AN EXAMINATION OF DETERMINANTS AND IMPROVING INTERNALLY GENERATED REVENUE FOR POST INSURGENCY PERIOD

Abstract

Revenue generation is the nucleus and the path to modern development. Thus, this study assessed the various ways of enhancing internal revenue generation in Adamawa state. The research methodology entailed the use of survey research design and purposive sampling method to select respondents from Adamawa State different Finance sections and Inland Revenue Office. The primary data were collected via structured questionnaire from respondents with total of 100 personnel. Data collected were subjected to descriptive statistics and linear regression analysis model to demonstrate the real drivers of IGR in the study area. The result of descriptive statistics revealed that there are several factors hindering IGR and the system of generation. Linear regression also showed that the Challenges like insecurity and corruption, poor man power rating, inaccessible tax were jointly having a positive correlation with IGR. However, despite the huge natural endowment of Adamawa State, Considering the dwindling federal allocations and the controversial allocation measures, it is therefore recommended (among others) that the States should widen its net for the Internally Generated Revenue to achieve meaningful economic development in the very near future. The study also revealed the various methods of generating internal revenue, which are the enforcement of tax personnel, contribution, and creating awareness to the public. The findings of the study however show that revenue administration agencies need to be reviewed to generate more revenue in the country.

INTRODUCTION

Nigeria’s economic and political fortunes hang on a notoriously precarious but potentially advantageous fiscal federalist system. The system is made up of four cardinal component parts:

the Federal Government, 36 state Governments, the Federal Capital territory, Abuja and 774 Local Governments. At least in theory, Nigeria operates on the principle of federalism with three tiers of government among which the constitution allocates varying revenue generation and spending powers.

The increasing cost of running government coupled with dwindling revenue has left various state governments in Nigeria with formulating strategies to improve the revenue base. More so, the near collapse of the National Economy has created serious financial stress for all tiers of government. Hardest hit are the state governments all of whom have experienced unusual reduction in their share of the National Revenue from the Federation Account. Despite the numerous sources of revenue available to the various tiers of government as specified in the Nigeria 1999 Constitution, since the 1970s till now, over 80% of the annual revenue of the three tiers of government come from petroleum.

However, with declining global oil prices putting increasing pressure on states to explore alternative ways to shore up their revenue earnings, only 11 of Nigeria’s 36 states improved their internally generated revenue (IGR) in 2015. The latest IGR report shows that Ogun, Anambra, Borno, Edo, Bauchi, Abia, Kogi, Nasarawa, Niger, Taraba and Sokoto as the only states that bettered their 2014 records of revenue generation performance in 2015. Among the 24 states that performed poorly included Kwara, Imo, Bayelsa, Adamawa, Akwa Ibom, Benue, Cross River, Delta, Ekiti, Enugu, Gombe, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos, Ondo, Osun, Oyo, Plateau, Rivers, Yobe, and Zamfara. And Ebonyi. Overall performance of the 36 states showed that the total IGR realized for the year dropped by 3.69 per cent, from N707.86 billion in 2014 to N682.67 billion. (NBS, 2016)

The need for state and local governments to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance. This need underscores the eagerness on the part of state and local governments and even the federal government to look for new sources of revenues or to become aggressive and innovative in the mode of collecting revenue from existing sources.

Adenuga and Ogechi, (2013) observed that while the cost of administration by various level of governments keep increasing as a result of many factors, the source to finance these expenditure are drastically reducing, various State governments in Nigeria thus, need to formulate strategies to improve the revenues base. At National level and many states several ambitious strategies and projects have been adopted to find the ways of improving the IGR. It is also worthy to note that most of these efforts perfectly works for many and some policies still keep scoring an own goals in achieving their specified objectives and targets. Adamawa state with its unique socio-economic group, different sources of income and determinants of IGR, research has not been well carry out on this economic threatening area especially using quantitative analysis as this study trying to do. In view of these, this study was set out to look into ways of improving IGR as the state is approaching post Insurgency.