States Share $71 Billion in Seven Years, But Poverty Persists: What’s Going Wrong in Nigeria? – In the last seven years, Nigeria’s 36 states have collectively received $71.3 billion in revenues aimed at boosting their economies and improving the welfare of their citizens. Yet, despite this substantial financial inflow, poverty remains a persistent issue across the country. The situation raises critical questions about where things are going wrong and why increased state revenues have not translated into improved living standards for millions of Nigerians.
The Revenue Paradox: More Money, Less Impact
Between 2017 and 2023, Nigerian states saw their revenues grow in nominal terms, thanks to allocations from the Federation Account Allocation Committee (FAAC) and Internally Generated Revenue (IGR). In naira terms, this growth is significant. However, due to the naira’s devaluation and economic volatility, the real value of these revenues—now standing at $71.3 billion—has diminished, with earnings plummeting to just $9.1 billion in 2023, the lowest in six years.
This nominal increase in state revenues has created an illusion of wealth. While it might seem that states are financially better off, the reality is starkly different. As Muda Yusuf, CEO of the Centre for Promotion of Private Enterprises (CPPE), aptly put it, the increase in revenue doesn’t necessarily mean that states can purchase or achieve more. The declining purchasing power means that the real benefits of these revenues are far less than what the numbers suggest.
Mismanagement and the Lack of Transparency
One of the key issues highlighted by experts is the poor management of these increased revenues. Despite having more money at their disposal, many state governments have failed to utilize these funds effectively to address critical needs like infrastructure development, education, and social welfare.
Yusuf stresses the importance of transparency and accountability in the deployment of state revenues. Without proper management and clear reporting on how funds are spent, the impact on the lives of ordinary citizens remains minimal. This mismanagement is a significant factor behind the persistence of poverty, even as state coffers grow.
Inflation, Exchange Rate, and Economic Challenges
Nigeria’s economy has been grappling with high inflation for months, which has eroded the value of state revenues. Even though inflation slightly eased to 33.40 percent in July, the cost of living remains high, with food inflation still at a concerning 39.53 percent. This economic environment has made it increasingly difficult for citizens to afford basic necessities, further entrenching poverty.
Economist Ibrahim Rafiu points out that while revenues have increased in nominal value, their real value—what they can actually buy—has decreased. This decline is largely due to the deteriorating exchange rate and persistent inflation. For any real economic development to occur, there must be a concerted effort to stabilize the currency and bring down inflation, thereby propping up the value of these revenues.
Disparities Among States: The Oil Paradox
The analysis also reveals significant disparities among states, particularly those in oil-producing regions. States like Delta, which received N296.6 billion, the highest share of the 13 percent Oil Derivation Fund in 2022, still have a large population of multidimensionally poor people. In stark contrast, Anambra, which received the lowest share of N4.5 billion, also struggles with high poverty rates.
This paradox highlights the uneven distribution of wealth and resources across the country. Despite receiving substantial revenues from oil production, many of these states have failed to invest in critical areas like education, leading to high numbers of out-of-school children. For instance, Akwa Ibom, which benefits significantly from oil revenues, still has 180,000 children out of school.
The Way Forward: Addressing the Core Issues
The current situation in Nigeria underscores the need for a more strategic approach to managing state revenues. It’s not enough for revenues to grow in nominal terms; their real value must be preserved and effectively utilized to address the pressing needs of the population.
Key areas that require immediate attention include:
- Improved Financial Management: States need to adopt more transparent and accountable practices in managing their revenues. Publishing detailed accounts and regularly auditing financial practices can help ensure that funds are spent effectively.
- Economic Stabilization: The federal government must take steps to stabilize the naira and control inflation. These measures will help increase the real value of state revenues and make them more impactful.
- Focused Investment in Social Infrastructure: States should prioritize investments in education, healthcare, and social welfare to ensure that the benefits of increased revenues reach the most vulnerable populations.
The $71.3 billion shared among Nigeria’s states over the past seven years represents a significant financial opportunity. However, the continued persistence of poverty highlights the deep-rooted issues of mismanagement, economic instability, and inequality. To break this cycle, there must be a concerted effort to improve the real value and impact of state revenues, ensuring that they are effectively used to lift citizens out of poverty and improve their quality of life. Only then can Nigeria begin to see the true benefits of its wealth.