Everything You Need To Know About State Allocation For Kano State

Kano State, Nigeria’s commercial nerve center of the North and one of the most populous states in the country, plays a critical role in the socio-economic fabric of Nigeria. With a strong presence in agriculture, trade, and manufacturing, Kano's fiscal structure, especially how it receives and utilizes federal and internally generated funds, is central to its development. In 2024, Kano embarked on an ambitious budget aimed at transforming its economy and improving livelihoods.

This blog post offers a detailed examination of everything related to state allocation for Kano State in 2024, covering how funds are received, budgetary priorities, execution strategies, and challenges faced in implementation.

Understanding State Allocation in Nigeria

Before diving into Kano State’s specifics, it is important to understand how state allocation works in Nigeria. The country operates a federal system where revenue generated—mostly from oil, taxes, customs duties, and VAT—is shared among three tiers of government.

The Federation Account Allocation Committee (FAAC) distributes this revenue monthly based on an agreed formula:

• Federal Government: 52.68%

• State Governments: 26.72%

• Local Governments: 20.60%

Additionally, states benefit from Value Added Tax (VAT) allocations and sometimes derivation funds if they are resource-producing states. While Kano is not an oil-producing state, it benefits significantly from VAT, especially because of its massive internal market and trading activities.

Federal Allocation to Kano in 2024

From January to June 2024, Kano State received over ₦62 billion in federal allocations, positioning it among the top 10 states receiving the highest federal disbursements. This was primarily due to its large population and high VAT contributions, given the vibrant market economy in cities like Kano and Wudil.

Federal allocation forms a critical part of Kano's fiscal budget, accounting for over 40% of its annual revenue, according to budget performance documents.

Kano State’s 2024 Budget Overview

In January 2024, Governor Abba Kabir Yusuf presented a record-breaking budget proposal to the Kano State House of Assembly. The total size of the budget was ₦437.3 billion, titled the "Budget of Restoration and Transformation."

Breakdown of the Budget:

• Capital Expenditure: ₦296.2 billion (67.7%)

• Recurrent Expenditure: ₦141.1 billion (32.3%)

The focus was on restoring public trust and transforming public services through massive investment in infrastructure, education, and health. The capital expenditure component was heavily tilted towards projects in transportation, urban renewal, housing, water, and energy.

Internally Generated Revenue (IGR)

Despite receiving substantial federal allocations, Kano has made consistent efforts to boost its Internally Generated Revenue (IGR). In 2023, Kano's IGR stood at ₦36.6 billion. As of Q3 2024, the state had already surpassed this figure, collecting ₦45.8 billion, marking a 25% year-on-year increase.

Drivers of IGR Growth:

1. Tax Reforms: The state restructured its tax system and adopted digital tools to plug revenue leakages.

2. Automation: Introduction of e-payment platforms for business registration, property taxes, and vehicle licensing.

3. Market Levies and Fees: Increased collection from the state’s extensive markets and motor parks.

4. Private Sector Involvement: PPP initiatives in the transport and housing sectors yielded additional revenue.

While Kano still relies heavily on federal allocations, the upward trend in IGR reflects increasing fiscal independence and better governance.

Key Sectoral Allocations

Kano’s 2024 budget reveals a strategic focus on core development sectors:

1. Education – ₦70 billion

Education received one of the highest allocations in the budget. The funds were used to:

• Renovate over 500 dilapidated primary and secondary schools.

• Recruit and train more than 5,000 teachers.

• Provide free uniforms and learning materials to public school pupils.

• Construct 30 new science and technical colleges.

2. Health – ₦45 billion

The health sector focused on reviving moribund facilities and building new primary healthcare centers across rural LGAs. Funds were allocated for:

• Upgrading general hospitals and specialist centers.

• Maternal and child health initiatives.

• Recruitment of over 2,000 health workers.

3. Infrastructure – ₦112 billion

This was the cornerstone of the capital expenditure. Major initiatives included:

• Completion of road dualization projects across the metropolis.

• Construction of rural access roads to enhance agricultural transportation.

• Installation of solar streetlights in Kano city and surrounding LGAs.

4. Water and Sanitation – ₦18 billion

In response to rising cases of cholera and other waterborne diseases, Kano revived several waterworks and constructed boreholes in underserved communities.

Budget Performance (Mid-Year Review)

By the end of the second quarter of 2024, Kano had achieved the following:

• Total revenue realized: ₦181.6 billion

• Capital budget implementation rate: 58%

• Recurrent expenditure implementation rate: 76%

While recurrent expenses like salaries and overheads were largely met, implementation of capital projects lagged due to procurement delays and inflationary pressures.

Challenges in Budget Implementation

Kano's fiscal performance in 2024 was not without challenges. Notable issues included:

• Inflation: Rising costs of construction materials affected budget estimates.

• Exchange Rate Fluctuations: Impacted costs for imported project materials.

• Procurement Delays: Bureaucratic bottlenecks slowed down project execution.

• Insecurity in rural areas: Affected movement of goods and labor for agricultural projects.

The state government has acknowledged these challenges and initiated reforms such as a new procurement framework and security task forces to mitigate risks.

Economic Context and Outlook

Kano's fiscal strategy in 2024 aligned with broader national economic policies. While Nigeria battled high inflation and naira depreciation, Kano stayed focused on expanding its economic base through:

• Urban Renewal Projects: Designed to attract investors and improve quality of life.

• Agricultural Transformation Agenda: Targeted at reviving rice mills and providing grants to farmers.

• Youth Empowerment Schemes: Through skill acquisition and startup grants.

Looking ahead, the proposed 2025 budget (yet to be passed) is projected at ₦520 billion, further expanding on current initiatives and aiming for greater capital investment.

Conclusion

Kano State’s 2024 state allocation and budget management exemplify a balanced approach to fiscal governance. By combining substantial federal allocations with increasing internally generated revenue, the state has made commendable progress in capital development, particularly in infrastructure, education, and health.

Although implementation challenges remain, the groundwork laid in 2024 has set the stage for deeper reforms and more sustainable development. If Kano maintains this trajectory and improves on transparency and execution, it could become a benchmark for fiscal excellence among northern Nigerian states.