The 2024 fiscal performance report by BudgIT, analyzed by Mohammed Bello of the African Centre for Innovative Research and Development (AFRI-CIRD), reveals critical insights into the economic health of Nigerian states, with Imo State ranking among the worst performers.
Positioned in the bottom five alongside Plateau, Yobe, Bayelsa, and Jigawa, Imo’s ranking indicates significant fiscal challenges, including low revenue generation, high operational costs, and possibly unsustainable debt burdens compared to other states in Nigeria.
This ranking underscores a worrying fiscal disparity among Nigerian states.
While states like Rivers, Lagos, and Anambra exhibit strong fiscal management with high Internally Generated Revenue (IGR) and manageable debts, Imo and its peer states in the red tier struggle to maintain financial stability.
Imo’s position reflects a heavy reliance on federal allocations rather than robust IGR, highlighting its vulnerability to fluctuations in federal revenue, particularly from oil proceeds, which do not directly benefit the state’s finances.
The performance gap also impacts the state’s capacity to provide essential services and invest in infrastructure critical for socio-economic development.
Poor fiscal health means Imo State is less able to fund basic public services such as health, education, and infrastructure development independently.
This leads to uneven development when compared to top-performing states that can sustain their budgets with local revenue and efficient spending.
Imo’s fiscal challenges could be tied to structural economic weaknesses and possible inefficiencies in tax collection and revenue mobilization.
Unlike Lagos, the commercial hub with a diverse economy, or Rivers, buoyed by oil revenue, Imo’s economy is not sufficiently diversified to generate consistent non-federal revenue.
This overreliance on federal allocations tends to limit long-term planning and investment in critical sectors, undermining sustainable development.
The report also raises concerns about debt sustainability in states like Imo. Poor fiscal management often leads to higher borrowing to cover operational deficits, pushing states into debt cycles that are difficult to service without improving revenue streams.
This poses risks not only to the state’s financial health but also to its future development prospects if borrowed funds are not directed to productive sectors.
To address these fiscal challenges, Imo State must prioritize strategies to diversify and increase its Internally Generated Revenue.
This includes broadening tax bases, reforming tax administration, and exploring alternative revenue sources such as tolls, levies, and investments in viable local industries.
Furthermore, enhancing transparency and accountability in fiscal management will improve public trust and encourage efficient allocation of resources.
Finally, Imo could benefit from studying the fiscal strategies of top-performing states like Lagos and Rivers.
Developing collaborative frameworks for peer learning and adapting best practices could help improve financial management, reduce wasteful spending, and boost economic resilience.
Without such reforms, Imo State risks further fiscal distress, which could stunt its social and economic progress relative to other Nigerian states.