NIGERIA

Nigeria is a federal Republic ruled by the 1999 Constitution. The head of the federation and government is the president, elected for a maximum of two four-year terms. Nigeria operates with three tiers of government: federal, state and local. There are 36 states bound through a federal agreement, one Federal Capital Territory and 774 local governments. There is a bicameral national assembly and assemblies for each state. On 1 March 2022, the National Assembly voted in support of 59 amendments to the 1999 Constitution, including bills that proposed financial and administrative autonomy for local governments. The proposed amendments must still be assented by the president and be translated into resolutions of the House of Assembly in at least 24 states before being passed into law. State governor and assembly member elections take place every four years in each one of the 36 states. The last elections for state governorship were held on 9 March 2019. The next round of general elections is expected to commence on 18 February 2023.

The structure of federalism in Nigeria began with the MacPherson Constitution of 1951 that was the first to introduce decentralisation and regional autonomy. The Lyttleton Constitution of 1954 gave rise to a more effective federal structure, by increasing the number of members of the Federal House of Representatives from 136 to 190. This enlarged number was incorporated by the Independence Constitution of 1960. In 1976, local governments were created as a third level of government and recognised as legal entities by the 1979 Constitution. The 1992, the Clifford Constitution endorsed the division of Northern and Southern provinces. The current Constitution of 1999 gave far-reaching responsibilities to local governments, including increased local authority over economic planning and development. An attempt at a local government reform was made in 2017 with the Fourth Alteration Bill No. 6, which aimed at strengthening local government administration by guaranteeing its democratic existence, funding and tenure of local councils.

Article 7 of the Constitution expresses that state governments have the power to enact legislation providing for “the establishment, structure, composition, finance and functions” of local government councils. All 774 local governments, whether in urban or rural areas, are uniform in structure and functions. They share similar sources of revenue and have the same relationships with the federal and state governments. In addition, states are empowered to create development areas and autonomous communities such as local council development areas (LCDAs), even though these administrative entities are not recognised in the 1999 Constitution. Each state has a Ministry of Local Government and Chieftaincy Affairs headed by a commissioner who is responsible for administering the state-level acts governing local governments. The state assemblies exercise oversight functions on the activities of local governments.

States are also responsible for the legislation governing local government elections. Thus, the timing of local government council elections differs from state to state. Local governments are divided into wards, each responsible for electing a single member to the local government council, which varies from 10 to 13 councillors including a chairman and a vice-chairman. These executives are elected directly, using a first-past-the-post-system for two-year terms. Even though local government elections are supposed to be held before the end of the tenure, states do not always adhere to this rule and might delay holding local elections. In such cases, the state government often appoints an interim/care-taker committee to steer the affairs of the affected local administrations until elections are held. This is unlike the state and federal government elections which are held by the Independent National Electoral Commission at designated periods. Given its special status as a Federal Capital Territory, elections in the 6 area councils of Abuja are conducted by the Independent National Electoral Commission.

The federal government operates a Department of States and Local Government Affairs that assists in promoting intergovernmental relations amongst all tiers of government. The department engages in close dialogue and collaboration on issues of mutual interest and removes frictions between federal, state and local governments. The Central Bank of Nigeria, the Federal Ministry of Finance, the Revenue Mobilisation Allocation and Fiscal Commission, the Debt Management Office and the Joint Tax Board are other federal government agencies that interact directly with the subnational governments in fiscal matters.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
768 local governments authorities and 6 area councils		36 states and the Federal Capital Territory (FCT)
Average municipal size: 266 330 inhabitants
774		37	811

OVERALL DESCRIPTION: Nigeria has a subnational government system made up of 36 states and one Federal Capital Territory (the Abuja FCT) and of 774 local governments (768 local government authorities across the 36 states and 6 area councils in Abuja FCT).

REGIONAL LEVEL: The Federal Capital Territory (FCT) is located in the geographical centre of the country. The FCT is not a state and is under direct control of the federal government. The Federal Capital Territory Administration is headed by a minister appointed by the president. Abuja became the Federal Capital Territory in December 1991, replacing Lagos from its long-serving role as the capital of Nigeria. Lagos State, in the South West of the country, remains the commercial and economic capital of Nigeria.

Lagos is composed of 20 local government authorities (LGAs) and is divided into the metropolitan city (16 LGAs) and the non-metropolitan city (4 LGAs). Kano state has the highest number of LGAs (44) while the FCT has the least (6 area councils at the local level). In terms of land sizes, the largest state in Nigeria is Niger with a land area of 76 363 km². Bayelsa is the least populated state with a population of about 2.2 million in 2016, as estimated by the National Bureau of Statistics. Lagos is the smallest, though it has the highest population density at 3 419 inh/km² as at 2016. The states in Nigeria are also organised into 6 geopolitical regions, which group together contiguous states that have similar ethnicity and political history.

The administrative structure of each state is as established by the 1999 Constitution of the Federal Republic of Nigeria, with the state legislative, judiciary and executive arms. The executive is headed by the governor and is responsible for policy formulation and implementation, in addition to the day-to-day administration of the state. Governors are elected for a maximum of two four-year terms. The state governor appoints commissioners to oversee ministries, departments and agencies. Members of the state legislature (State House of Assembly) are charged with making laws that govern each state, and will subject bills to up to three readings before they are forwarded to the governor for assent and thereafter passed into law. The legislature is composed of elected members from each constituency of the state. Constituencies are created by the Independent National Electoral Commission in line with the Constitution. The state legislature is headed by the speaker, elected by the legislators themselves. The judiciary is headed by a chief judge, appointed by the state governor upon recommendation of the National Judicial Council and subject to confirmation by the State House of Assembly.

MUNICIPAL LEVEL: Nigeria’s municipal level of governance is composed of 774 local governments that are further divided into wards across all states. There are about 12 001 wards in Nigeria. Among the local governments, 6 area councils (Abaji, Abuja, Bwari, Gwagwalada, Kuje, Kwali) form the lowest level councils of the Abuja FCT. While no local government areas have a population below 20 000 inhabitants according to estimates for 2016 based on a census dating back to 2006, the 12 largest urban agglomerations have more than 1 million residents.

All local governments have similar structures that consist of the executive (council chairman and appointed departmental heads), the legislative (elected councillors representing administrative wards) and the judiciary (magistrates’ court). These three branches are autonomous and have statutory responsibilities as well as budgetary allocations under the enabling laws of the state. While councillors represent the legislative arm of the local council, community development associations (CDAs) and community development committees (CDCs) can be set up and then overseen by local governments. They are a way to mobilise residents and create awareness on their civic duties and other similar activities, as well as to promote self-help efforts to initiate, execute and monitor community development projects. In addition, traditional leaders in Nigeria can play an advisory role to local governments, although the relationship remain contentious in some states since traditional leaders do not have any executive, legislative or judicial powers over the local government. Community involvement remains low and is mainly achieved through civil society organisation programmes.

The administrative, electoral and financial powers given to state governments over local governments by the Constitution weaken fiscal decentralisation in Nigeria, as local government have a very limited impact on the municipal services that they are constitutionally empowered to deliver.

HORIZONTAL COOPERATION: States and local governments have two major structures for support and peer activities. These are the Nigeria Governors’ Forum and the Association of Local Governments of Nigeria. Subnational governments do not have the financial independence for joint projects and rather rely on these associations to provide linkages for development opportunities that they can uptake.

State governors met in 1999 at the onset of a new era of democratic governance in Nigeria to form the Nigeria Governors' Forum (NGF). This non-partisan association promotes good governance and cooperation among the states and a beneficial relationship with other tiers of government. The NGF is modelled after the American National Governors' Association. To further cooperation in moments of need, 6 South West governors established in 2020 the Western Nigeria Security Network (WNSN) code-named Operation Amotekun, to assist the police and other security agencies against security breaches. While this was deemed unconstitutional by the federal government, the security network has continued in operation to mitigate security issues in the region.

Similarly, the Association of Local Governments of Nigeria (ALGON) has the objective of promoting and protecting the interests, rights, privileges and autonomy of local governments, encouraging them to execute their constitutional functions efficiently and effectively. It is funded by membership subscriptions and does not have a constitutional authority. It operates as a liaison between the states and local governments and is an active lobbyist for increased local government revenue allocations, expansive fiscal devolution and political autonomy.

The 1999 Constitution outlines the basic principles of the sharing of roles and responsibilities. Exclusive functions are those reserved for the federal government. Concurrent functions are shared jointly by the federal and state governments. However, in case there is a conflict, the powers of the federal government prevail over those of the states. The federal government is broadly responsible for the provision of amenities such as public education, affordable quality healthcare, electricity, affordable housing, roads, security, external relations, macro-economic policy, protection from external and internal threats, resource control and research, amongst others.

Residual functions are assigned to the states. States are broadly responsible for the protection of lives and properties, provision of basic amenities such as education, quality and affordable health care, portable water and construction and maintenance of transportation system, as well as creation of employment and revenue generating opportunities. They are able to secure loans, obtain grants, enter into partnerships with the private sector in fulfilment of these functions.

The core functions of the local government are defined in the Fourth Schedule of the Constitution. They include: pre-school, primary and adult education; public health (including primary care and health protection); town and regional planning; roads and transportation; waste collection and disposal; cemeteries and crematoria; environmental protection, sports; leisure space and religious facilities. In practice, the states are primarily responsible for these services.

Joint service responsibilities of local governments with the states are: primary and adult education, town and regional planning, roads and transport, water and sanitation, environmental protection, sport and leisure facilities, and religious facilities.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Municipal level
1. General public services (administration)	Internal administration, local government affairs, public buildings and facilities	Administrative services (marriage, birth etc), public buildings and facilities (shared)
2. Public order and safety	State Police Commands, regional fire-fighting services, sectoral public safety agencies
3. Economic affairs / transports	Regional and urban roads, public transports, regional economic development, regional tourism	Local roads and transportation
4. Environment protection	Nature preservation, soil and groundwater protection, consumer protection	Refuse collection and disposal, cemeteries and crematoria, environmental protection, public health, Parks and green areas, street cleaning, butcheries/slaughterhouses (shared)
5. Housing and community amenities	Housing construction and renovation, management, urban and land use planning, water and sanitation	Town and regional planning, water and sanitation (shared)
6. Health	General Hospitals	Public health: Primary healthcare (medical centres), preventive healthcare (shared)
7. Culture & Recreation	Regional museums, cultural heritage, sports, libraries	Sports, leisure space and religious facilities (shared)
8. Education	Primary, secondary and higher education; vocational and technical education, higher and adult education	Pre-primary and primary education, adult education (shared)
9. Social Welfare	Civil service contributory pension scheme	Civil service contributory pension scheme

Scope of fiscal data: 36 states, the Abuja Federal Capital Territory and 774 local governments

SNA 2008

Availability of fiscal data: Medium

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: State and local governments have autonomy for public spending, economic planning and sector policies. In practice, states largely rely on the policies dictated by the federal government and the efficiency of implementation and outcomes differ from state to state. Fiscal centralisation has been in part comforted by the many years of military rule and dependence on oil revenue.

The state governments’ lack commensurate revenue and fiscal and budget management capacity for efficient governance. Fiscal federalism is enshrined in the 1999 Constitution. Since then, state and local governments have seen their share in Nigeria’s expenditure and revenue increase and currently enjoy wider policy and fiscal spaces. The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) is responsible for reviewing the country’s intergovernmental fiscal relations. States and local governments receive a substantial number of resources as constitutionally guaranteed transfers from the Federation Account. Oil producing states in the Niger-Delta Region of the country, as well as other states with oil reserves are entitled to a 13% derivative from oil revenues, in addition to their share from the federal allocation.

Each state has its own tax authority, responsible for the administration and collection of state taxes. However, the Central Bank of Nigeria (CBN) and other relevant federal agencies retain strong oversight. In August 2015, the CBN implemented the Treasury Single Account (TSA) by recommendation of the IMF. In its guidelines to the state governments, issued in February 2016, the CBN asked that all deposit money bank accounts of state governments be closed and maintained in a single account. This was a way to bring all government funds in bank accounts within the effective control and operation purview of the Treasury, with the aim to ensure centralised, transparent and accountable revenue management. Statutory allocations from the Federation Account, corruption, tax evasion at the local level, subnational government incapacity to generate finance internally and effectively for development purposes and the lack of financial autonomy remain key challenges.

Subnational, state and local government expenditure by economic classification
2020	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total expenditure	215	160	55	4.2%	3.1%	1.1%	38.6%	28.8%	9.9%	100.0%	100.0%	100.0%
Inc. current expenditure	167	121	45	3.2%	2.3%	0.9%	37.9%	27.6%	10.3%	77.4%	75.7%	82.3%
Compensation of employees	-	-	-	-	-	-	-	-	-	-	-	-
Intermediate consumption	-	-	-	-	-	-	-	-	-	-	-	-
Social expenditure	-	-	-	-	-	-	-	-	-	-	-	-
Subsidies and current transfers	-	-	-	-	-	-	-	-	-	-	-	-
Financial charges	-	-	-	-	-	-	-	-	-	-	-	-
Others	-	-	-	-	-	-	-	-	-	-	-	-
Incl. capital expenditure	49	39	10	0.9%	0.8%	0.2%	41.4%	33.1%	8.3%	22.6%	24.3%	17.7%
Capital transfers	-	-	-	-	-	-	-	-	-	-	-	-
Direct investment (or GFCF)	-	-	-	-	-	-	-	-	-	-	-	-

EXPENDITURE: State governments are responsible for 28.8% total public expenditures in 2020 and together with local governments, 38.6%. Most subnational resources went to recurrent expenditures, which stood at 77% of subnational government total expenditure. This situation reflects the growing cost of governance, personnel cost, gratuities and pensions over the last 10 years. Labour unions across industries recently negotiated a raise in the national minimum wage for salaried workers, which states are required to implement in their jurisdictions.

DIRECT INVESTMENT Capital expenditure is concentrated at the federal level, with the states constituting 33.1% of the total capital expenditure in Nigeria in 2020, while local governments’ contribution was of 8.3%. The scale of capital investment in local governments is limited and reflects their scarce contribution to the GDP (0.2%).

In order to promote the financing of capital projects, the Infrastructure Concession Regulatory Commission (ICRC) established in 2005 develops guidelines, policies and procurement processes for public-private partnerships (PPPs) and collaborates with the states in implementing PPPs. This federal government agency also carries out workshops to strengthen subnational governments’ capacities to implement capital projects. According to the PPP national policy, each state is responsible for its own investment projects but PPP projects within states can be financed with the support of a guarantee by the federal government. In 2020, only a few of the approved PPP projects were done in collaboration with state governments. Among them, the procurement process for Ibom Deep Seaport in Akwa Ibom State was successfully concluded in 2020 and the project is being developed jointly by the federal and state governments along with private investors. Lagos State is also listed as a shareholder in the Lekki Port Lekki Free Trade Zone Enterprise Limited. In 2020, the ICRC reported its collaboration with the Nigeria Governors’ Forum in the form of the Nigeria Public Private Partnership Network (NPPPN), in which the heads of PPP bodies in the states and the FCT are members. The objective of the NPPPN is to establish a harmonised framework for projects that cross states border or require a federal guarantee and also to act as a platform for PPP peer learning across states. Local governments are not mentioned in these partnerships but the Association of Local Governments of Nigeria (ALGON) has been active in advocating for resource control and autonomous re-positioning of local governments in Nigeria.

ⓘ No detailed data available for this country

Education, healthcare, water supply and housing are priority expenditure categories at the subnational government level.

Subnational, state and local government revenue by category
2020	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total revenue	178	123	55	3.4%	2.4%	1.1%	36.3%	25.1%	11.2%	100.0%	100.0%	100.0%
Tax revenue	40	24	16	0.8%	0.5%	0.3%	18.9%	11.2%	7.7%	22.3%	19.1%	29.3%
Grants and subsidies	3	3	1	0.1%	0.05%	0.01%	-	-	-	1.7%	2.0%	0.9%
Tariffs and fees	27	26	1	0.5%	0.5%	0.02%	-	-	-	15.0%	20.9%	1.8%
Income from assets	103	68	36	2.0%	1.3%	0.7%	-	-	-	58.1%	55.0%	65.2%
Other revenues	5	4	2	0.1%	0.1%	0.03%	-	-	-	3.0%	3.0%	2.8%

OVERALL DESCRIPTION: In 2020, subnational government revenue constitutes 3.4% of the national GDP. State and local government revenue represented 25.1% and 11.2% of the general government revenue respectively. For both subnational levels of government, the most important source of revenue were the incomes from assets arising from oil revenues (58.1%), followed by tax revenue at an average of 22.3%. While states received 15.0% from tariffs and fees coming in third position of subnational revenue sources, this category accounted for only 1.8% of local government revenues.

The oil subsidy is central in the Nigerian accounting system. The government subsidises fuel through the petroleum product suppliers so that consumers pay below market rates. Reforms towards the total removal of these subsidies by 2022 were proposed in a meeting of the monetary policy committee of the Central Bank held in November 2021. Such reforms aim to reduce government spending, increase the funds available in the Federation Account and hence resources for subnational governments. It is, however, a very unpopular reform that has led to national industrial strike actions because of the perception that it would lead to significant increase in household expenditures on fuel, gas, power, transportation of people and consumption goods. Moreover, when the subsidies were removed in 2016, it was seen that kerosene prices increased, fuel scarcity became endemic and women were particularly negatively impacted (IISD, 2020).

TAX REVENUE: In Nigeria, both the federal and state governments have the power to make and impose tax laws as specified under the concurrent legislative list of the Constitution. However, a state can only make laws for itself and its local governments, while item 59 on the exclusive legislative list of the Constitution empowers the federal government to make tax laws for the entire country through the National Assembly. Further, the Taxes and Levies Act 21 of 1998 provides that state and local governments are statutorily responsible for the collection of 80% of total taxes and levies.

Tax administration is carried out by 37 independent revenue authorities (officially referred to as State Internal Revenue Services) operating in each state government, including the Abuja FCT. The taxes administered by these authorities are put in place through laws enacted by the National Assembly. A Joint Tax Board (JTB) was established by section 86 (1) of the Personal Income Tax Act Cap. P8 LFN in 2004, to help promote and improve tax administration across the country. State Internal Revenue Services are members of the JTB.

In 2020, subnational government tax revenue amounted to 18.9% of tax collected at the national level, with states generating 11% of that general government tax revenue and local governments 8%. Local governments continue to generate the least revenue across all categories. Lagos, Rivers, Abuja FCT, Delta and Kaduna States were the 5 states with the highest revenue generation in Nigeria. In particular, Lagos state contributed up to 32% of the total country’s internally generated revenue, despite the COVID-19 pandemic and social unrests in the last quarter of 2020. Lagos state saw a 5.1% increase from its revenues in 2019, its highest revenue source being PAYE (Pay as You Earn -PAYE- income tax from salaried workers and direct assessments from self-employed persons). Lagos state has also provided leadership in revenue mobilisation from property tax and other internally generated revenues for many years.

The majority of high-earning tax items, such as value-added tax, company income tax, import and excise duties, mining rents and royalties and petroleum profit tax are exclusively collected by the federal government. VAT revenue is distributed through a vertical sharing arrangement of 15, 50 and 35% for the federal, state and local governments respectively. Subnational governments mainly collect personal income tax (PAYE), capital gains tax (individuals only), road taxes, stamp duties, pool betting and lotteries as well as gaming and casino taxes. The personal income tax is collected by the state governments via their State Internal Revenue Service and accounts for at least 50% of all internally generated revenue at the state level.

Nigeria operates a decentralised property tax system, with its administration devolved to the state and local governments. Each one of the 36 states and the FCT make their own laws and tax systems. Lagos and Edo state tax laws for example, provide for the ‘devolvement' or recentralisation of statutory the local governments’ tax collection function to the state. Yet property tax revenue is estimated at less than 0.01% of national GDP due to inefficient collection, incomplete property records and high incidence of informal activities amongst others. Recent reforms have been carried out in Lagos, Anambra, Oyo, Edo, Ondo, Abia, Osun and Enugu states to make the property taxation process simpler and more effective. This has included the use of GIS-enabled property identification systems, tax payer education and the use of banks and e-collection platforms to make tax payment easier. Nevertheless, recent attempts to review property tax rates in states such as Lagos have been met with significant public protest.

GRANTS AND SUBSIDIES: In 2020, international grants were not a significant source of revenue contributing 1.7% of subnational government revenues and 0.1% GDP.

In Nigeria, centrally-collected revenues are deposited in a Federation Account shared amongst the three tiers of government (Section 192 of the Constitution). A distribution formula in operation since 1992 allocates 52.68% to the federal government, 26.72% to the state governments and 20.60% to local governments. States receive the transfers allocated to subnational governments through the Federal Account Allocation Committee. This is referred to as “vertical allocation formula.'’ The amount received by a state is determined by the national Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), according to specific criteria, namely the “equality of states”, population, landmass, social development and the value of internally generated revenues. Furthermore, 9 oil-producing states (out of 37) receive an additional 13% of the country’s oil revenues.

Section 162(6) of the 1999 Constitution set up a State Joint Local Government Account in each state, into which all allocations from the Federation Account that are destined to the local government councils are paid. Thus, there is no direct federal allocation to the local governments. There have been many calls for a change in this system. In April 2022, the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) presented a review proposal to the presidency, whereby the vertical allocation was to be set to 45.17% for the federal government, 29.79% for state governments and 21.04% for the local governments, increased the share distributed to subnational governments. In the same proposal, RMAFC recommended the dissolution of the State Joint Local Government Account to strengthen local governments’ constitutional position as a third tier of government. The reform, aligned to the ongoing review of the 1999 Constitution which proposes stronger local government autonomy, is subject to internal review and approval processes.

OTHER REVENUE: Subnational governments can generate revenues from other sources, which are mainly fees and charges on public services. The Joint Tax Board Technical report of 2021 shows that states generated revenues from road taxes and revenue generating activities of their Ministries, Departments and Agencies (MDAs). In 2020, road taxes contributed 2.27% to total subnational government revenues, while the MDAs’ contribution was over 16%. Other taxes produced about 17% of subnational government revenues. Compared to 2019, there were slight reductions in both road taxes and other taxes collected by subnational governments in 2020, although an increase of 0.11% was recorded in MDA revenue generation activities.

Subnational, state and local government fiscal rules and debt
2020	Dollars PPP / inh.			% GDP			% general government debt			% SNG debt			% SNG financial debt
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total outstanding debt	200	200	-	3.9%	3.9%	-	18.2%	18.2%	-	100.0%	99.4%	-	-	-	-
Financial debt	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-

FISCAL RULES:Subnational governments are allowed to raise funds through the issuance of bonds, borrowing from commercial banks and accessing intervention funds provided by the Central Bank of Nigeria. Since 1978, several states and local governments have had access to the bond market and are authorised to trade bonds that are free of federal income tax on the interest paid. The Investment and Securities Act of 2007 provided that the debt status of each state should not exceed 50% of the statutory revenue in the previous 12 months.Insufficient bank financing has led subnational governments to seek funds from the bond market to supplement their revenues in order to finance development projects.

Due to the rather centralised fiscal system in the country, fiscal rules are concentrated in the federal tier. Since 2000, a debt management office (DMO) has managed medium-term borrowing and the efficient management of Nigeria's external and domestic debt obligations at both federal and subnational government levels. The DMO operates under the World Bank's States Fiscal Transparency, Accountability and Sustainable Program for Results (SFTAS). In 2007, the DMO introduced a fiscal responsibility plan for subnational governments, leading to increased frequency of financial statement preparation. Subnational governments also benefit from bespoke and periodic collaborative capacity building programs of the DMO. For instance, in 2019, the DMO conducted a special capacity programme on public debt creation and subnational debt management for the Delta state government and progressed on preliminary implementation of the Middle-Income Country-Technical Assistance Fund (MIC-TAF) grant of the African Development Bank, for subnational debt management capacity building projects. In the DMO’s 2020-2023 debt management strategy, a national public debt target of 40% of GDP was adopted in acknowledgement that federal government bail outs may be required in the event of a sharp drop in state revenues during the planning period.

DEBT: A Debt Management Office (DMO) was established by the Debt Management (Establishment) Act of 2003 to manage Nigeria's external and domestic debt obligations and strengthen subnational governments’ capacities in public debt management. States and the Abuja Federal Capital Territory (FCT) are mandated to generate and submit their domestic debt data to the DMO within a period of 60 days from the end of each quarter. Local governments must submit their annual accounts to their state’s Auditor-General.

Nigeria's total public debt stock, is defined as the aggregation of domestic and external debt stocks of the federal government, the states and the Federal Capital Territory of Abuja (FCT). The external debt stock of subnational governments constitutes the federal government’s on-lent loans whose proceeds were utilised by the states and the FCT to finance mainly capital projects in priority sectors such as education, health care, water supply and housing. Multilateral and bilateral loans are contracted by the federal government on behalf of the states and the FCT from development institutions such as IDA, IFAD, African Development Bank and African Development Fund.

In 2020, subnational government total debtrepresented 18% of total public debt, of which 39% was composed of external debt. State domestic debt was concentrated in Lagos, Rivers, Delta, Akwa-Ibom and Ogun States, in that order.

TERRITORIAL MANAGEMENT OF THE CRISIS: The National Centre for Disease Control (NCDC) led the health responses to COVID-19. The first case in Nigeria was diagnosed on 27 February 2020. The following day, the federal government instituted a national multisectoral Emergency Operations Centre (EOC) at the National Centre for Disease Control (NCDC). Subnational State Public Health EOCs (PHEOC) were initially activated in both Lagos and Ogun States in addition to rapid response teams (RRTs). In total, 61 RRTs were deployed in the states to strengthen coordination and response activities at the subnational government levels. The national RRTs provided technical and logistical support at the state and local levels. Subnational governments worked closely with the NCDC to address critical health infrastructure challenges while promoting non-pharmaceutical measures such as lockdowns and travel restrictions.

The federal government also imposed five weeks of lockdown, banning inter-state travel, specifically in Abuja, Lagos and Ogun states. State governors were mandated to contain the spread with regards to the peculiarity of their situations. Many states voluntarily imposed local travel restrictions and lockdowns while others did not declare any (Kogi and Oyo), and a few declared partial lockdowns on alternative days (Ogun). The federal government commenced a gradual reopening of the economy on 4 May.

Responses across states differed, although several states instituted COVID-19 Committees which operated as task forces to advice on responses and impacts. As at April 2020, Lagos had increased its COVID-19 healthcare facilities and announced incentives for healthcare workers. As of May 2020, Cross Rivers state did not have a testing centre, focussing on travel restrictions and promoting non-pharmaceutical measures. In Kaduna state, an "Incident Action Plan” was developed, the Infectious Disease Control Centre (IDCC) was upgraded in terms of infrastructure, mobile courts were set up to discourage non-adherence to movement restrictions and as at May 3^rd, a 30-day lockdown was in place.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: To ensure economic recovery at both national and subnational levels, the federal government revised the 2020 budget and modulation the oil price benchmark downwards in response to the oil price shock.

The Central Bank of Nigeria (CBN) led the economic responses to the pandemic. On 26 March 2020, it announced the formation of a Nigerian private sector coalition against COVID-19 (CA-COVID). Several billion naira were released to enable businesses and individuals cope with the debilitating effects of COVID-19. These were accessed through designated third-party organisations. The private-sector coalition against COVID-19 raised more than NGN 26 billion (or USD PPP 180 million), which were used to purchase food and relief materials that were distributed to residents through the state governments. Local governments were not visible responders in the COVID-19 crisis. The Central Bank of Nigeria also introduced several grants to support the local businesses, households and the healthcare sector. The relief measures were sector-driven and not led by subnational governments. The CBN also directed deposit money banks to increase moratorium to ease debt obligations for households and businesses.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: In 2020, the Nigerian economy shrank by 1.8%, according to a World Bank sectoral report. The lockdown measures had implications for subnational governments’ internally generated revenue which came from taxes and levies on affected activities. However, for cities with partial lockdowns, markets, stalls and trade for essential needs were permitted and the resilient informal economy allowed the continuation of low levels of economic activity in cities and rural areas.

By the end of first quarter of 2020, federally collected revenue from combined oil and non-oil revenue fell below the preceding quarter by 4.8%, while the total estimated expenditure of the federal government weighed against retained revenue was below the quarterly budget estimate by 12.1% In as much as subnational governments rely heavily on proceeds from the Federation Accounts, the decline in federal government revenue due to the COVID-19 pandemic also impacted total revenue accruing to states and local governments. Statutory allocations to state governments in the first quarter of 2020 was therefore lower than the quarterly budget estimate by 42%. Local governments also received 37.1% less than the budgeted quarterly budget. Subnational governments benefitted from grants from international development organisations to support their technical capacities and operations. States were able to access the Nigeria COVID-19 Action Recovery and Economic Stimulus Programme (NG-CARES) of the World Bank and the COVID-19 Preparedness and Response Project (CoPREP). The CoPREP is a USD 114.28 million facility composed of a USD 100 million credit from the International Development Association (IDA) and a USD 14.28 million-grant from the Pandemic Emergency Financing Facility. This CoPREP financing scheme meant to enhance direct technical and fiscal support to subnational governments in Nigeria to prevent, detect and respond to the threat posed by COVID-19. As at 7 August 2020, funds had been disbursed to 23 states.

ECONOMIC AND SOCIAL STIMULUS PLANS: The Nigeria COVID-19 Action Recovery and Economic Stimulus Programme (NG-CARES) is a USD 750 million intervention programme running from 2021-2023. It is a collaboration between the World Bank, the federal government and the 36 state governments. The programme seeks to alleviate the impacts of COVID-19 on livelihood, welfare, food supply system, the informal sector and the local economy.