable to Lagos under Tinubu who helped boost the metropolitan state’s IGR, urging other states to emulate Lagos, Edo and Kaduna in adopting a one-stop tax administration system, automating title registration process which makes land use charge collection easier, integrating land use charge to tenement rate and having a single body collecting as a single tax, having a Geographical Information System for documentation and registration of land titles, etc.
The NBS data also showed that Lagos and Rivers States together account for above 40 percent of the aggregate internally generated revenues in Nigeria.
The two states recorded a total of N539.13bn of the N1.344trn internal revenues generated by all the 36 states and the FCT last year.
The two giants in IGR are joined in the chart for the top five by the FCT, Ogun and Delta and together they account for 56.16 percent of Nigeria’s total states’ IGR or N759.294bn which was generated in 2019.
A further analysis shows that the top 12 states (Lagos, Rivers, FCT, Ogun, Delta, Kaduna, Kano, Akwa Ibom, Enugu, Kwara, Ondo and Edo in that order) account for a staggering 73 percent of the total IGR generated by Nigeria’s states.
The bulk of the states’ IGR comes from taxation from the personal income of workers.
