A WikkiTimes review of budget performance documents of North Central states have shown, no North Central State out of those reviewed can fund its budget up to 20% if their only source of revenue was the Internally Generated Revenue of the state.
What this simply means is that, if the state planned to spend N10 (ten naira) in 2023, with the money they generated internally, they would have only been able to spend N2 (two naira) for the year, since they only made N2 (two naira) as revenue.
This report reviewed five states based on the availability of their budget performance documents.
While Katsina budgeted an expenditure of N300.6 billion, it only posted N19.7 billion Internally Generated Revenue. Meaning that if the state were to fund its budget through the IGR, it would achieve only 6.5% budget implementation.
In Kano, while the state budgeted a final figure of N350.3 billion, it could only amass N41.1 billion IGR, representing 11.7% of the total approved budget expenditure.
Although the situation is better in Kaduna, however, the state could only record 16.5% of its total value of budget as IGR. In 2023, Kaduna state planned to spend N376.3 billion but recorded only N62.4 billion as internally generated revenue.
While Zamfara planned to spend N189.6 billion, at the end of the year, it only received N17.3 billion as IGR, which would mean that if the IGR was the only source of revenue, only 9.12% of the budget would have been achieved.
Kebbi state recorded the lowest IGR to budgeted expenditure percentage, per budget documents studied. While the sum of N191.8 billion was budgeted for the year, only N10.4 billion was recorded as IGR.
North Western Bank on Taxes for IGR But Have Low Number of Businesses Registered
Northern states are relying heavily on taxes to generate their internal revenue. For instance tax revenue contributed N10.714 billion to the IGR of Zamfara in 2023.
Non-tax revenue contributed N6.6 billion of the IGR.
In Katsina, taxes also contributed N14.7 billion while non-tax revenue contributed N4.5 billion.
In Kano, there are 79,328 formal enterprises, in Kaduna there are 38908 enterprises ,Katsina has 44,102 formal enterprises, Kebbi as of the last SMEDAN survey was stated as having 17,306 formal enterprises.These number are those operating in the state and registered with the CAC.
In contrast, there are 1.419 million micro enterprises (informal) in Kaduna, 1.717 million in Kano, 1.504 million in Katsina.
These informal sectors are mostly outside the tax net.
Although a state like Kaduna has been noted to have implemented digitization of its tax system, a development that increased its tax fortunes, figures posted and ratio of formal to informal sector may show that more is needed to be done.
“Kaduna state IGR increased from N11.54 billion in 2015 to N50.77 billion in 2020. This shows that the state’s IGR increased by 340.06% over the last five years. Digitalization of tax systems in Kaduna state has seen the state multiply its IGR four times over in five years.” The report noted.
The executive director of Accountability Lab, Friday Odeh, had told WikkiTimes that states have to start thinking of creative ways to earn more money. He noted that dependence on FAAC allocation without boosting revenue is not sustainable.
According to him, over the years, the usage of FAAC allocation has become questionable. He opined also that it may be important to devolute revenue generation.
Experts have also noted that the Northern region can generate more revenue if technology is deployed in the process of tax collection.
