In a report released on Tuesday, titled ‘Moving Healthcare Delivery from Suboptimal to Optimal,’ the organization evaluated all 36 states using five distinct metrics.
According to BudgIT, the first metric, Index A, assesses each state's capacity to cover operating expenses (recurrent expenditure) solely through their internally generated revenue.
“Index A1 measures the year-on-year growth percentage of each state's internally generated revenue. Index B analyzes the ability of states to meet all operating expenses and loan repayment commitments using their Total Revenue (which includes Internally Generated Revenue, Statutory Transfers, and Aids and Grants) without resorting to borrowing,” the organization explained.
“Index C evaluates the sustainability of state debt through four key indicators: A. foreign debt as a percentage of total debt, B. debt as a percentage of revenue, C. debt service as a percentage of revenue, and D. personnel costs as a percentage of revenue. Index D assesses how much each state prioritizes capital expenditure relative to its operating expenses (recurrent expenditure).”
BudgIT reported that Rivers State secured the top position in fiscal performance for 2023.
The civic technology firm indicated that the leading five states are Rivers with 250 points out of a possible 100, followed by Lagos (143/100), Anambra (139/100), Kwara (120/100), and Cross River (111/100).
Kebbi State demonstrated the most significant progress, moving up 12 positions from 28th to 26th, while Jigawa State faced the largest decline, falling 16 places to the 36th position. According to BudgIT, Rivers and Lagos were the only states that generated sufficient Internally Generated Revenue (IGR) to fully cover their operating expenses, with IGR to operating expense ratios of 121.26% and 118.39%, respectively.
Additionally, several other states, such as Ogun, Anambra, Cross River, Kwara, Kaduna, and Edo, were able to generate IGR that covered at least 50% of their operating costs, with the remainder depending on federal transfers.
The report also highlighted that the total revenue of all 36 states in Nigeria saw a substantial increase of 31.2%, rising from N6.6 trillion in 2022 to N8.66 trillion in 2023. This growth rate surpassed the previous year's increase of 28.95%, reflecting a significant enhancement in fiscal performance. Notably, Lagos State contributed N1.24 trillion, accounting for 14.32% of the total revenue generated by all states in 2023.
Considerable financial resources are essential to promote and sustain development initiatives.
In reference to the report, Iniobong Usen, BudgIT's research and policy advisory lead, underscored the imperative for states to allocate significant investments in infrastructure and human capital development.
“The fiscal viability and long-term sustainability of states heavily depend on their capacity to mobilise revenues internally by effectively leveraging their natural resource endowments, technology, public-private partnerships, human capital, and effective consequence management,” Usen said.
“This capacity is crucial for financing essential infrastructure, investing in human capital development and social protection, meeting the new minimum wage and its consequential adjustments, and repairing the fractured social contract.
“To achieve debt sustainability, states must also curb their reliance on foreign loans, especially in light of exchange rate volatility and shrinking fiscal space, to minimise exposure to unfavourable exchange rates.
“Additionally, states should establish robust frameworks for debt transparency and accountability, ensuring that borrowed funds are allocated to high-impact projects with clear economic returns.”
Regarding the report's significance, Gabriel Okeowo, the country director of the BudgIT Foundation, emphasized that the report's primary objective is to initiate a dialogue on the necessity for subnational governments to prioritize effective resource management and strategic investments in crucial sectors, particularly healthcare.
“The State of States report looks at how states can finance their budgets with revenues generated internally, viz-a-vis their dependence on federal allocation,” he said.
Furthermore, Okeowo mentioned that the report examines how states prioritize investments in human capital development and the sustainability of their borrowings.