EVALUATION OF INTERNALLY GENERATED REVENUE AND ECONOMIC GROWTH OF KANO STATE FROM 1999-2014.
CHAPTER ONE
INTRODUCTION
1.1 STUDY BACKGROUND
Internally Generated Revenue (IGR) is the revenue generated by state governments inside their jurisdiction. Taxes, fines and fees, licenses, earnings and sales, rent on government property, interests and dividends, and other sources of internal revenue are accessible to state governments.
The ability of a state government to produce revenue internally is an important issue when forming a state government. According to Babalola (2009), providing public schools, public health, and public infrastructure necessitates significant government spending, particularly in these modern times.
In addition, the state government spends money on proper security, commercial functions, and administration. As a result, given the government’s expenditure profile aimed at decreasing poverty, creating jobs, stimulating growth, and producing wealth, enough revenue at all levels of government has become critical.
State governments are also facing additional obstacles in their efforts to become less reliant on the federal government for financial resources (Anyanwu, 1999). Despite the fact that the income allocation system requires a portion of the Federation Account to be transferred to state governments, these monies are insufficient to meet expenditure requirements.
This is because the amount of the account is linked to oil revenue, which fluctuates, and state government expenditures far outstrip available resources. The problem of lack of fiscal transparency persists as a result of misuse of funds, corruption, weak internal control, and a lax attitude toward government work and property.
Despite the different sources of revenue available to the various levels of government as stipulated in Nigeria’s 1999 Constitution, petroleum still accounts for more than 80% of the annual revenue of the three tiers of government and has done so since the 1970s.
However, the sharp drop in the price of oil in recent years has reduced the revenues available for distribution to governments. According to Kiabel and Nwokah (2009), the necessity for state governments to earn appropriate money from domestic sources has thus become an issue of extraordinary urgency and importance.
This requirement emphasizes state governments’ readiness to seek new sources of revenue or to become more aggressive and imaginative in collecting money from existing ones. The rising expense of administering government, combined with declining revenue, has prompted different state governments in Nigeria to devise revenue-boosting initiatives.
Furthermore, the effects of the 2007-2009 Global Financial Crisis in Nigeria brought further financial hardship for all levels of government. State governments have been struck the hardest, with all experiencing exceptional reductions in their portion of Federation Account earnings.
One of the most noticeable differences amongst Nigeria’s 36 states is their economic, demographic, topographical, socio-cultural, and fiscal characteristics.
While some states are classified as urban due to their level of economic, agricultural, infrastructural, industrial, and technological development, others are classified as rural due to a predominance of absolute poverty, economic, agricultural, infrastructural, industrial, and technological backwardness.
Urban states in Nigeria include Kano, Rivers, Oyo, Enugu, Anambra, Kaduna, Kano, and others, whilst rural states include Ekiti, Ebonyi, Nasarawa, Zamfara, and Yobe. It is critical to understand that a state’s level of economic growth has a substantial impact on its fiscal capability and viability in Nigeria.
For example, a state’s capacity to create revenue from domestic sources is governed by its level of economic, commercial, industrial, infrastructural, and agricultural development. As a result of this assumption, metropolitan states produce more revenue from internal sources and, as a result, incur more expenditure than rural states.
This demonstrates that budgetary capacity and viability in Nigeria differ across urban and rural states. However, Kano State, the subject of this study, earns the most domestic revenue in the country. Despite the fact that the state’s population has many requirements due to overcrowding, the level of economic progress is not commendable.
1.2 THE PROBLEM’S STATEMENT
Interestingly, while much has been written about the need for improved allocation from the federation Account to states and local governments, as well as how to boost IGR of state governments in Nigeria, little attention has been paid to the relationship between internally generated revenue and state economic growth.
However, the ability of governments to earn revenue from internal sources is determined by whether the state is urban or rural.
In other words, a state’s fiscal capability and viability are determined by its commercial, industrial, economic, agricultural, infrastructural, and technological improvement and progress. Kano State, as an urban state, possesses all of the aforementioned traits.
However, the researcher is looking into Kano State’s internally generated revenue and economic growth between 1999 and 2014.
1.3 THE STUDY’S OBJECTIVES
The following are the study’s objectives:
To determine the amount of revenue generated internally in Kano State between 1999 and 2014.
To investigate Kano State’s economic growth and development between 1999 and 2014.
To investigate the relationship between locally generated revenue and Kano State’s economic growth between 1999 and 2014.
1.4 QUESTIONS FOR RESEARCH
How much revenue was created internally in Kano State between 1999 and 2014?
What was Kano State’s economic growth and development rate between 1999 and 2014?
What is the relationship between Kano State’s internal revenue and economic development between 1999 and 2014?
1.5 HYPOTHESIS
HO: There is no substantial association between Kano State’s internal revenue and economic growth between 1999 and 2014.
HA: Between 1999 and 2014, there was a considerable association between internally generated revenue and Kano State’s economic growth.
1.6 THE STUDY’S SIGNIFICANCE
The following are the study’s implications:
The study’s findings will educate on the level of internal revenue generated in Kano State, the degree of economic growth, and the relationship between internal revenue and economic growth in Kano State between 1999 and 2014.
This study will contribute to the body of literature on the effect of personality traits on student academic achievement, forming the empirical literature for future research in the field.
1.7 STUDY SCOPE AND LIMITATIONS
This research will look at the relationship between Kano State’s internal revenue and economic growth between 1999 and 2014.
STUDY LIMITATIONS
Financial constraint- Inadequate funding tends to hamper the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data gathering procedure (internet, questionnaire and interview).
Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
REFERENCES
Anyanwu, J.C. (1999), Fiscal Relations Among Nigeria’s Different Levels of Government. Paper for the NES Conference. Ibadan
R. Babalola, Boosting Government Revenue Through Non-Oil Taxes, 2009.
Boosting Revenue Generation by State Governments in Nigeria: The Tax Consultants Option, Kiabel, B.D., and Nwokah, N.G. 8th European Journal of Social Sciences, Revisited (4)
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