In a stark revelation, an analysis of the fiscal performance of 29 Nigerian states has shown that they collectively spent a staggering N1.994 trillion on recurrent expenditures in the first nine months of 2024. This figure includes costs for refreshments, sitting allowances, travel expenses, and utilities, according to a report by Newsmen.
The findings highlight a significant gap in the states’ fiscal management, with many overshooting their operational costs while struggling to meet revenue targets.
Despite a substantial 40% increase in federal allocations from the Federation Account, the states failed to meet their revenue generation goals.
While the states collectively generated N1.92 trillion in internally generated revenue (IGR), they fell short of the target of N2.868 trillion, recording a deficit of N948.28 billion.
In addition to the large recurrent expenditure, the states accumulated a total loan of N533.29 billion, contributing to a total debt servicing cost of N658.93 billion during the review period.
These states owe local, foreign, and multilateral creditors, underscoring the challenges faced by state governments in managing fiscal pressures.
The fiscal gap has raised concerns about the financial sustainability of many states, especially as they continue to rely on borrowing to meet their expenses. For instance, Niger State led the borrowing spree, obtaining loans amounting to N79.09 billion, followed closely by Katsina State at N72.89 billion. Several states, including Kogi and Kebbi, also borrowed extensively during this period.
The analysis of recurrent expenditure for the states revealed that a significant portion of these funds went towards travel expenses, sitting allowances for government officials, and utility bills.
Lagos, Plateau, and Delta states were the highest spenders, incurring N375.19 billion, N144.87 billion, and N121.54 billion in operating costs, respectively.
The breakdown indicates that states with significant population sizes and economic activity, such as Lagos and Rivers, also had the highest revenue collections. Lagos, in particular, generated N912.17 billion in IGR, followed by Rivers State at N269.18 billion.
However, not all states were able to balance their books. States like Abia and Taraba saw a wide gap between their operating costs and revenues, leading to higher reliance on borrowing. Abia, for instance, generated only N22.15 billion in revenue against a recurrent expenditure of N17.91 billion.
Similarly, Taraba spent N58.39 billion on recurrent costs but earned only N7.84 billion.
The increased federal allocations from the Federation Accounts Allocation Committee (FAAC) appear to have had little impact on reducing the fiscal imbalance at the state level.
The second-quarter FAAC disbursements saw N3.473 trillion allocated across the three tiers of government, with states receiving N1.337 trillion, a 4.29% increase from the first quarter.
However, despite these improvements, states have struggled to translate the increased funding into tangible development for their citizens, with many governors continuing to prioritize operational expenditures over long-term infrastructure investments.
Professor Segun Ajibola, an economist at Babcock University, expressed concern over the continued high spending on governance amidst widespread economic challenges.
He pointed out that state assemblies have largely failed in their oversight duties, leaving governors to operate without adequate checks and balances.
This, he argued, has resulted in minimal economic benefits for ordinary citizens, as state resources are increasingly spent on non-productive activities.
Ajibola’s remarks align with recent statements from the Fiscal Responsibility Commission (FRC), which has raised alarms about the unsustainable nature of Nigeria’s fiscal federalism.
The FRC has warned that unless states adopt more stringent measures to control governance costs and improve accountability, the financial strain could jeopardize the country’s long-term economic stability.
