Mathematical Analysis/Predictions of Internal Generated Revenue (IGR) in Some States in Nigeria.
In this paper, we apply the LINEST model of the Microsoft excel to the population, Nigeria (Naira) exchange rate with US Dollar and Internal Generated Revenue (IGR) of 2014 top-10 Nigerian states by IGR in billions of naira from 2010 to 2014 as in the data bases of National Population Commission (NPC), Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) respectively.
The indexed IGR is used as proxy for each state and the nation. The last census of 2006 by NPC is used as proxy to the national and states population, and the end of December CBN exchange rate with U.S. Dollar was used as well.
The research whichresults into 14 equations (10 for states and 4 for the nation but all having and ) proves that the states in discuss (including Lagos, Rivers, Kaduna and Enugu) over spend/levy, against assets, tax and securities, the members of the states beyond the normal exchange rate in order to meet-up with the IGR target.
This is seen in the negative “Difference” of the last/8th column in all the phases’ table of chapter 4; the highest (90%) resulting in 2013 indicated that the nation experienced subsidy removal from fuel at the end of the year in 2013.
At the other hand, the positive “Difference” (highest in 2010-70%) indicated that the concerned states submitted an invalid data, indeed below their IGR. The study showed that fuel subsidy removal generates and stimulates excess charges and expenses in the Nigerian economy.
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 Nigeria Naira with US Dollar. The national IGR equation, in billions of naira, is 35 376 39 5 5 .
Concept of Revenue:
Revenue is always the price per unit times the number of units sold. The revenue resulting from one or more business transactions is the total payment received, sometimes called the gross proceeds.
If R(x) is the revenue from selling x items at a price of m each, then R is the linear function R(x) = mx and the selling price m can also be called the marginal revenue.
Revenue is a very important concept in economic analysis. It is directly influenced by sales level, i.e., as sales increases, revenue also increases.
The concept of revenue consists of three important terms; Total Revenue, Average Revenue and Marginal Revenue.
Total Revenue (TR):
Total Revenue refers to total receipts from the sale of a given quantity of a commodity. It is the total income of a firm. Total revenue is obtained by multiplying the quantity of the commodity sold with the price of the commodity.
Total Revenue = Quantity × Price
Average Revenue (AR):
Average revenue refers to revenue per unit of output sold. It is obtained by dividing the total revenue by the number of units sold.
Average Revenue = Total Revenue/Quantity
Marginal Revenue (MR):
Marginal revenue is the additional revenue generated from the sale of an additional unit of output. It is the change in TR from sale of one more unit of a commodity.
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) pp 520-530
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, February 2011
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, Functions of a Local Government Council, Fourth Schedule Government Printers, Abuja.
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