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An analysis of the 2024 full-year budget implementation report of state governments has revealed that 30 state governors generated N2.8tn as Internally Generated Revenue but disbursed N3.03tn on operational costs.
The N.03tn was spent on refreshments, sitting allowances, local and foreign trips, utilities, and medical expenses.
This fiscal nature of the state governments came under intense scrutiny, becoming a major point of controversy as concerns mounted over their spending habits and low revenue generation.
The amount generated was out of a revenue target of N2.836tn, indicating a deficit of N24bn. However, the difference between the revenue and expenditure reached N223bn.
The subnationals also spent N1.038tn to repay debts owed to local, foreign, and multilateral creditors.
The PUNCH reports that sub-nationals have continued to enjoy cash windfall unlocked by the removal of fuel subsidies and the devaluation of the naira.
Within the 12 months of 2024, statutory allocations from the Federal Account Allocation Committee to the three tiers of government increased by N4.994tn to N15.12tn.
The amount indicates an increase of 49.24 per cent from N10.143tn disbursed to meet their obligations in 2023.
An analysis of the monthly communique issued by the committee showed that the 36 state governments got the highest allocation of N5.22tn representing 34.5 per cent of N15.14tn total allocation to the three tiers of government.
This was followed by the Local Government areas with N4.97tn and the central government with a revenue allocation of N4.95tn.
When compared, the states got an increase of 45.5 per cent from N3.585tn in 2023.
A breakdown of the state’s 2024 monthly allocation showed that N396.69bn was disbursed in January, N379.41bn in February, and N398.69 in March and April.
These states also got N403.4bn in May, N388.42bn in June, N461.97bn in July and N473.47bn in August.
In September, an allocation of N422.86bn was disbursed to the states, N453.72bn in October, N490.69bn in November, and N549.79bn in December.
However, the reliance on FAAC funds will be significantly impacted by the implementation of a direct statutory allocation to local governments.
State governments have strongly opposed this direct allocation, as it poses a potential threat to 32.8 per cent of their current share of the national revenue, which could lead to a reduction in their financial resources and disrupt their ongoing projects and operations.
Despite the impending financial implications, the states’ expenditures are heavily skewed towards non-productive activities, raising concerns about fiscal discipline and the sustainability of public finances.
An analysis of the fiscal performance of each state, utilising data from the Q1 to Q4 budget performance reports obtained from each state’s website on Sunday, reiterated the pressing need for stringent measures to prioritise fiscal discipline, especially amidst growing calls to reduce the costs of governance.
For the four quarters of the year, our correspondent examined budget implementation data from 30 states; data for six states was not available.
Benue, Borno, Enugu, Imo, Katsina, and Ogun states were the ones without 2024 full-budget implementation data.
A breakdown showed that eight states, including Rivers, Lagos, Ekiti, Cross Rivers, Delta, Bayelsa, Akwa Ibom, and Abia, exceeded their revenue target for the year.
While 19 states achieved between 53 and 99 per cent revenue targets. Only Taraba, Niger, and Jigawa scored below 50 per cent of its revenue target.
On its expenditure, Lagos, Delta, and Plateau states were the highest spenders of N578.74bn, N188.16bn, and N184.6bn. This was followed by Akwa Ibom and Bauchi spending N155.25bn and N138.7bn.
A state-by-state analysis revealed that Abia State, led by Governor Alex Otti, spent N24.74bn on operating expenses and generated N33.14bn in revenue. Additionally, the state allocated N14.97bn for debt servicing.
Adamawa State spent N55.22bn on recurrent expenditure, while it earned N13.77bn income out of its revenue of N22.24bn. This state borrowed N10bn and paid N31.38bn to service its debts.
Akwa-Ibom State recurrent spending reached N155.26bn in 12 months, N88.19bn more than its generated revenue of N67.07bn. The state paid N45.82bn as debt service but didn’t borrow.
Anambra State generated more revenue (N42.04bn) than its recurrent spending of N20.67bn. It spent N5.01bn on debt service and didn’t record any borrowing.
The Bauchi government spent N138.7bn on its operating expenses. This state only got N24.22bn out of its budgeted revenue target of N37.03bn but borrowed N39.64bn and paid N44.22bn as debt service.
Bayelsa state got N67.91bn IGR more than its revenue target of N61.37bn. It spent N122.56bn on its operating costs and spent N42.52bn on its debt service.
Governor Bassey Otu of Cross River state approved the spending of N73.56bn for operating expenses while it collected N46.29bn as revenue out of an N44.04bn target. This state borrowed N20.67bn but spent N34.88bn to service previous loans collected.
Delta state recurrent expenditure reached N188.16bn in 12 months while it earned N150.78bn as revenue. The oil-rich state serviced its debt with N71.78bn and didn’t obtain any loan.
Also, Ebonyi State spent N53.22bn on its recurrent expenses but earned N20.97bn as revenue. The state borrowed N76.88bn and spent N12.29bn on debt service.
Edo State spent N92.55bn on recurrent expenditure but generated N71.17bn revenue. The state spent N28.55bn on its debt service commitments.
Similarly, Ekiti State recurrent spending was N61.5bn, generated N24.09bn revenue, borrowed N3.03bn and spent N12.93bn to service its debts.
Gombe State spent N61.5bn on its operating expenses but got N20.2bn in revenue. This state borrowed N51.42bn and spent N38.34bn on its debt service.
Jigawa State under Governor Umar Namadi, spent N47.17bn on its operating expenses but got N20.74bn as revenue. This state spent N2.78bn to service its debts and obtainean d N744.75m loan.
Further analysis showed that Kaduna State spent N88.91bn on its recurrent expenditure while it generated revenue of N70.23bn. This state increased its loan by N52.26bn and paid N53.67bn as debt service.
Kano state recurrent spending was N120.48bn while it generated N59.73bn revenue. It also obtained an N6.16bn loan and paid debt service of N69.84bn
Kebbi state recurrent spending was N34.99bn while it generated N11.17bn revenue. It also obtained an N24.59bn loan and paid debt service of N5.15bn.
Kogi State spent N133.19bn on its operating expenses but earned N28.28bn in revenue. The confluence state also obtained N52.68bn as loans and repaid N28.29bn debt.
Lagos state spending on recurrent expenses was N578.74bn, while it earned N1.16tn revenue. The state paid N93.88bn as debt service and obtained a loan of N58.36bn.
Within the same period, Nasarawa spent N60.57bn on its operating expenses but got N32.59bn as revenue.
Niger state recurrent expenses reached N21.52bn while it earned N14.73bn.
Ondo State spent N140.5bn on recurring expenses but only earned N33.54bn, Osun State spent N77.79bn but earned N40.52bn as revenue while Oyo State spent N78.27bn on its recurrent expenditure, N63.29bn was collected as revenue.
Plateau spent N184.6bn on its recurring expenses but only earned N25.42bn; Rivers State’s spending on its operating costs was N95.95bn, but it earned N348.18bn.
Taraba state spending on recurrent expenditure reached N68.94bn, surpassing its revenue generation of N13.64bn, resulting in a deficit of N55.3bn. This state borrowed N80.11bn and paid N27.62bn.
Yobe State spent N84.23bn on its recurrent costs but earned N11.08bn as revenue. Also, Zamfara spent N25.45bn on its recurrent expenditure but earned N25.45bn.
In the face of the severe economic hardships caused by government-inflicted policies, which have left many citizens poor, these governors also approved and disbursed a total sum of N147.796bn for providing refreshments, welfare packages, and sitting allowances to government visitors and guests.
The funds allocated to ensure the comfort of visitors at the state government house and other agencies during courtesy calls and various official visits were fully utilised within the 12 months of 2024.
According to the breakdown, the bulk of this spending went towards the provision of refreshments and sitting allowances for guests attending various government functions.
These funds were used to cater to the comfort of high-ranking officials, dignitaries, and other visitors.
In addition, several states allocated substantial amounts for hospitality packages designed to enhance the experience of attendees at government-sponsored events.
A breakdown showed that the 30-state government spent N147.796bn on refreshments for guests, with welfare packages gulping a major percentage of the amount.
Meanwhile, experts have pointed out that these lavish spending practices not only divert funds from essential public services but also fuel public distrust in the government’s ability to manage resources effectively.
The annual budgets, which should ideally be focused on building a more resilient and sustainable economy, appear to be disproportionately allocated to luxury spending, which does little to improve the lives of ordinary citizens.
At different fora, financial experts have also raised concerns about states’ spending on recurrent expenditure, highlighting the need to embrace financial innovations.
A development economist, Aliyu Ilias, in an earlier interview with PUNCH, said many states had yet to fully develop themselves as industrialised and marketable to attract investors.
Ilias urged governors to develop an area of strength they could leverage to attract foreign investments.
A Professor of Economics at Babcock University, Segun Ajibola, stated that the enduring problem of high governance expenses had persisted at the state level, with inadequate oversight and accountability resulting in minimal economic benefits for grassroots citizens.
The monetary policy committee of the Central Bank of Nigeria has also complained about the excessive government spending noting that it is a major challenge to effective monetary policy in Nigeria.
