Data diary of a richly poor country: Low incomes and high indebtedness.
Events reported during the week highlight Nigeria's credentials as the poverty capital of the world.
The 37 federating states in Nigeria could not muster 1% of the country's GDP as their revenues, NBS's data release this April shows. This presents a sorry monthly exhibition of state governments queuing for handouts from the central revenue pool of the federation.
But the federal government itself might be in a more dire financial situation than the states. The country woke to the news that the CBN printed money to make up for the federal government's revenue shortages.
Having exhausted its credit lines in every nook of the global north and from every corner of the country, Nigeria's government has resorted to the CBN for overdraft loans that defy the CBN regulations for loans to the government.
However, it appears this government can never borrow enough. The DMO statistics as of December 31, 2020, stated Nigeria has a total debt of N32.915 trillion.
While the expenditure-revenue imbalance tilts towards the debt side, Nigeria's balance of trade also tilts down towards the deficit side. Just as the country is spending more than receiving revenue, it has also been importing more than exporting. The country hit a trade deficit low of 7.37 trillion naira in 2020.
Yet, it is not the economy alone that suffers these imbalances; the social life in Nigeria also does. Dr Isa Pantami also does. During the week, the internet search for him has outperformed even the terrorist group Boko Haram, especially in Nigeria.
States' IGR less than 1% of GDP
According to the recent report from the Nigerian Bureau of Statistics, the total internally generated Revenue (IGR) of the thirty-six states and the FCT in 2020 is N1.306 trillion.
Lagos State led with 418.99 billion naira while Yobe generated the least IGR of 7.78 billion naira among all the federating states and the FCT.
The same report compared the internally generated revenue (IGR) of each state with the state's revenues from the federation account. This joint revenue of the entire federation is disbursed monthly by the Federal Account Allocation Committee FAAC.
For starters, the 36 states and the FCT shared 2.29 trillion naira from the federal account (FAAC) revenue in 2020.
The Dataphyte research team found 4 key issues worth pondering on from the state IGR revenue.
Kebbi and Ebonyi blazed the trail with an 87.02% and 82.30% year on year IGR revenue growth
Ministries, Departments and Agencies (MDAs) at state levels contributed meagre revenues to the coffers of the state governments. While the cumulative tax contribution for all the states totalled N1.09 trillion, all revenue-generating MDAs across the 36 states made 87.68 billion as revenue. This is despite the fact that the salaries of their workers make the highest expenditure of state governments totalling N1.289 trillion in 2019.
Lagos topped the IGR earners list in 2020 with N418.99 billion. This showed an increase of 5.08% over the N398.73 billion it recorded in 2019.
The entire 36 states and the FCT were only able to generate an IGR of N1.306 trillion. All of this amounts to 12% of the 2020 Federal Budget of N10.8trillion, and less than 1% of the country’s GDP of N153.252 in 2020.
Is CBN Printing Money for the government?
And then, the controversy about the Central Bank of Nigeria (CBN) printing money to augment the FAAC allocation to the federal and state governments. To printing, CBN statistics show that the money in circulation increased from N5.95 trillion in June 2015 to N13.34 trillion in March 2021. Thus, the CBN had created money to the tune of N7.39 trillion and injected the same into the economy within the period.
Besides this, the CBN loaned the federal government through overdrafts beyond the statutory 5% benchmark of the FG’s past year revenue.
The CBN started issuing Overdrafts loans to the federal government's budget account in 2015 and had already mastered the art by 2019. The CBN released 88% of the federal government's revenue in 2019.
Also, 85% of revenue specifically meant to finance the federal budget came from CBN's loans to the Federal government in 2019.
Source: CBN
Debts today, burdens tomorrow
In a related move, the Buhari government has got a legislative nod to borrow $1.5 billion and €995 million. The DMO statistics as of December 31, 2020, stated Nigeria has a total debt of N32.915 trillion. When this is added to the N9.042 trillion overdrafts with the CBN, it means that the present and future generations must find means to repay at least N 41.957 trillion. Of course, this amount is besides the interest on the loan capital.
Some debts go towards Infrastructural Development.
President Buhari has borrowed N20.797 trillion since 2015 to finance various infrastructure projects across the country. One is the Kano Maradi line. The Federal and state governments have a cumulative debt of $86.39 billion and N32.92 trillion, according to Nigeria’s Debt Management Office (DMO)
Yet another unfavourable balance of trade
As of December 2020, Nigeria's trade deficit stood at N7.37 trillion. The country imported goods worth N19.89 trillion and exported goods worth N12.52 trillion.
Data from the Nigerian Bureau of Statistics (NBS) showed that the trade deficit worsened with each successive quarter of the year. The deficit increased in each successive quarter from N329.92 billion (N0.33 trillion) deficit in the first quarter to an N2.73 trillion deficit in the fourth quarter.
Sheik Pantami outperforms Boko Haram.
In the last two weeks, the accountability lens has been on Isa Ali Pantami, the Nigerian Minister of Communications and Digital Economy. A yet to be verified news made the airwave claiming the Minister was on the US Terrorist Watchlist. Angered by the media retraction, the citizens’ campaign mainly led by David Hundeyin went ahead to show how much historical fact matches Dr Isa Pantami as an Islamic Extremist. Since then, the internet search for him has outperformed even the terrorist group, Boko Haram.