Mathematical Analysis/predictions of Internal Generated Revenue (IGR) in Some States in Nigeria
CHAPTER ONE
Aims and Objectives of The Study
Aims
The aim of this study is to formulate equations, using the LINEST model, which can predict or estimate the Internal Generated Revenue (IGR) of the states and the nation whenever the CBN exchange rate of Nigeria Naira with U.S. Dollar is given.
Objectives
The objective is to ascertain the uncertain prices of assets, in this case the Internal Generated Revenue (IGR), which has no generalized prediction in the economy.
CHAPTER TWO LITERATURE REVIEW
One of the most vital aspects of research work involves the review of relevant literature to the study. According to Ali (1996), review of relevant literature is imperative in the early planning stage of the work because it is anticipated that the review should provide much of the theoretical reference point or basis for undertaking a proposed study. It is also hoped that at the completion of the research work, findings would be linked up with the literature reviewed relevant to the research work that would be carried out.
Banabo and Koroye (2011) were of the opinion that Nigerian economy has to be diversified from a single oil revenue sustaining economy to a multiple revenue economy. The dependability on taxation alone by federal, states, and local governments may not be the way out of solving the consistently increasing capital and recurrent expenditures of the governments. They went further to assert that increasing cost of governance has forced some states to formulate other means of improving their revenue base due to dwindling oil revenue in 2009.
Naiyeju (2011) is of the opinion that states and local governments have continued to demonstrate total lack of interest in improving their lots towards improved revenue generation by preferring to use consultants to administer taxes, rather than modernizing their tax systems for enhanced revenue yield, and less dependency on allocation from the Federation Account. The preference for tax consultants in the collection of revenues negates the ongoing reforms in the country’s revenue generation system.
CHAPTER THREE
METHODOLOGY
Model List
There are many models that are associated with Internal Generated Revenue (IGR). In this book, we explain the Linear Revenue Model, Simple Interest, Compound Interest, Annuity, Amortization and LINEST Model; and then utilize the LINEST Model.
Linear Revenue Model
In the linear revenue model we assume that the price p of a unit sold by a firm is the same no matter how many units are sold. (This is a reasonable assumption if the number of units sold by the firm is small in comparison to the total number sold by the entire industry.) Revenue is always the price per unit times the number of units sold. Let x be the number of units sold. (For convenience, we always assume that the number of units sold equals the number of units produced.) Then, if we denote the revenue by ( )
The LINEST Model and its Variables Description
The method used in this book is the LINEST Model(function) of the Microsoft excel, which uses regression model(analysis) to check for collinearity of the functions and removes any redundant independent variable column from the regression model when it identifies them; at the end displays in matrix format: the coefficients of the independent variables n , intercept , standard error value for the n coefficients n, standard error value for the b constant b, coefficient of determination 2, the standard error estimate for the dependent variable y, the F statistic or F-observed value , the degrees of freedom , the regression sum of squares , and the residual sum of squares, .
CHAPTER FOUR
MODEL RESULTS
Result Description
The results of each data in the phases of chapter three above are more emphasized in this chapter. The “Predicted columns”, “Difference columns” and the figures with its contents are the major reasons of this chapter, which vary from the previous.
At the other hand, interpretations/suggestions have been given beneath each table and figure for a better result in subsequent researches. Below are phases corresponding with those in chapter three above.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
Conclusion
We have developed methods which could be used to reach important and lasting insights about the determination of the Internal Generated Revenue (IGR) of some Nigerian states: Lagos, Rivers, Delta, Enugu, Ogun, Oyo, Akwa Ibom, Kaduna, Bayelsa , Anambra and the nation, Nigeria. In the same vein, the equation for perfectly (R2=1) estimating the selling rate of CBN Nigerian naira with U.S. Dollar was developed as well.
In the uncertain economy, we now know that Internal Generated Revenues (IGR) are very hard to predict over short time horizons (phase 1, pp. 26/27 and phase 13, pp. 38/39), but on a long run (for about 5-years on our research) can be forecasted (see ch. 4, phases 2 – 12 and 14, and Appendix H). The study showed that fuel subsidy removal generates and stimulates excess charge and expenses in the Nigerian economy.
Recommendation
The author recommends that Nigeria should maintain subsidy assistance to the member states; charges levied on assets, tax and securities should not exceed the CBN exchange rating. Again, the nation/states in concern should use the formulated equations for predicting or estimating the IGR to the dynamic/uncertain exchange rate of Nigerian Naira with US Dollar.
We also recommend/suggest that National Population Commission (NPC), (see Appendix E), should update the states and national population daily, monthly and yearly for a better accuracy in research. The delay in the submission of IGR (see Appendix D and F) by states and the nation should be resolved.
REFERENCES
- Microsoft Excel (2010) LINEST Model or function of the Microsoft office excel 2010.Ink
- Banabo, E., and Koroye, B. (2011) Stimulating Internally Generated Revenue in Nigeria: The Entrepreneurial Option Revisited European Journal of Social Sciences – Volume 23, Number 4 (2011) pp520-530
- Agu, C. (2011) Fragile States! Why Subnational Governments in Nigeria Cannot Subsist on Internally Generated Revenue? The IUP Journal of Public Finance, Vol. IX, No. 1, pp. 25-53, February2011
- Atakpa, M., Ocheni, S., and Nwakwo, B. C. (2012) Analysis of options for Maximizing Local Government internally generated Revenue in Nigeria, International Journal of Learning & Development ISSN 2164-4063 2012, Vol.2, No. 5 www.macrothink.org/ijld 94
- Constitution of The Federal Republic of Nigeria 1999 CAP. C23 L.F.N. 2004, Functionsof a Local Government Council, Fourth Schedule Government Printers,
- Douglas, A. (2010) Stimulating Internally Generated Revenue in Bayelsa State Retrieved fromhttp://pointblanknews.com/pbnpvst.html on Monday March 18, on Monday 18 February,2013
- Ebelo, E. (2013) More Revenue Allocation Not Solution to Your Problems, FIRS Boss Tells States Retrieved from http://allafrica.com..201107150543.html on Tuesday March 5,2013
- Egonmwan, J. A. (1984) Principles and Practice of Local Government in Benin City: S. M. O. Aka and BrothersPress.
