Governor Babajide Sanwo-Olu on Monday charged state governments to look for ways to generate more revenue rather than relying on federal allocations to run their states.
Sanwo-Olu who spoke at the opening ceremony of the Federation Account Allocation Committee (FAAC) Retreat held in Lagos with the theme: ‘Efficient Federation Revenue Allocation as a Nexus for National Economic Diversification’ emphasized that the era of relying wholly on federal allocation was over in the country.
Governor Babajide Sanwo-Olu was represented by his deputy, Dr. Obafemi Kadiri Hamzat, stressed that each state needed to diversify its source of revenue and look for ways to boost its Internally Generating Revenue, IGR, instead of waiting on federal government monthly allocation.
He also urged the federal government to look beyond oil revenue and improve diversification into the agricultural sector.
“Nigerian government needs to diversify its source of revenue. We must do anything we can to boost revenue along the line of manufacturing. It is important every state first look for ways to diversify. We must reduce our dependence on federal allocation,” he said.
Describing the FAAC as one of the most important national institutions due to the critical nature of its responsibilities, Sanwo-Olu said there is need for a new, fair and just revenue-sharing formula, for federating units to achieve a meaningful diversification and sustainable growth in IGR.
To make revenue sharing formula fairer, equitable, and more development-oriented, he suggested the need to attach increased value to population density as a critical factor, in addition to the nominal population figure.
In her keynote address, the Minister of Finance, Budget and National Planning, Hajiya Zainab Shamsuna Ahmed, who was represented by the Permanent Secretary in the Ministry, Mahmud Dutse, said the federal government had embarked on “policies and measures to improve the fiscal health of the federal government and states.
“For the states, these measures included various financing options made available in form of bailout funds, budget support facility, relaxation of conditions for borrowing and ease of doing business. Over the years, government have been committed to the efficient of our common resources through fair, just and equitable distribution of the federation revenue to the three tiers of government as monthly statutory allocations.”
She expressed concerns that states have relied largely on federal allocations to finance their budgets and described it as “not only risky but also unsustainable.”
He urged states to “give serious consideration to diverse sources of revenue at national and sub-national levels with a view to deploying appropriate measures to plug leakages and ensure effectiveness in revenue collection.”