Thirty-three states and the Federal Capital Territory (FCT) are united in their opposition to more cash for Lagos, Kano and River states in the proposed Revenue Formula, it was learnt yesterday.

The three states are being considered for a larger share of the national revenue because of their high-yielding Internally Generated Revenue (IGR) profile.

But, the 33 states and the FCT are insisting on the present formula for the sharing of the IGR.

The sharing formula for the 10 per cent IGR by the states is equality (7.5 per cent) and efforts (2.5 per cent).

The Revenue Mobilisation Allocation and Fiscal Commission(RMAFC) is weighing the options on how best to resolve the matter.

The IGR is one of the five principles being applied to revenue sharing among the states with a 10 per cent weight attached to it.

Investigation showed that although most states want more revenue, they do not want the IGR shared based on their performance.

A source, who spoke in confidence, said: “The states (like Lagos , Rivers and Kano ) that are doing well in revenue generation are also insisting that each state should be rewarded by what it generates internally.

“Most of the 33 states, which are rated as “rural” are opposed to performance as the basis for sharing the 10 per cent IGR. I think they want to be protected by states with huge revenue base.

“So, even among the states, there is a subtle cold war over how the IGR should be managed or shared. It is a scenario that RMAFC is confronted with.

“It has been difficult to reconcile these two positions over the years. But with the latest field work being done by RMAFC, the commission will weigh all the indices.

“All the states and 774 local government areas also have opportunity to air their views on this matter. RMAFC will consult extensively on this new revenue allocation formula.”

An RMAFC memo obtained by The Nation gives graphic details of the conflict among the states and local government areas on IGR.

The memo also suggested that RMAFC may look at the issue, which is causing friction among the states.

The document reads: “As members may be aware, Internally Generated Revenue (IGR) is one of the factors used on the Horizontal Revenue Formula which is the formula used in sharing revenue amongst the states and Local Government Areas. The weight assigned to the IGR factor is 10 per cent of the Federation Account.

“The factor was introduced sometime in 1991 and the idea it was to encourage and reward States and Local Governments that look inwards in terms of their financial needs instead of relying mainly on the monthly allocations from the Federation Account.

“When the factor was first applied in 1991, the Commission used absolute quantum of IGR by States and Local Governments as proxy in allocating revenue under the factor. “This approach was greeted with protests from most of the states as Lagos, Rivers and Kano States were taking more than 50 per cent of the total allocation under IGR.

“Based on the protests, Decree 102 of 1992 (now Act) introduced ‘internal revenue effort’ as the proxy to be applied instead of using the absolute quantum of IGR. That approach too was found to be lopsided as States with smaller revenue base were benefiting much more than those with larger revenue base and capacities.

“Specifically, the ‘rural States’ were getting twice the allocation of states like Lagos , Kano and Rivers states .

“After using the two extremes, the military government at that time had to find a middle ground in solving the problem. Consequently, it directed that the 10 per cent be divided into two parts namely; equality (7.5 per cent) and efforts (2.5 per cent) and applied in allocating revenue under the factor. Since then the Commission has been using equality and efforts in all its Indices reviews.

“However, members may also wish to be informed that after the 2006 Indices review, the Commission received several complaints from States and Local Governments arguing that the Commission was actually rewarding equality and not IGR efforts as originally intended in the Act.

“The Commission in Plenary, after studying the complaints, agreed that in all subsequent reviews the entire 10 per cent be applied, using internal revenue effort.

“This decision may not solve the problem because the states with lower revenue base and capacities are still going to get more allocation under the factor than those with larger revenue base and capacities.

“For example, if Ebonyi State can generate N1.5 billion this year, it will be easier for the state to double the figure next year to N3 billion and get 100 per cent effort than for Lagos State to double its N20 billion naira to N40 billion the following year. Perhaps Lagos State might end up getting 20 per cent effort, thereby putting it at a disadvantageous position. At any rate, the law is very clear and the Commission should be seen to be acting in accordance with the law.

“However, the Commission may consider this issue in the ongoing process of reviewing the Revenue Allocation Formula.”

http://www.thenationonlineng.net/2011/index.php/news/44343-33-states-oppose-more-cash-for-lagos-rivers-kano.html

When I say people should burn down their state governors and LG chairmen, some of them feel insulted.
If your state and mine cannot generate revenue outside oil, then what are their reasons for existence? It is usual for failures to oppose the rewards of those who have succeeded; shame on the 33 state and FCT. Awuf luv'n phucks.

Just like most governors and LG bosses, the majority of Nigerians are awuf luv'n phucks.

this is serious wahala.

.....waiting on kobo to analyse this piece.

Lazy leaders. Giv us true federalism n dier wil b no nid 4dis bulshits

I have always advocated a drastic approach to tackling this issue. Oil allocation must stop before many of these states will be serious about developing themselves. Any "oil money" should henceforth only go into funding dedicated infrastructure projects to help the states utilize their own resources, and any state that cannot run itself from its IGR has no business being in existence.

Until we adopt a radical, "necessity-is-the-mother-of-invention" approach to this issue, our fiscal structure will remain a mess.

In many ways, Lagos has brought this on herself. That state is always at the forefront of asking for more federal funds, without considering that as by far the most industriliased piece of real estate in the country, she is shooting herself in the foot. Reason? Imagine lagos becomes the next Bangalore in Nigeria (which is very possible); under the current revenue sharing formula, their taxes will go to all the other states of Nigeria as awuf, instead of into development.

Nigerians don't even realise the scope of what they are playing with.

Beaf: When I say people should burn down their state governors and LG chairmen, some of them feel insulted.
If your state and mine cannot generate revenue outside oil, then what are their reasons for existence? It is usual for failures to oppose the rewards of those who have succeeded; shame on the 33 state and FCT. Awuf luv'n phucks.

Just like most governors and LG bosses, the majority of Nigerians are awuf luv'n phucks.

I agree with you 100%

Beaf: In many ways, Lagos has brought this on herself. That state is always at the forefront of asking for more federal funds, without considering that as by far the most industriliased piece of real estate in the country, she is shooting herself in the foot. Reason? Imagine lagos becomes the next Bangalore in Nigeria (which is very possible); under the current revenue sharing formula, their taxes will go to all the other states of Nigeria as awuf, instead of into development.

Nigerians don't even realise the scope of what they are playing with.

so whats your position on it ?

i think its really a shame that the others "two for the price of one" states are literally parasiting heavily on lagos revenue, at this rate Lagos can never attain her suppose and full potential - into a megacity.

Lagos financial debt is current almost 4000% of her revenue.

Lagos has the most capital/ financial burden of any state, being the commercial capital of the country of which thousands migrate to daily.

On matter what is built in Lagos, as long as this current structure is in place- Lagos will ultimate fail.

SUMMARY , this structure is absolutely not sustainable and need to be reviewed.

steps to be taken by lagos

1st. stop payment to the FG until the matter is resolved.

2, get a court injunction to the effect.

3. Send / Threaten to send any un-productive person out of Lagos.

4. Stop accepting every FG projects and demand to have the Fg relocate some of the seaports.

5. define a business model for lagos - financial or industrial. having the two will inconvenience the other esp financial .



BY THE WAY, HOW COME ONITSHA DOESNT GENERATE AS MUCH REVENUE AS THESE THREE ??

BIGGEST MARKETS ?

BIGGEST TRANSPORT HUB.

HIGHEST REAL ESTATE AFTER ISLAND AND ASOKORO, A MODERATE SIZE SHOP ON A-LINE IN ONITSHA GOES FOR OVER 25 MILLION PER ANNUM.

A PIECE OF LARGE AROUND MAIN MARKET FETCHES UPWARDS OF 700 MILLION.

ONITSHA HAS OVER TEN THOUSAND BILLIONAIRE IMPORTER

HUNDREDS OF INDUSTRIES.

no reply yet ?

Pls confirm, bomb blast in kaduna

where about in kaduna ?

picolo01: i think its really a shame that the others "two for the price of one" states are literally parasiting heavily on lagos revenue, at
BY THE WAY, HOW COME ONITSHA DOESNT GENERATE AS MUCH REVENUE AS THESE THREE ??

BIGGEST MARKETS ?

BIGGEST TRANSPORT HUB.

HIGHEST REAL ESTATE AFTER ISLAND AND ASOKORO, A MODERATE SIZE SHOP ON A-LINE IN ONITSHA GOES FOR OVER 25 MILLION PER ANNUM.

A PIECE OF LARGE AROUND MAIN MARKET FETCHES UPWARDS OF 700 MILLION.

ONITSHA HAS OVER TEN THOUSAND BILLIONAIRE IMPORTER

HUNDREDS OF INDUSTRIES.

There is no standard mechanism for utility billing, tax collection or revenue generation unlike Lagos state. Money and business could be flowing but nothing comes to the government if they are not collecting regular taxes from this businesses. You just have to find a way of registering, monitoring this business and find a way of collecting and tracking their prompt payments of taxes to the government.

picolo01: i think its really a shame that the others "two for the price of one" states are literally parasiting heavily on lagos revenue, at this rate Lagos can never attain her suppose and full potential - into a megacity.

Lagos financial debt is current almost 4000% of her revenue.

Lagos has the most capital/ financial burden of any state, being the commercial capital of the country of which thousands migrate to daily.

On matter what is built in Lagos, as long as this current structure is in place- Lagos will ultimate fail.

SUMMARY , this structure is absolutely not sustainable and need to be reviewed.

steps to be taken by lagos

1st. stop payment to the FG until the matter is resolved.

2, get a court injunction to the effect.

3. Send / Threaten to send any un-productive person out of Lagos.

4. Stop accepting every FG projects and demand to have the Fg relocate some of the seaports.

5. define a business model for lagos - financial or industrial. having the two will inconvenience the other esp financial .

The same way every other states feeds on crude oil revenue and with this formula for IGR . . . . there is definitely no incentive for any other incompetent state to improve on their own IGR :O. Provided there is free money from crude oil and IGR, well who wants to stress himself by developing other sectors of their own economy. Give every states the right to run its destiny as it seems fit and let them pay taxes to the weak central goverment and that should solve all these laziness around.

u re right sha

picolo01: this is serious wahala.

.....waiting on kobo to analyse this piece.

Our people talk say "as you lay your bed, na so you go lie in it"! Wetin you wan make I talk?

A source, who spoke in confidence, said: “The states (like Lagos , Rivers and Kano ) that are doing well in revenue generation are also insisting that each state should be rewarded by what it generates internally.

“Most of the 33 states, which are rated as “rural” are opposed to performance as the basis for sharing the 10 per cent IGR. I think they want to be protected by states with huge revenue base.

“So, even among the states, there is a subtle cold war over how the IGR should be managed or shared. It is a scenario that RMAFC is confronted with.

“It has been difficult to reconcile these two positions over the years. But with the latest field work being done by RMAFC, the commission will weigh all the indices.

“All the states and 774 local government areas also have opportunity to air their views on this matter. RMAFC will consult extensively on this new revenue allocation formula.”

We have a formula that rewards states that are doing well,and essentially ignores States that may need additional funds to help them do better. So Lagos should not back down oo . . . get as much as you can of that national loot.