The multiplier effect of states' inability to pay salaries is a clear and present danger. Omololu Ogunmade writes
When the Senate passed a resolution in September 2011 that some states were financially distressed while others faced acute state of bankruptcy, it was dismissed in some quarters as a needless move capable of misleading the nation.
When the Senate passed a resolution in September 2011 that some states were financially distressed while others faced acute state of bankruptcy, it was dismissed in some quarters as a needless move capable of misleading the nation.
However, the recent distress call by All Progressives Congress (APC)
governors on the president-elect, General Muhamadu Buhari, in Abuja for
bail-out appeared to have turned the upper legislative chamber into a
soothsayer of sort.
The Senate had on October 27, debated extensively the financial state
of 36 states of the federation following the earlier presentation of a
research result conducted on the status of 36 states of the federation
by the Nigerian Governors' Forum (NGF). The NGF research output provided
the Senate with the platform for a further and more detailed research
which resulted in a motion entitled: "Looming Danger of Bankruptcy in
States: The Need for Fiscal Evaluation," by Senator Olubunmi Adetunmbi
(Ekiti North).
The motion drew the attention of the Senate to what the mover described
as a great fiscal challenge and looming danger of insolvency and
bankruptcy confronting the states. This looming danger, Adetunmbi said,
was attributable to the fresh take-off of a new minimum wage at the time
and the attendant consequence of a recurrent expenditure of the states.
Adetunmbi, who lost a return bid to the Senate in March, proceeded to
highlight the financial status of each of the states of the federation
as he classified the 36 states into different categories depending on
what he described as his findings on their fiscal states. Hence, the
motion classified some states as distressed; others as critical; some as
unhealthy; another group as tolerable and the last set as healthy.
According to him, six states whose personnel expenditure ranged between
50 and 126 per cent were already witnessing a financial distress.
States in this category with their distress rating were Kano (126 per
cent), Sokoto (62 per cent), Niger (56 percent), Zamfara (54 per cent),
Katsina (50 per cent) and Osun 50 per cent.
In the same vein, states in their critical conditions, according to the
motion, were Ekiti (48 per cent); Plateau (44 per cent); Benue (42 per
cent); Edo (42 per cent); Borno (41 per cent); Adamawa (40 per cent) and
Cross River (39 per cent). Other states said to be in critical state
were Enugu (39 per cent); Taraba (38 per cent); Ogun (37 per cent); Kogi
(32 per cent); Yobe (32 per cent); Ebonyi (31 per cent); Ondo (31 per
cent) and Kaduna (30 per cent).
The senator listed six states to be unhealthy. These were Oyo (27 per
cent); Bauchi (26 per cent); Bayelsa (24 per cent); Nasarawa (24 per
cent); Gombe (23 per cent) and Rivers (20 per cent).
On the other hand, he said the fiscal status of five states were
tolerable. They were Imo (19 per cent); Kwara (18 per cent); Lagos (18
per cent); Kebbi (16 per cent) and Delta (15 per cent).
However, he gave a clean bill of health to only four states which he
said had a healthy financial status. Those in this category were Abia
(14 per cent); Akwa Ibom (12 per cent); Anambra (12 per cent) and Jigawa
(6 per cent).
The senator expressed concern "that most of the state governments
rushed to the capital market to raise bonds to finance development
projects with an appropriate framework. The misuse of such funds could
spell doom for the future of the states." He listed some state
governments that had resorted to taking bonds between 2002 and 2011 to
include Lagos (series 1 - N50 billion; series 2, N57.5 billion); Imo
(N18.5 billion; Kwara (N17 billion); Niger (N6 billion); Bayelsa (N50
billion); Kaduna (N8.5 billion); Ebonyi (N16.5 billion); Ogun (N50
billion); Delta (N5 billion); Kebbi (N3.5 billion) and Lagos again (N15
billion).
Adetumbi, in the motion, raised certain fundamental issues which
included the call for an urgent review of revenue sharing formula among
the three tiers of government; decentralisation of labour and wages
legislation; rural-urban drift caused by infrastructural deficit as well
as the threat to peace caused by dwindling available resources.
"The financial quagmire of states further highlights the urgency of a
review of the revenue sharing structure between the federal, states and
local government areas. The continued centralisation of labour and
wages' legislation without a reference to resource endowment of states
is antithetical to the basis of true federalism in Nigeria. Such
unitarian policies are unhealthy to the development of a competitive
labour market in states.
"Infrastructural deficit and shortage of jobs in the states have led to
massive migration of youths into key cities. This has further
exacerbated the pressure on urban infrastructure and social services
with attendant slum growth, urban unemployment and worsening crime rate.
"The state and local government areas are the places of domicile and
points of service delivery of dividends of democracy to the people.
Therefore, a progressive dwindling of resource availability for
essential services constitutes a threat to peace and security," he
stated.
After an exhaustive debate on the issue, the Senate mandated its
committees on appropriation and finance to further study the situation
and offer remedial measures with a view to avoiding a total collapse of
the economies of the states.
It also directed the federal Ministry of Finance to consider the
establishment of a state economy stabilisation fund in line with the
provision of Section 164(1) of the 1999 Constitution of the Federal
Republic of Nigeria (as amended) which states that "the federation may
make grants to a state to supplement the revenue of the state in such
sum and subject to such terms and conditions as may be prescribed by the
National Assembly."
The parliament also implored the federal Ministry of Trade and
Investment to work with the states to develop and implement policies and
programmes on how to promote and generate economic growth and
employment in affected states. It as well advised the federal government
to expeditiously review the revenue formula in favour of states and
local government areas in the spirit of a true federation.
The motion generated wild anger in the polity with some of the state
governments resorting to name calling. They did not only deny any sign
of distress or bankruptcy in their states but also described concerns
raised in the motion as baseless and mischievous.
For instance, Enugu State Government placed a full page advertorial in a
national daily, where it cast aspersions on the image of the mover of
the motion, describing his submissions as false, baseless and
irresponsible.
It did not dawn on many at the time that the alarm raised in the Senate
was a time bomb that was only waiting to explode. Hence, as it is
customary of Nigerians to dismiss or trivialise supposedly serious
issues, no cognisance was paid to it neither was any investigation that
could nip the matter in the bud undertaken.
Even the Senate itself went to sleep after passing notable resolutions
as it failed to follow up these resolutions with a view to averting the
time bomb until the bubble eventually burst. On May 5, 2015, governors
who should have explored the output of NGF research as well as the alarm
raised by the Senate to embark on moves that could help their states
overcome imminent bankruptcy ran to Abuja cap-in-hands.
When the motion was moved four years earlier, most of the states could
still pay salaries. Therefore, they dismissed it as nothing but a false
alarm because they were allegedly ignorant that they were sitting on a
time bomb.
Today, many states are suffering economic kwashiorkor embedded in
malignant elements that now forge the piteous fate of citizens in
various states. Thus, the hitherto meager civil servants' salaries that
were insufficient to meet their family needs are now difficult to come
by as many states now grapple with inability to offset a catalogue of
unpaid salary arrears. This has resulted in regular protests in some of
these states, notably Osun.
The frustration of civil servants in affected states led to protest
votes during the last elections as some of the governors, who could not
pay salaries had their candidates voted out by frustrated citizens in
dire search for change of fortune.
But can that decision reverse their pains? It is left to be seen as
some will argue that as commendable as the courage of such citizens to
vote out unproductive governors were, the action may yet amount to
overlooking leprosy while curing a ring worm.
This is because the real cause of the bankruptcy and possible solutions
as highlighted in Senate's motion has not been addressed. The worrisome
trend, as independent observers would argue, would require the
engagement of competent hands by the Buhari government to address this
menace.
As at the last count, states that have been unable to pay salaries from
six months and below are Benue, Rivers, Osun, Plateau, Kogi, Oyo and
Ogun, among others.
Following their inability to turn various resources in their states to
wealth, APC governors on May 5, asked Buhari to spoon-feed them when he
assumes office as the president of Nigeria. Led by the Imo State
Governor, Rochas Okorocha, the governors ran to Abuja to narrate their
plights to the president-elect.
According to them, their state economies were in precarious conditions.
Therefore, they said they needed urgent bail-out from the incoming
administration of Buhari. They also alleged that the federal government
was culpable in the crisis because it had been unable to pay the April
salary at the time.
Hear Okorocha: “One of the issues that became of concern to all of us
is the state of the Nigerian economy, which is really in a bad shape. We
have come to notify the incoming president of the challenges ahead of
him.
“As it stands today, most states of the federation have not been able
to pay salaries and even the federal government has not paid April
salaries and that is very worrisome. By May and June, the unpaid
salaries will be in cumulative of three months.
“We wonder with the huge expectation from Nigerians and people who have
voted us into power, we are hoping that the president-elect will do all
the things that are humanly possible to bring about a bailout not only
for the states but the federal government, at least for people to get
their salaries and turn around the economy.
“We have seen the reason to work together and support Mr. President and
we have also called on all our brothers in other political parties to
come along with us to build the Nigeria of our dream,” Okorocha
explained.
In a nutshell, the incoming administration of Buhari has been advised
by experts to immediately put on its thinking cap by avoiding the
pitfalls of the outgoing administration of President Goodluck Jonathan,
which has been accused at various fora of trivialising important issues
and hiring people indiscriminately without the track records of their
abilities to proffer solutions to the lingering problems.
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