Lagos, Ogun Don’t Rely on FAAC Allocations Despite their Higher Ratio of IGR to FG…

0
430
Outdoor mall and pedestrian bridge in downtown Lagos.

In the just concluded week, President Muhammad Buhari, assented to the Federal Competition and Consumer Protection (CCP) Bill. The Act which annulled the Consumer Protection Act, Cap. 25, laws of the Federation of Nigeria, 2014 to establish Federal Competition and Consumer Protection Commission as well as the Competition and Consumer Protection Tribunal was for the development and promotion of fair, efficient and competitive markets in Nigeria.

The Act placed the responsibility of approving mergers on the Competition Commission, effectively stripping the Security and Exchange Commission (SEC) of its power to do such as it (the Act) cancealed the provisions of the Investment and Securities Act relating to mergers. On price regulations, the Federal Competition and Consumer Protection Act empowers Nigeria’s President to regulate prices of goods and services by order published in the Federal Gazette on the recommendation of the Competition Commission. However, the anti-monopoly Act prohibits any agreement on price fixing and rigging as the established Competiton and Consumer Protection Tribunal by the Act is allowed to handle disputes and issues from the operations of the Act.

Meanwhile, the National Bureau of Statistics (NBS), in its Q3 2018 report tagged “Internally Generated Revenue At State Level” made available in the week, revealed that Nigerian states’ internally generated revenue (IGR) for Q3 2018 moderated quarter on quarter (q-o-q) by 5.08% to N264.38 billion from N278.54 billion in Q2 2018.

Of the thirty-six states, twenty states recorded loss in IGRs, especially eight states that registered declining IGR by more than 15% in the quarter under review: Cross River (46.31%), Niger (35.62%), Benue (30.11%), Kano (23.44%), Adamawa (22.60%), kaduna (16.34%), Abia (15.72%) and Oyo (15.65%) to N3.22 billion, N1.66 billion, N2.32 billion, N7.09 billion, N1.38 billion, N5.99 billion, N3.03 billion and N5.88 billion respectively.

The decrease in their IGRs were chiefly driven by lower revenues from income sources such as Pay As You Earn (PAYE) and Ministry, Departments and Agencies (MDAs). On the positive side, states such as Sokoto, Kwara, Yobe, Akwa Ibom, Zamfara and Imo recorded growth in IGR by 123.51% to N7.76 billion, 63.37% to N5.97 billion, 60.36% to N1.26 billion, 34.73% to N6.71 billion, 33.75% to N1.80 billion and 30.88% to N4.48 trillion respectively in Q3 2018.

Further analysis of the report showed that five states generated IGR above N10 billion in just a quarter: Lagos state generated the highest IGR of N87.06 billion, while Rivers, Ogun, Abuja and Delta states generated N22.88 billion, N20.58 billion, N14.05 billion and N13.15 billion respectively. However, Kebbi, Ekiti, Gombe, Yobe, Ebonyi and Adamawa generated the least IGRs of N1.14 billion, N1.23 billion, N1.26 billion, N1.26 billion, N1.32 billion and N1.38 billion respectively.

Meanwhile, net Federation Accounts Allocation to states which stood at N646.16 billion for Q3 2018 outweighed the states’ IGRs which stood at N264.38 billion for the same quarter under review by 2.44 times.

This was reflective of the continued dependency of most states on monthly allocations from the Federal Government. Further breakdown of the numbers showed that Kebbi, Bayelsa, Yobe, Borno, Katsina and Adamawa states had the highest ‘dependency multiples’, FAAC to IGR, of 12.4 times, 11.18 times, 10.86 times, 10.47 times, 9.93 times and 9.35 times respectively in Q3 2018.

However, only Lagos and Ogun states generated more revenue internally than allocated money from the FG given their ‘dependency multiples’ (0.35 times and 0.50 times respectively) which were below 1.

The CCP Act is expected to further put a check on the activities of Cartels in taking advantage of consumers through price fixing and rgging. More so, as natural monopoly is eliminated amid increased competition, we should see more companies spring up, create jobs and in turn increase state governments’ revenues via PAYE

SHARE
Previous articleAbegunde’s Case: US alleged Fraud Mastermind in Nigeria
Next articleNaira Gains Against the US Dollar at I&E Forex Window
Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.