Within seven years, the 36 states in Nigeria have gotten $71.3 billion to bolster their economies and improve the welfare of their citizens, but poverty has persisted.
The present administration reforms which boosted states’ revenues amid rising cost of living have also sparked protests across the country. Earlier in the month, there was widespread discontent and social unrest.
According to BusinessDay analysis of the data from the National Bureau of Statistics (NBS) and Agora Policy, between 2017 and 2023, the total allocation from FAAC and Internally Generated Revenue was N27.8 trillion.
The analysis shows that states’ revenue increased in naira terms, but shrank to $71.29 billion with earnings dropping to $9.1 billion in 2023, the lowest in six years due to naira devaluation and volatility.
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“States now have more revenue to execute their programmes such as improving infrastructure, paying salaries and pensioners,” said Muda Yusuf, CEO of the Centre for Promotion of Private Enterprises (CPPE).
He, however, raised the question of how well the revenues are being deployed to drive meaningful development, noting that states ought to be publishing their accounts for transparency.
Yusuf stated that poor management of resources by the states has resulted in little or no impact on the lives of the people, cautioning on “not overestimating the growth of the revenues by the states”.
“The fact that revenue has grown in nominal terms doesn’t mean they can buy much. The nominal growth can be misleading. It creates an illusion that the states are getting richer so we must factor this into our expectations,” he added.
Nigeria’s inflation has been on the rise for the 19th straight month before hitting a break in July to 33.40 percent, offering hope for consumers and businesses alike. Food inflation also eased to 39.53 percent, but Nigerians still lament elevated prices of key staples forcing them to seek alternatives.
Afolabi Olowookere, managing director and chief economist at Analysts Data Services & Resources (ADSR) said the increase in the government’s revenue ought to lead to improved social impact but stated that spendings of the government are equally channelled to other things.
“For instance, there are statutory spendings that the government embarks on which are from the revenues. Even if the revenues are spent on capital projects, the impact might be delayed,” Olowookere said.
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He, however, stated that government revenues rise as a result of not giving much back to the people, noting that an “increase in revenue may be that government is taking from the people which will decrease in resources to the people”.
“Economics teaches us that when you take from the people, you spend the same back to the people to attain equilibrium. But when you take more from the people than you give back to them then poverty will rise,” the Ibadan-based economist said.
A more cursory interrogation of available data shows that oil-producing states receiving 13 percent derivations from the proceeds of sales of crude oil have a high number of poor people and out-of-school children.
In 2022, Abia, Akwa-Ibom, Anambra, Bayelsa, Delta, Edo, Imo, Ondo, and Rivers shared a total of N970.2 billion as 13 percent Oil Derivation Fund, data from the Federation Account Allocation Committee shows.
In what appears to be a stark contrast, Delta which received N296.6 billion, the highest share, has almost three million multidimensionally poor people while Anambra with the lowest share of N4.5 billion is home to 1.6 million people whose living conditions are less well off.
The rise in revenue has equally failed to keep children in school as more young people between six and 15 engage in other activities during schooling hours.
Nigeria Multidimensional Poverty Survey carried out in 2022 revealed that of the nine states that get additional revenue due to their oil-producing status, Akwa Ibom has 180 thousand out-of-school children while Anambra has the lowest with thirty thousand.
Ibrahim Rafiu, an Ogun-based economist and financial analyst, said that revenue has indeed increased in nominal value but decreased in real value.
“The real value is the purchasing power of the money anywhere. So, for any development in the economy, the government needs to address the exchange rate and bring down inflation to prop up the value of the revenues,” he said.
