Kogi State, located at the confluence of Nigeria’s two largest rivers—the Niger and Benue—is often referred to as the "Confluence State." Its strategic central location has made it a hub for transportation, commerce, and administration in Nigeria’s North Central region. With rich natural resources, vast agricultural potential, and a growing population, Kogi State holds significant developmental promise.
A major factor in achieving the state’s developmental goals lies in how it receives, allocates, and utilizes public funds. This comprehensive blog post explores everything about state allocation in Kogi State, including revenue sources, sectoral budget allocations, internal revenue strategies, fiscal responsibility mechanisms, and the state’s ongoing efforts to improve transparency and accountability in public finance.
Understanding State Allocation in Nigeria
In Nigeria, state allocation refers to the share of national revenue distributed among the 36 states and the Federal Capital Territory. The Federation Account Allocation Committee (FAAC) is responsible for disbursing these funds. Revenues shared through FAAC come from:
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Oil exports and taxes
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Value Added Tax (VAT)
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Company income tax
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Import duties
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Royalties from natural resources
Each state receives a monthly allocation based on a formula that includes factors like population size, land mass, revenue generation ability, and other socio-economic indicators. These funds are often the largest portion of a state’s budget and are vital to financing public services and capital projects.
Kogi State's Revenue Sources
Like other Nigerian states, Kogi generates revenue from both federal allocations and local income. The state's total revenue is a combination of:
1. Statutory Allocations from FAAC
Kogi State receives a monthly allocation from FAAC which remains a major revenue stream. For instance, in February 2024, the state earned a gross revenue of over ₦7.4 billion, including ₦5.17 billion in statutory allocation, ₦2.08 billion from VAT, and ₦141.8 million as Exchange Gain/Non-oil revenue. These allocations form the foundation of Kogi's financial planning.
2. Internally Generated Revenue (IGR)
The Kogi State Internal Revenue Service (KGIRS) is responsible for collecting the state's IGR, which includes taxes, levies, licenses, and fees. In 2024, Kogi State’s IGR averaged ₦2.3 billion monthly, amounting to an annual estimate of ₦27.73 billion. The government aims to raise this to ₦6 billion monthly by intensifying tax reforms, digitizing collections, and promoting tax compliance.
3. Grants and Loans
Kogi State also accesses grants from development partners and loans from financial institutions, which are often tied to infrastructure and social development projects.
The 2024 Budget: Budget of Consolidation and Continuity
Governor Yahaya Bello presented the 2024 Budget titled “Budget of Consolidation and Continuity,” with a total estimate of ₦258.27 billion. The budget builds on the foundation of previous years, aiming to consolidate developmental strides and maintain continuity in project implementation.
Budget Breakdown:
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Recurrent Expenditure: ₦145.73 billion (56.43%)
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Capital Expenditure: ₦112.54 billion (43.57%)
This budget reflects a balance between maintaining day-to-day government operations and investing in new capital projects. A key strategy was to fund a significant portion of this budget from internally generated revenue, demonstrating a shift towards fiscal independence.
Sectoral Allocations in the 2024 Budget
A detailed look at the 2024 budget reveals how Kogi State plans to prioritize various sectors to promote inclusive growth and infrastructure development:
1. Education
The government allocated substantial resources to education, with institutions like the College of Education (Technical), Kabba receiving ₦4.67 billion. The funds are earmarked for improving infrastructure, recruiting more qualified staff, enhancing technical and vocational education, and expanding access to quality learning.
2. Healthcare
Healthcare received a sizeable share of capital and recurrent expenditure, focused on renovating general hospitals, equipping primary healthcare centers, and improving access to affordable healthcare across rural areas.
3. Agriculture
Agriculture remains a critical sector for food security and job creation. The budget funds mechanized farming initiatives, farmer cooperatives, agro-processing hubs, and rural access roads to boost agricultural productivity and reduce rural poverty.
4. Infrastructure and Public Works
Kogi’s infrastructure spending includes road construction, bridge rehabilitation, and public utilities. The budget targets projects that connect rural communities to urban centers, stimulate commerce, and improve quality of life.
5. Water Resources and Sanitation
Investments were made in providing clean water and sanitation through borehole projects, rural water schemes, and urban water supply improvements.
Enhancing Internally Generated Revenue (IGR)
To strengthen financial sustainability, the Kogi State government has launched an ambitious plan to increase its monthly IGR to ₦6 billion. This plan includes:
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Broadening the tax base to include the informal sector
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Digitizing tax collection systems to eliminate leakages
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Public education campaigns on the importance of tax compliance
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Economic diversification through tourism, mining, and industrialization
The KGIRS is also collaborating with other state ministries and local governments to improve coordination and revenue tracking.
Fiscal Responsibility and Debt Management
The government of Kogi State has continued to show commitment to responsible fiscal governance. Emphasis has been placed on:
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Reducing debt servicing obligations
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Avoiding unsustainable borrowing
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Tying loans to capital projects with measurable impact
By maintaining this disciplined approach, the state can avoid the fiscal crisis that plagues some sub-national governments in Nigeria.
Transparency and Citizens’ Engagement
Kogi State has embraced transparency and citizen participation through initiatives like the publication of a Citizens’ Budget. This document simplifies the budget for easy understanding by residents, helping them track how government funds are allocated and used. The Citizens’ Budget includes:
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Key revenue sources and estimates
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Major projects and their locations
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Budget summaries for health, education, roads, and water
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Performance tracking and implementation timelines
This transparency builds public trust and enhances accountability.
Challenges in State Allocation
Despite its achievements, Kogi State faces some challenges:
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Dependence on federal allocation exposes the state to risks from oil price fluctuations and macroeconomic instability.
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Tax evasion and poor compliance remain persistent problems.
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Infrastructural deficits, especially in rural areas, hinder economic inclusion.
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Youth unemployment and limited access to finance for SMEs continue to slow economic development.
Opportunities for Growth
Kogi State is well-positioned to leverage several opportunities:
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Its central location makes it a natural hub for logistics and commerce.
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The mining sector, with abundant deposits of coal, iron ore, and limestone, presents huge investment potential.
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With the right infrastructure, tourism in areas like Mount Patti and the confluence of the Niger and Benue rivers could become a major revenue source.
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The state's expanding IGR platform can provide greater financial independence and resilience.
Conclusion
Kogi State’s approach to state allocation demonstrates a solid commitment to fiscal prudence, sustainable development, and citizen engagement. The 2024 budget reflects an effort to strengthen internal revenue, support strategic sectors, and invest in infrastructure that benefits both urban and rural communities.
While challenges remain, the state's reforms in tax administration, improved transparency, and diversified investments offer a promising outlook. Kogi is taking meaningful steps to move from dependency to self-reliance, ensuring that public funds are used effectively for the progress and well-being of its people.
With continued focus, innovation, and collaboration between government and citizens, Kogi State is well on its way to unlocking its vast economic potential and securing a prosperous future for all.
