INSTANT NEWS

A recent report by Economic Confidential, a subsidiary of PR Nigeria, has highlighted seven states, including Lagos, Ogun, Rivers, Kaduna, Kwara, Oyo, and Edo, as the most financially viable states in Nigeria for the year 2022. The information was shared by Zekeri Idakwo, the Assistant Editor of Economic Confidential, during a press briefing and the presentation of the 2022 Annual States Viability Index Report in Abuja.

Based on figures released by the Nigerian Bureau of Statistics and the Federal Account Allocation Committee, the report revealed that the Internally Generated Revenue (IGR) of all 36 states totaled N1.8 trillion in 2022, surpassing the N1.76 trillion recorded in 2021. Lagos, in particular, stood out with an IGR of N651 billion, surpassing the combined IGR of 30 other states that were significantly lower and poor in comparison to their allocations from the Federation Account.

A breakdown of the report showcased the financial performance of the seven most viable states in contrast to their federal allocations. For instance, while Lagos received N370 billion from the Federation Account, its IGR stood at N651 billion. Other states like Ogun, Rivers, Kaduna, Kwara, Oyo, and Edo also demonstrated substantial IGR relative to their federal allocations.

On the flip side, six states, including Bayelsa, Akwa Ibom, Katsina, Taraba, Yobe, and Kebbi, were declared insolvent states as they failed to generate up to 10% of their total allocations received from the Federal Government in 2022. Bayelsa, at the bottom of the list, received N273 billion but generated only N15.9 billion, representing 5.81% of the allocations. The report emphasized that improving the IGR of these states requires a proactive approach such as diversification of the economy into productive sectors, reducing reliance on monthly Federation Account revenues from the oil sector.

Idakwo pointed out that some states struggled to attract investments due to various socio-political and economic challenges, including insurgency, kidnapping, armed banditry, and conflicts between herders and farmers. The report underscores the need for these states to address these issues to enhance their economic viability beyond monthly allocations.

Nigeria's capital importation has seen a significant downturn, with a notable decline to $1.03 billion in the second quarter of 2023, marking a substantial drop from the $1.5 billion recorded in the same period in 2022. This decrease, amounting to 32.90%, was reported by the National Bureau of Statistics (NBS). Additionally, the NBS report highlights a 9.04% decrease compared to the $1.13 billion recorded in the first quarter of 2023.

Capital importation is a term encompassing all foreign investments or monetary inflows into Nigeria's economy, including funds directed towards investments, trade, or business expansion.

The Bureau's data reveals that investment claimed the lion's share, accounting for 81.28% of total capital importation in Q2 2023, equivalent to $837.34 million. Portfolio investment followed with 10.37%, amounting to $106.85 million, and foreign direct investment with 8.35%, totaling $86.03 million.

In terms of sectors, the production sector led the inflow, capturing $605.04 million, which constitutes 58.73% of total capital imported in Q2 2023. The banking sector followed closely with $194.58 million, equivalent to 18.89%, and shares accounted for $68.63 million, or 6.66%.

The NBS data further indicates that the majority of capital importation during the reference period originated from the United States, contributing $271.92 million (26.39%). Singapore and the Republic of South Africa followed with $177.44 million (17.22%) and $136.95 million (13.29%) respectively.

Lagos State retained its position as the top destination for capital importation in Q2 2023, attracting investments totaling $778.06 million, equivalent to 75.52% of the total capital. Abuja ranked second with $194.28 million, representing 18.86% of the capital inflow.

The report also highlighted the financial institutions that played a significant role in capital importation. First Bank of Nigeria Limited emerged as the leading recipient, with capital inflow of $323.13 million (18.23%). It was followed by Citibank Nigeria Limited, which received $187.77 million (12.23%), and Rand Merchant Bank with $126.03 million (6.47%).