THERE is no respite for Nigeria’s cash-strapped state governments. The N305 billion that was available for sharing among the three tiers of government in May 2016 may have been higher than the N281.5 billion of the preceding month, but this marginal increase hardly improved their balance sheets. Moreover, the additional N90 billion lifeline the Federal Government has offered comes with stringent conditions our spendthrift governors will struggle to meet.
The moment of truth, long postponed, has finally arrived: the state governments must restructure their fiscal architecture or go bankrupt.
Finance Minister, Kemi Adeosun, was blunt when she addressed the state commissioners for finance a fortnight ago: henceforth, Nigeria should be properly seen as a “confederation of economies” and develop a broad-based economy with “productive activities in every region and state.” This is a position that The PUNCH has repeatedly canvassed. A federation worth its name is an agglomeration of economically productive units. Nigeria alone of all federal polities operates a strange federalism where the constituent units are wholly dependent on the centre to the point that they cannot even pay employee salaries without the monthly dole from the central pot.
Deaf to all warnings to reduce dependence on federal allocations and the oil revenues that constitute the bulk of that, the states are delivering misery to the populace now that crude oil prices and production have dropped radically. Unemployment, says the National Bureau of Statistics, grew from 10.4 per cent to 12.1 per cent in the first quarter of 2016, a figure that does not take in underemployment. Twenty-seven states owe salaries.
The N57.22 billion, representing 26.72 per cent, shared among the 36 states and the Federal Capital Territory as well as the N44.12 billion or 20.6 per cent by the 774 local governments in May are puny compared to the N137 billion and N105 billion respectively of June 2014. The story is boldly written by the drastic fall in the 13 per cent of oil revenues shared among the nine oil-bearing states. In April, only N15.75 billion was available from this and N16.73 billion in May. In the heady days of higher crude oil prices, Akwa Ibom alone received N17 billion in some months from derivation alone. Over N57 billion was available to the oil producing states in June 2014 and N39.9 billion in November 2014 when oil prices had started falling. Today, only Lagos generates revenue internally enough to sustain itself.
The states are to blame for their own plight. Fiscally reckless, wasteful, lacking in vision and unable to craft and pursue sound development plans, all, save Lagos, have wasted the past 17 years of civil rule, run up debts and failed to provide an enabling environment for production, job creation and radically enhanced internal revenue generation. According to the Debt Management Office, total domestic debt stock of the states was N1.65 trillion in December 2015. The then Finance Minister, Ngozi Okonjo-Iweala, publicly challenged state governments to explain what they did with their humongous allocations. She said Nigeria’s 10 highest allocation receiving states earned more than some neighbouring African countries. What did Akwa Ibom do with the N260 billion it received in 2013? Or Bayelsa with N173 billion; Rivers with N230 billion; Kano N140 billion; Katsina N103 billion; Oyo N100 billion and Delta N209 billion received in 2013?
Our state governors and lawmakers should stop their luxurious living at public expense and be prudent with public funds. Looking inwards, they should leverage their natural advantages in minerals, agriculture and human capital. Ten of India’s 29 states are pivotal to its ranking as the world’s second in farm output. Maharashtra State leveraged its fertile lands, population and mining to develop agriculture and industry sectors that enabled it to grow its GDP to $220 billion, while Utar Pradesh (GDP $130 billion) developed agriculture and drove industrialisation and job creation with a robust investment corporation. Canada’s 10 provinces compete to create strong economic units, with Quebec transiting from mining and agriculture to a knowledge economy based on information technology, aerospace and multimedia, while Alberta is strong in petroleum and industry and Saskatchewan and Manitoba remain strong in agriculture and natural resources.
We urge the states to take advantage of the opening of the mining industry and attract investment for industrialisation and job creation. Nasarawa, with about 25 mineral types, Ondo with bitumen, Enugu with coal and Kogi with about 29 mineral types, should stop whining over dwindling federal allocations and seek serious foreign investors as should every other state. They must see themselves as autonomous, economically self-sufficient entities.
Regional economic integration and cooperation are crucial as most of the states are simply unviable and will remain so. Contiguous regions should embark on joint road, housing, rail, water supply and irrigation, as well as capacity projects with heavy private sector participation.
Our present governance structure cannot drive production; a report by the Daily Trust newspaper found that N5.3 trillion, nearly half of the combined total budget spending of N12.2 trillion of the federal and state governments this year, will be spent on salaries and overheads. With a substantial sum earmarked for debts and dubious capital projects, this fiscal model cannot deliver development or generate revenue.
State governors should avoid simply hounding individuals and corporate bodies for more taxes and levies in the name of IGR as Adeosun has warned, but rather drastically cut down costs and their retinue of aides, stamp out corruption, give priority to rural infrastructure, agriculture, promote start-ups and streamline permits and licences while ensuring security.