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Lagos State: Tracking Excellence

Lagosstate's economy is service-driven. Economic activities in the state can beclassified in an unconventional manner of a Night economy, Marine economy, Service Economy and Faith-based economy. Lagos State derives a majority ofits revenue from sub-national taxes.  Thebiggest piece of the state's revenue pie is its PAYE (Pay As You Earn) Tax.

The Night Economy

Lagosis an amalgam of activities stitched together in kaleidoscope of contrasts. Thecomplex nature of its economy represents both a weakness and a strength. Thestrength derives from reinforcing revenue streams from activities ranging fromcommerce and trade to finance and manufacturing and ICT. But in this mix, thestate loses tonnes of money from under-exploiting the potentials of its silentbut massive night economy.

Thestate could potentially run a 24-hour economic cycle that would perhaps doubleits annual internally generated revenue (IGR) to about N798bn from its 2019figure of just under N400bn. To move the night economy forward some steps needto be taken:

• Improve around the clock security. The state must install 24-hoursurveillance CCTV Cameras in all areas of business concentration starting fromIkeja, the state capital. The state's neighbourhood watch patrol in collaborationwith the Nigerian police can provide security coverage for night tradingactivity with Ikeja used as a pilot project

• LAWMA should be retooled and reorganized. The state's environmentalsanitation body should have a night squad, responsible for cleaning up tradingcentres at night. The night team would go around markets and clear refuse aftercertain schedules have been agreed with market associations.

• Cinemas and Shopping Malls should be allowed to run nightschedules.Cinemas and shopping malls should be given special protection at night with atleast two Neighbourhood  Watch/Policesquad cars attached to each location. CCTV Cameras should be located around eachpremise with 24-hour surveillance.

• Lagos is called the land of aquatic splendour, but where isits night fish market?Lagos needs to leverage its marine status by building a night fish market thatwould eventually be continentally renowned for the quality of its fish and theacquatic design of its infrastructure would would include a 'sushi' bar and 'bukkas' which sell fish pepper soupamongst other fish delicacies.  How doesthe state finance the building of the market? With April 2020 Federal Bond issuesbeing oversubscribed by 459%, the domestic capital market is sufficientlyliquid to meet such aspirations.

The Marine Economy

Theother side of Lagos that disappears into a sinkhole of political talk withlittle action is its marine economy. Lagos State is essentially a collection ofsmall Islands but so far successive governments of the state have not been ableto leverage its riverine nature to upscale IGR and the state's GDP per Capita.The last best effort at developing commercial water transportation in the statewas during the government of governor Lateef Jakande between 1979 and 1983. Thesecond nest attempt was under governor Babatunde Fashola, between 2007 and2015. The Fashola marine transport effort that took life in his second termbetween 2011 and 2015. The project got stumped as a result of weakfollow-through. Lagos state's marine economy is critical to its post-COVID-19future for the following reasons:

• Watertransportation would decongest the number of people that use bus services,thereby, reducing vehicle congestion and interpersonal physical contact. Watertransportation would also reduce the time it takes workers, traders, and otherindividuals to get to different locations, especially between Ikorodu, Epe,Badagry and Lagos Island and Mainland.

• Themarine economy also builds on the state's many fishing ports spread fromBadagry to Ikorodu and Epe and the Island. The ports could be upgraded to mini-fishmarkets with fish processing facilities and financing options that providemicro-credit, micro-insurance and micro-leasing. The state's various seashoresare well-known for their crabs, shrimps and prawns and so its seafood economycould be supported to generate at least three times its current earnings. Withseafood clusters constructed across the state with 24-hour security and power,this part of the state's marine life could ride a wave of double-digit growthwith twelve months. The clusters would be COVID-19 compliant by ensuring therequired codes of cleanliness and social distancing. Indeed, digital techapplications could be used to order fish or other seafoods while live streamingof market prices and quantity of fish types could enable fish buyers toexperience new types of digital-based commercial transactions using mobilephone apps. Digital TV could cover markets across the states and give buyersand sellers opportunities for continuous daily engagement by remoteinteraction.

• The state's marine economy should tie into amedium-term energy strategy where its water resources also serve as a means ofenergy generation to supply industrial clusters across the state with at least10MW of light per cluster. This would improve business activity, reduce thecost of doing business in the state and increase the state's GDP and IGR.

Service Economy

Lagosstate is the financial hub of the country, just as London is the businessepicentre of the United Kingdom (UK) and New York the financial hub of theUnited States of America (USA). Lagos shares the blessings and curses of bothcities. In light of the complexities of major business hubs globally, the Lagosstate government needs to transition into a more efficient ecosystem to ensurethat service delivery excellence is provided to support expanding privateenterprise. Some key options are available to the state which could include,but may not be limited to, the following:

• Buildinga G2B and G2C service delivery platform that makes the interaction betweenenterprises and citizens less cumbersome. Businesses and citizens should beable to process documents and get approvals digitally rather than engage inphysical interfaces with public officers.

• Publicgovernance protocols must be elevated to ensure that transparency is elevatedto a routine rather than a hit-and-miss occasional achievement of execution.The transparency question once resolved should lead to public service efficiencyand effectiveness. In post-COVID-19 reality obscurity is a foe rather than afriend as investible funds will flow to markets that are cost-competitive,yield-superior and governance transparent. The debacle that happened with the Lagos State Government MunicipalityBond Issue in 2019should not be allowed to repeat itself. 

• Tosupport a 24-hour economy agenda, a 24-hour public service must be in place toprovide the regulatory and operational public service support needed to drivean economy without boundaries. Time should be a resource, not a constraint. A Lagos that defies timelimitations will rapidly ramp up GDP and IGR thereby improving the standard ofliving of state households.

Faith-Based Economy

AfterOgun state, Lagos state may have the largest faith-based economy with largeChristian and Muslim congregants, this allows for the state to collaborate withfaith-based institutions to improve the well-being of state households throughFPPs or faith and public projects. The FPP model integrates faith-basedresources into providing services to societies most vulnerable, enabling thegovernment to partner churches and mosques in schemes that help congregantsgrow micro-businesses, access micro-insurance and leverage micro-mortgageswhile also providing improved protection to the socially vulnerable people suchas aged and the physically and mentally challenged.

Thestate with faith-based partnerships can build purpose-fit facilities wherethese individuals can get help and live meaningful lives rather than depend oninformal structures that could be dangerous or simply unsustainable.

Thevarious types of economies of Lagos would require or contribute to robust staterevenues and expect efficient cost management. 

Lagos State Revenue

Thestate's total revenue grew by 3.07% in 2019, leveraging its night and marineeconomy alone the state could triple this growth rate in eigthteen months. Itstotal revenue in 2019 was N516.62bn from N501.21bn in 2018.  Its total IGR was 77.18% of total revenuewhile its FAAC was 22.82% of total revenue. A firmer harnessing of stateresources and a realignment of its strategy could see IGR rise to 97% of totalrevenue and FAAC fall to about 3% of the state's total annual earnings (see chart 55).

Chart 55: LagosState Total Revenue (N'bn) 2019

Source: NBS,Proshare Research 

Lagos State IGR

Inunderstanding the state's current revenue structure its is noteworthy torealize that the state's major source of internally generated revenue is itsPAYE which accounts for about 68% of the state's IGR, while revenue generatedfrom other taxes as well as from MDAs (Ministries, Departments and Agencies)accounts for 16% and 10% of IGR respectively (see Chart 56).For the state to position properly for a post-COVID-19 world, its must rethinkIGR composition by reducing PAYE to roughly 30% of IGR and increasing theproportion of IGR from taxes, levies, fines and fees to about 70% of stateIGR. 

Chart 56: LagosState IGR (N'bn) 2019

Source: NBS,Proshare Research 

Lagos State Domestic Debt

Lagos state's domestic debtstood at N444.23bn as of December 2019, a reduction from N530.24bn as ofDecember 2018.

Chart 57: LagosState Domestic Debt (N'bn) 2015-2019

Source: NBS,Proshare Research

Despite the drop in itsdomestic debt from N530.24bn in December 2018 to N444.23bn in December 2019,the size of the was worrisome as it poses a potential burden for futureadministrations/generations (see Chart 55).

Lagos State External Debt

Lagos state's external debtdeclined to $1.4bn in December 2019 from $1.43bn in December 2018. The fall inthe debt may be considered desirable but it still leaves the state with a majorforeign exchange exposure. The fact that most of the state's revenue is nairadenominated, the large foreign debt exposure threatens the state's fiscalbalance with foreign exchange translation risks and could result in a downgradeof its credit rating and a rise in its cost of finance.

Chart 58: LagosState External Debt ($'bn) 2015-2019

Source: NBS,Proshare Research

Illustration 16: Lagos State-Growing A Post COVID-19 Economy

The State of Osun

Osun state is on the oppositeside of the revenue pendulum from Lagos state. The state recorded the lowestIGR and the lowest revenue in the South-West region in 2019. It posted an IGRof  N17.92bn in 2019, while its totalFAAC received in 2019 was N24.2bn in 2019.

The State of Osun is a darkhorse on a white canvass. The opportunities of the state well outstrip itschallenges, but its present fiscal structure robs it of development, growth andhuman well-being. Its large public sector (over 2.2mpeople) relative to the overall population (around 5.5m people) suggests heavyrecurrent public sector payments by way of salaries and other emoluments andlarge monthly pension and gratuity outflows. 

LowHanging Fruits

Tokick off an aggressive rebuilding of the Osun economy with limited publicfinancial outflows the government may need to do the following:

• Take inventory of all idlestate government enterprise assets and prepare them for private-sectoracquisition
• Convert the statescultural and faith-based advantages into economic opportunities through tourism
• Upgrade the states AsoOke industry into a medium-sized private sector-led joint venture thatinvolves clothing design, manufacturing, fashion fairs and export. Patents andcopyrights would be obtained by the government and kept as contingent assets.
• The cola nut business ofEde would be upgraded and will form the basis of a major exportable colanuttrade

Thereal potential of Osun State follows from a clear vision to achieving thefollowing:

• Building a State with astrong AgriTech framework that integrates agriculture and technology in amanner that brings about "Green Economy" efficiency, effectiveness andinnovation. Producing agricultural throughputs at globally competitive pricesand quality will bring revenue streams that reduce State Debt -to-Revenueratios and Improve IGR-to-Total Revenue numbers.
• Improving specializedhuman capital skills in the areas of AgriTech, Mining and Commodities,including expertise in commodities trading, product derivatives and forwardand futures contracts trading. The economy of the future is knowledge-basedand reliance on raw commodities and minerals would push the State to the leastrewarding end of the future production and service value chains. The State ofOsun must prepare itself for 4IR. The fourth Industrial Revolution (4IR) istechnology and science-driven requiring education in the State of Osun to beremodelled in a way that is fit-for-purpose in an era of disruptiveeconomic competition. Roadshows about the State's agricultural resources andmining potential are only as useful as they feed into a narrative that showshow these resources can support a new technological paradigm that createsuncommon value by way of technology.
• LeveragingReligious/Spiritual Tourism is the 'soft' aspect of the Osun economy that hasbeen either intentionally or unintentionally been ignored. The State of Osun isknown to have the largest number of hills in the South West associated with,allegedly efficacious, spiritual essence and power. The various 'Okes' known as magnets for religious faithful seeking communion with God possess an underlyingvalue that is yet to be explored. Also, festivals such as the 'Osun Osogbo' andother annual traditional fiestas need to be harnessed in a way that attracts aglobal tourist audience beyond the present numbers. Religious/Spiritual tourismcould ignite cash flows well beyond past conservative calculations. 
• Creating IndustrialClusters/Parks with Tech Incubators that leverage the verdant agriculturallandscape of Osun to build digital businesses that scale agriculturalmarketing, sales and production. The AgriTech valley would collaborate withcoastal economies to build agricultural export pipelines that are both virtualand physical that merge into a helix-like interchange of economic value.If structured and implemented properly, the attendant Agricultural Tourismwould create a unique stream of investing and operational cash flows that couldorganically increase the State's GDP by at least another 10% or N147.5bn basedon available National Bureau of Statistics (NBS) 2018 data.

StateGDP and Its Imperatives

AcceleratingIndustrial Development and Increased Industrial Activities are linked toeconomic growth, trade and market development. As a component of the States GDPtrade has been largely consistent in its rising trend of contribution to theeconomic size of the State of Osun. This stands at 5.8% in 2017, from 5.55 in2014. Trade alone is the third-largest contributor to State GDP (estimated atN1.47trn in 2018) and the second-largest contributor to the monetary value ofservice sector output in 2017. 

TheGDP numbers open up a myriad of potential opportunities to investors in theareas of:

• Modern Farming
• Manufacturing
• Logistics
• Storage
• Warehousing
• Value Chain Management
• Tech Conference Centres
• Infrastructure Developmentet al.

However,these potential business growth areas depend on new frameworks and not ageingfiscal and business growth models of the past. These traditional businesseswill need to be reworked within a 4IR mindset. The State of Osun will need toRethink the past, Reconsider the present and Reimagine its Future if it isgoing to make a success of the transformation of the State's economy between2020 and 2023 (see illustration 17).

Illustration17: The State of OsunEconomy; Rethinking Fiscal Strategy

TheState's fiscal condition must inspire the confidence of private investors whoneed to buy into a strong fiscal narrative so that they can match the fiscaldiscipline and foresight of the State government with the experience and cashof their own, as they align their local business plans with that of the StateGovernment. Hard data tell the best stories of future businessopportunities and outlook, government speeches are good but they are crafted toinspire hope and as American Army General, Gordon R. Sullivan (Rtd.), oncenoted, "hope is not a method".

Acritical component of the growth strategy for the State of Osun over the nextfew months should be to drive a rapid socio-economic data gathering, collation,organization and analysis process that provides investors with broad and deepdata upon which they can base their investment decisions.

Indeed,with credible data available for interrogation and review, the business casebecomes easier to establish and the cost of attracting foreign and localinvestors would decline sizably. It must be observed that Investorsare not philanthropists they expect to make reasonable returns on theirinvestments and so, the data upon which critical investment decisions are madeis fundamental to attracting their money. 

Withthe data available and registration and licensing of businesses made easy, TheState of Osun should see investments in the following areas if the 4IR mindsetis adopted:

• Industrial Parks/Estates
• Shopping Malls
• International ConferenceCentres
• Warehousing Facilities
• Commodity Storage Silos
• Inland Container Ports
• Housing Estates
• Health /Religious Resorts

Thebenefit of the limitations of the State of Osun economy in hindsight shouldstrategically spark the required action plans for the new economy with thebenefit of foresight (see illustration 18)

Illustration18: The Benefits of Hindsight and Foresight Based on Insight

Osun State Revenue

Osun states total revenue grewby 26.87% in 2019. Osun recorded total revenue of N42.14bn in 2019, animprovement from total revenue of N33.22bn in 2018. It mainly relies on revenuederived from its FAAC. In 2019, its total FAAC received was N24.2bn while itsIGR was N17.92bn.

Chart 59: OsunState Total Revenue (N'bn)

Source: NBS,Proshare Research

Osun State IGR

Osun State recorded a totalIGR of N17.92bn in 2019. The breakdown of Osun states' IGR reveals that itsmajor source of revenue comes from its MDA's while PAYE was its second main sourceof revenue. Its MDA's generated a total of N8.75bn in 2019 while it generated atotal of N7.85bn from PAYE.

Chart 60: OsunState IGR (N'bn) Breakdown

Source: NBS,Proshare Research 

Osun State Domestic Debt

The state's domestic debt declinedto N138.65bn in December 2019 from N148.1bn in December 2018. Given its lowlevel of total revenue, it is expected that its domestic debt might continue torise in the future.

Chart 61: OsunState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Osun State External Debt

Osun state's external debtdeclined to $95.45m in December 2019 from $103.26bn in December 2018.

Chart 62: Osun StateExternal Debt ($'m) 2015-2019

Source: DMO,Proshare Research

FCT

The FCT is known for a largenumber of commercial activities that take place in its territory. It had thehighest total revenue of N146.47bn in the North-Central region. But forsustainability, the territory needs to turn itself into a conference and publicpolicy mecca on the African continent. The federal capital needs to be morethan a public service showpiece and more of a 21^st-century communityprepared to be the hotbed of policy and ideas for the African continent. Thecapital needs to be a city choke-full of think tanks and world-class librariesand schools.  To support this thefollowing would be required:

• The city's urban mass transitsystem needs to be upgraded. Abuja's transport system iscurrently less than is required for a first-class continental conference andresearch hub.
• The city requires a network ofCCTVs in major areas that serve as gathering destinations for large crowds. A post-COVID-19 era would see buses carrying 20 people withsufficient distancing in compliance with the new social ethos. This means alarger number of crowd 'pockets' would need to be handled around the clock.
• Abuja needs to transmute intoa 24-hour city. The city would require around the clockbus transport services, pharmacies, cinemas, theatres, restaurants, and retailmarkets. The 24-hour economy never sleeps so security in the capital would haveto be top-notch.
• The FCT administration wouldhave to leverage the domestic capital market to provide the necessarystructures to build the city into the strategic go-to policy and researchdestination of the continent.

FCT Total Revenue

FCT total revenue grew by5.61% in 2019. Its revenue rose to N146.47bn in 2019 from N138.69 in 2018. The major source of its revenuewas from its IGR which amounted to N74.56bn (50.91% of total revenue) in 2019while its allocated FAAC in 2019 was N71.91bn (49.09% of total revenue).

Chart 63: FCTTotal Revenue (N'bn) 2019

Source: NBS,Proshare Research 

FCT State IGR

The FCT gets all its IGR fromtaxes levied by the states. The major chunk of the tax income comes from PAYEaccounting for N65.75bn of the total IGR recorded in 2019 (see Chart 64).

Chart 64: FCT IGR(N'bn) 2019

Source: NBS,Proshare Research

FCT Domestic Debt

FCT's domestic debt declinedby 34.1% in 2019. FCT domestic debt as of December 2019 stood at N108.17bn adecline from a domestic debt of N164.25bn in December 2018.

Chart 65: FCTDomestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

FCT External Debt

FCT's external debt declinedby -4.43% in 2019. FCT's external debt declined to $30.44m in December 2019from $31.85m in December 2018 (see Chart 66).

Chart 66: FCTExternal Debt ($'m) 2015-2019

Source: DMO,Proshare Research 

Niger State

Niger state recorded a sum of N69.21bnas revenue in 2019, which was the third in its region. The state relies mainlyon its FAAC allocation as its source of revenue.

Niger State Total Revenue

Niger state revenue grew by1.85% in 2019. Its total revenue in 2019 was N69.21bn, an increase fromN67.95bn in 2018. Its allocated FAAC accounted for 81.56% (N56.45bn) of itstotal revenue while its IGR accounted for 18.44% (N12.77bn) of its totalrevenue (see Chart 67).

Chart 67: NigerState Total Revenue (N'bn) 2019

Source: NBS,Proshare Research 

Niger State IGR

Niger State's major source ofIGR comes from the taxes it levied, with a major chunk from 'other taxes'. Itearned N7.07bn from other taxes while it earned N4.8bn from PAYE (see Chart 68).

Chart 68: Niger StateIGR (N'bn) Breakdown 2019

Source: NBS,Proshare Research 

Niger State Domestic Debt

Niger state domestic debt grewby 45% in 2019. Its domestic debt recorded an upward trend from 2015 to 2019.Niger state domestic debt has continuously been on the rise since December2015. Its domestic debt peaked at N60.61bn in December 2019 from N41.8bn inDecember 2018 (see Chart 69).

Chart 69: NigerState Domestic Debt (N'bn) 2015-2019

Source: DMO, Proshare Research 

Niger State External Debt

Niger State's external debtpeaked at $69.99m in December 2019 from $61.35m in December 2018. Its externaldebt has continuously been on the rise since December 2015 (see Chart 70).

Chart 70: NigerState External Debt (N'm) 2015-2019

Source: DMO, Proshare Research 

Borno State

Borno state is characterizedby a low level of commercial activity as well as its high level of insecuritywhich has impeded the growth of its economy.

Borno State Total Revenue

Borno state's major source ofrevenue in 2019 was its FAAC. Its FAAC accounted for 88.30% of its totalrevenue while its IGR accounted for 11.70% of total revenue.

Chart 71: BornoState Total Revenue

Source: NBS, Proshare Research 

Borno State IGR

The major source of Bornostate IGR is gotten from its PAYE. In 2019, its PAYE accounted for N4.19bnwhile the revenue generated from the MDA's was N2.3bn (see Chart 72).

Chart 72: BornoState IGR (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Borno State Domestic Debt

Borno state domestic debt grewby 22.1% in 2019. Its domestic debt peaked at its highest in December 2019. Itsdebt increased to N83.6bn in December 2019 from N68.38bn in December 2018 (see Chart 73).

Chart 73: BornoState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Borno State External Debt

Borno state external debtdeclined by 20.86% in 2019. Its external debt has a downward trend. Itsexternal debt declined from $21.62m in 2018 to $17.11 Borno state recorded itslowest external debt of $17.11m in December 2019 (see Chart 74).

Chart 74: BornoState External Debt ($'m) 2015-2019

Source: DMO,Proshare Research

Adamawa State

Adamawa in most recent timeshas been overwhelmed by banditry. The state relies significantly on revenuefrom FAAC allocation. The state's huge dependence on FAAC is abnormally large.The state is potentially one of the country's breadbaskets. With rich andverdant land and a strong farming culture, the state has massive potential todrive an agricultural revolution in the country.

Thinking Strategically

Adamawa State can attractlarge scale agricultural companies into the state if its philosophy is privatesector-led. The COVID-19 period provides a great opportunity for the state toupscale agriculture through the use of technology a major factor in breakingpoverty cycles according to the late Professor Clayton Christensen, EfosaOjomo, and Karen Dillon in their award-winning book the "Prosperity Paradox".

Adamawa may need to do thefollowing:

• Shift to more mechanized modesof farming
• Adopt cattle ranching as asystem of nurturing animal protein and providing leather as inputs for thefashion, automobile, and furniture industries. The cattle reared could alsoprovide milk and yogurt as in-puts to other businesses such as confectionary.
• Mining activities should beformalized with artisanal activities eased out as larger and better-equippedcorporations are encouraged to mine. 

Adamawa State Revenue

Adamawa state derived 83.28%of its total revenue from FAAC while 16.72% of its revenue was derived from itsIGR in 2019. Its total revenue earned in 2019 was N58.04bn. Its allocated FAACin 2019 was N48.34bn while its IGR was N9.7bn (see Chart 75).

Chart 75: AdamawaState Total Revenue (N'bn) 2019

Source:NBS,Proshare Research 

Adamawa State IGR

The major source of its IGR isits PAYE. In 2019, Adamawa state recorded a PAYE of N5.75bn while its MDA'sgenerated a total of N3.03bn (see Chart 76).

Chart 76: AdamawaState IGR (N'bn) Breakdown 2019

Source: NBS, Proshare Research

Adamawa State Domestic Debt

Adamawa state's domestic debthas consistently risen since December 2015. Adamawa state recorded its highestdomestic debt of N102.41bn in December 2019. Its domestic debt rose fromN89.66bn in December 2018 to N102.41bn in December 2019.

Chart 77: AdamawaState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Adamawa State External Debt

Adamawa state's external debthas an upward trend. Its external debt rose consistently each year and peakedat $108.76m in December 2019. Its external debt rose from $97.79m in December2018 to $108.76m in December 2018 (see Chart 78).

Chart 78: AdamawaState External Debt ($'m) 2015-2019

Source: DMO,Proshare Researchn 2019, its FAAC allocatedaccounted for 77.89% of its total revenue while its IGR was 22.11% of its totalrevenue.

Abia State Total Revenue

Abia state's total revenuedeclined by -4.78%  to N66.81bn in 2019from N70.16bn in 2018. Its FAAC accounted for 77.89% of total revenue while itsIGR accounted for 22.11% (see Chart 79).

Chart 79: AbiaState Total Revenue (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Abia State IGR

Its two major sources of IGRin 2019 were its PAYE and revenue derived from its MDA's. Revenue derived fromPAYE and MDAs in 2019 were N5.91bn and N5.8bn respectively.

Chart 80: AbiaState IGR (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Abia State Domestic Debt

Abia state had an upwardtrending domestic debt, as its domestic debt increased yearly. Its highestdomestic debt recorded was N68.76bn in December 2019. Its domestic debtincreased from N67.02bn in December 2018 to N68.76bn in December 2019 (see Chart 81).

Chart 81: AbiaState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Abia State External Debt

Abia state external debtdeclined by -2.02% in December 2019. Its external debt declined from $98.58m inDecember 2018 to $96.59m in December 2019 (see Chart 82).

Chart 82: Abia State External Debt ($'m)2015-2019

Source: DMO,Proshare Research 

Anambra State

Anambra state recorded anincrease in its debts and revenue in 2019. Its total revenue increased by 7.66%in 2019. Its main source of its IGR is its PAYE.

Anambra State Total Revenue

Anambra state's total revenueincreased by 7.66% in 2019. Its total revenue increased from N74.56bn in 2018to N80.26bn in 2019. The major source of its revenue in 2019 was from its FAAC.Its FAAC in 2019 was N53.89bn (67.15% of total revenue) while its IGR wasN26.37bn (32.85% of total revenue).

Chart 83: Anambra State Total Revenue (N'bn) Breakdown 2019

Source: NBS,Proshare Research 

Anambra State IGR

Anambra state's two majorsources of its revenues are its PAYE and MDAs revenue. In 2019, its PAYEaccounted for N11.19bn of total revenue while its MDAs revenue accounted forN10.24bn of total revenue (see Chart 84).

Chart 84: Anambra State IGR (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Anambra State Domestic Debt

Anambra state's domestic debtrose significantly from N2.61bn in December 2017 to N33.92bn in December 2018.Its highest domestic debt of N33.92bn was recorded in December 2019 (see Chart 85).

Chart 85: AnambraState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Anambra State External Debt ($'m) 2015-2019

Anambra state's external debtgrew slightly by 0.97% in 2019. Its external debt rose consistently fromDecember 2015 to December 2019. Its highest external debt recorded was $108.08min December 2019 (see Chart 86).

Chart 86: AnambraState External Debt ($'mn) 2015-2019

Source: DMO,Proshare Research 

Rivers State

River state is characterizedby large economic activities. It's the second state in Nigeria with the highestamount of total revenue earned in 2019.

Rivers State Total Revenue

Its total revenue increased by4.71% in 2019. Its total revenue rose from N285.41bn in 2018 to N298.85bn in2019. Rivers state recorded a total FAAC allocation of N158.45bn and an IGR ofN140.4bn in 2019 (see Chart 87).

Chart 87: RiversState Total Revenue (N'bn) 2019

Source: NBS,Proshare Research 

Rivers State IGR

Rivers State's major source ofrevenue was from PAYE and other taxes. In 2019, its PAYE earned was N101.09bn while its revenue earned fromother taxes was N21.27bn.

Chart 88: RiversState IGR (N'bn) 2019

Source: DMO,Proshare Research

Rivers State Domestic Debt

Rivers state domestic debt wasupward trending from December 2015 to December 2019. Its domestic debt peakedat N266.94bn in December 2019. Its domestic debt rose from N225.59bn inDecember 2018 to N266.94bn in December 2019 (see Chart 89).

Chart 89: RiversState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Rivers State External Debt ($'m)2015-2019

Rivers state had was upwardtrending external debt from December 2015 to December 2019. Its external debtrose slightly by 0.19% from $78.28m in December 2018 to $78.43m in December2019 (see Chart 90).

Chart 90: RiversState External Debt ($'m) 2015-2019

Source: DMO,Proshare Research

Delta State

Although the state is richlyendowed with various resources, especially oil, the resources are yet to befully harnessed to significantly improve the welfare of the people. Besidesabundant oil and gas, the state has a variety of other resources and faciltieswhich gives it comparative advantage over other states in the Federation. Theseresources include: solid minerals such as silica, lignite and kaolin; abundantland for cropping and plantation agriculture; forest resources; water bodiesfor recreation and tourism; aquatic resources with vast potentials foraquaculture, several port, etc.

The Delta states economy isprimarily dependent on its revenue derived from FAAC. Its primary source of itsIGR is its PAYE

Delta State Total Revenue

In 2019, Delta state recordedan increase in its total revenue by 4.37%. Its total revenue increased fromN272.07bn in 2018 to N283.96bn in 2019. Delta states major revenue comes fromits FAAC. Its FAAC accounted for 77.22% of its total revenue while its IGRaccounted for 22.78% of its total revenue in 2019.  In 2019, it recorded a total allocated FAACof N219.28bn while its IGR was N64.68bn.

Chart 91:  Delta State Total Revenue (N'bn) Breakdown2019

Source: NBS,Proshare Research 

Delta State IGR Breakdown

Delta's state major source ofIGR is its PAYE and its MDAs. In 2019, it derived  N47.4bn from its PAYE while N8.01bn wasderived from its MDAs.

Chart 92: DeltaState IGR (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Delta State Domestic Debt

Delta state domestic debtincreased marginally by 2.22% in December 2019. Its domestic debt increasedfrom N228.81bn in December 2018 to N233.89bn in December 2019 (see Chart 93).

Chart 93: DeltaState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Delta State External Debt

Delta state external debtdeclined marginally by -1.17% in December 2019. Its external debt declined from$63.27m in December 2019 to $62.53m in December 2018 (see Chart 94).

Chart 94: DeltaState External Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Kaduna State

Kaduna state is an industrialcentre of Northern Nigeria and the Middle Belt, Manufacturing products liketextiles, machinery, steel,  aluminum,petroleum products and bearings

Kaduna State Total Revenue

Kaduna states total revenuegrew by 14%  in 2019. Its total revenueincreased to N112.06bn in 2019 from N98.3bn in 2018. Its major source ofrevenue was revenue derived from FAAC allocation. In 2019, its total FAACallocated was N67.1bn (59.88% of total revenue) while its IGR was N44.96bn(40.12% of total revenue).

Chart 95: KadunaState Total Revenue (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Kaduna State IGR

Kaduna state's major source ofits IGR is derived from its MDAs and PAYE. In 2019, its MDAs generated revenueof N19.01bn while N11.69bn was generated from PAYE (see Chart 96).

Chart 96: Kaduna State IGR (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Kaduna State Domestic Debt

Kaduna state domestic debt wasN78.9bn as of December 2019. Its domestic debt declined by -6.78% in 2019, itsdomestic debt declined from N84.64bn in December 2018 to N78.9bn in December2019 (see Chart 97).

Chart 97: KadunaState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research

Kaduna State External Debt

Kaduna state's external debtgrew by 144.13% in December 2019. Its external debt increased from $227.25m inDecember 2018 to $554.78m in December 2019 (see Chart 98).

Chart 98: KadunaState External Debt ($'m) 2015-2019

Source: DMO,Proshare Research

Sokoto State

Sokoto State Total Revenue

Sokoto state's total revenueincreased slightly in 2019. Its total revenue increased by 1.72% in 2019. Itstotal revenue increased from N73.2bn in 2018 to N74.48bn in 2019. The majorsource of its revenue was its FAAC, which accounted for 74.48% of the state'stotal revenue and 25.52% of its total revenue was generated from its FAAC. In2019, its total FAAC allocated was N55.48bn while its IGR was N19.01bn (see Chart 99).

Chart 99: SokotoState Total Revenue (N'bn) Breakdown 2019

Source: NBS,Proshare Research 

Sokoto State IGR

Sokoto state's major source ofits revenue was derived from Other taxes and PAYE. In 2019, revenue derivedfrom other taxes was N11.61bn while revenue derived from PAYE was N5.95bn (see Chart 100).

Chart 100: SokotoState IGR (N'bn) Breakdown 2019

Source: NBS,Proshare Research

Sokoto State Domestic Debt

Sokoto state domestic debtincreased significantly by 23.58% in December 2019. Its domestic debt had anupward trend and increased consistently yearly, its domestic debt increasedfrom N38.6bn in December 2018 to N47.7bn in December 2019 (see Chart 101)

Chart 101: SokotoState Domestic Debt (N'bn) 2015-2019

Source: DMO,Proshare Research 

Sokoto State External Debt

Its external debt declinedslightly by -3.60% in December 2019. Its external debt declined from $39.22m inDecember 2018 to $37.81m in December 2019 (see Chart 102).

Chart 102: SokotoState External Debt ($'m) 2015-2019

Source: DMO,Proshare Research

Table 20: Debt to Revenue PerState-A "COVID" chill

The high debt to revenue ratio across the various states ofthe federation is another source of concern. Accordingto the DMO guidelines on borrowing, no state should have outstanding loans thatare more than 50% of their total revenues in the previous 12 months.

However, statisticsprovided by the FRC in its 2018 Annual Report show that all the states haddebts beyond 50% of their previous 12-month revenues. Lagos Staterecorded the highest debt to revenue ratio. It had net revenue of N119.02bn,with a total debt of N968.16bn. This left the state with a debt to revenueratio of 813.41%. It also means that the state had gone beyond the DMO limit by763.41%. Lagos was quickly followed by Osun State with a debt to revenue ratioof 781.7%. While it had net revenue of N22.84bn, its total public debt stood atN178.52bn.

This means that the state had a debt torevenue ratio of 781.71% and had gone beyond the limit set by the DMO by731.71%. Other top states in terms of highdebt to revenue ratios include Cross River, Ekiti, Ogun, Plateau, Edo, Bauchi,Adamawa, Kaduna, Nasarawa, Imo and Oyo states. The spread of the coronavirus isprojected to worsen the state's debt to revenue ratio in 2020 (seeTable 20). 

Illustration 19: Understanding the Challenges, Mining the Opportunities

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