How will Nigeria’s sub-nationals sustain IGR drive?

A recent report by the National Bureau of Statistics has revealed a 26 per cent increase in Internally Generated Revenue (IGR) for sub-nationals in Nigeria in 2023. Lagos, the Federal Capital Territory (FCT), and Rivers states emerged as the top performers in terms of IGR growth. To delve deeper into this significant uptick in revenue generation and discuss the strategies employed to sustain this growth, Michael Ango, the Acting Chairman of the FCT Internal Revenue Service, sat down with CNBC Africa for an exclusive interview. Ango highlighted the dynamic landscape in which sub-nationals function, emphasizing that as revenues increase, so do the responsibilities of state governments. In the case of the FCT, there is a concerted effort led by the Minister, Yeson Nwiki, to transform the infrastructure of the region. This ambitious agenda necessitates a robust revenue stream, prompting the FCT to revamp its revenue structure. Ango, who assumed his role in August, outlined his mandate to enhance revenue collection from various sources within the FCT. One of the key focus areas for the FCT's revenue generation strategy is the harmonization of taxes and the development of a coherent revenue ecosystem. Ango underscored the importance of optimizing revenue collection from sources such as personal income tax, pay-as-you-earn deductions, direct assessments, withholding tax, and capital gains tax. Additionally, efforts are underway to streamline revenue collection across the FCT's six area councils, ensuring a centralized and efficient system. In line with modernization and efficiency goals, the FCT is investing in technological solutions to facilitate seamless tax collection. Ango revealed plans to upgrade existing platforms and introduce multiple payment channels to enhance taxpayer convenience. By leveraging technology and fostering collaborations with partner agencies, including the Federal Inland Revenue Service (FIRS), the FCT aims to improve revenue collection processes while prioritizing taxpayer compliance. An important aspect of the discussion revolved around the issue of subnationals' dependency on federal allocations. While acknowledging the role of federal funding, Ango emphasized the need for states to diversify their revenue sources and reduce reliance on federal allocations. He urged states to adopt a mindset shift towards prioritizing internally generated revenue as a sustainable and controllable income stream. By enhancing IGR potential, states can mitigate the risks associated with fluctuations in federal funding and achieve financial autonomy. As the interview concluded, Ango reiterated the critical importance of states looking inward and strategically expanding their revenue base. By fostering a culture of self-reliance and proactive revenue generation, sub-nationals like the FCT can chart a path towards fiscal stability and long-term financial growth.