A FEW weeks ago, 27 states of the Federation were listed to have applied to the Central Bank of Nigeria (CBN) for bailout funds. That was after many months of grappling with a parlous financial situation. Under the scheme, the affected states are to pay an interest rate of nine per cent on the amount being loaned to them. The fund is repayable over a 20-year period.
While some states, such as Edo applied for less than N2 billion, some others like Imo are asking for a princely sum of N26 billion. There are also middle ground states like Sokoto whose governor applied for a N10 billion loan. The arrangement, it would appear, is the much-needed breather, which will get the states working again. With the fund, states that had been in arrears of salaries, pensions and gratuities may begin to live up to their financial obligations again.
But that is as far as it goes. It does not guarantee the states any form of development. In fact, it should be taken that the development of physical infrastructure is one luxury, which states in the throes of such economic crisis cannot contemplate, let alone afford. And this is very tragic for a country like ours that is light years away from modernities that can guarantee the growth of science and technology.
But the most telling of the ongoing scramble for bailout funds is its long-term effect on the citizenry, especially those of the affected states. Since the loans are repayable over a 20-year period, it means that the burden of repayment actually lies with governments that will come in future and the generation that is yet to come. If this is the case, as we know it is, it then means that the future of the generation of Nigerians to come has been mortgaged. They will have the unenviable task of bearing the burden of today. This unpalatable situation should make any sober mind sad. It should give the governors scrambling for the funds something to reflect upon.
But it is regrettable that those who should worry about the future effect of what they are doing today are having a ball. The governors of the states concerned are seeing the exercise as some kind of bazaar. As in everything Nigerian, states of the Federation which are supposed to be humble over their dire financial straits are beginning to be heady about it. They now treat it as a normal situation. They are no longer embarrassed by their financial state. They are also behaving as if the bailout they are getting from the CBN is a right.
The story of financial distress across the states was muted before now. But it became an open secret shortly after new governors were sworn in, in some states. In fact, since the beginning of the present political dispensation, the story has not been rosy for most of the states. The impression the governors of the affected states create is that their immediate predecessors mismanaged the resources of their various states. Even some of the new governors like that of Sokoto State, who have chosen to bear their states’ financial anaemia with secrecy, apparently in order not to embarrass their benefactor-predecessors, have had their stories told for them by their cap-in-hand posturing before the CBN. Essentially, the immediate past governors are being held responsible for the financial distress afflicting their states.
But regardless of who we blame or do not blame about the financial crisis in the states, the fact is that there is everything wrong-headed about the bailout option. Bailout is like toeing the line of least resistance. It is the easy way out. It misses the opportunities and lessons of the wisdom of the ancients who make us to appreciate the fact that necessity is the mother of invention. In situations of hardship, man is known, more often than not, to exceed his ordinary and known possibilities. Difficult times fire the imagination of man and make him to attain heights he would ordinarily not have attained were he to remain in his comfort zone.
If we accept this ancient philosophy as axiomatic, we will be saying that we should not have converted the difficult financial state of some states into a tale of rosy cheeks. By that I mean that states which are badly affected by the meltdown, which they are blaming on global dwindling oil resources, should have been left to tackle the crisis on their own. We should have allowed the governments of the affected states to put on their thinking cap with a view to fashioning out how to bail their states out of the hard times. But rather than do that, the National Economic Council decided to shower them with bailout funds. Today, the states are scrambling for the funds with many of the governors already treating them as free money. The result is that we have before us something that looks like a largesse which has been thrown at the states in order to give them life again. Under this kind of atmosphere, the funds can hardly be prudently managed. This is especially so since the present governors that are grabbing the funds with both hands will not be the ones to repay them.
To underline the cavalier and shameless disposition of some of the governors over the funds, many of them now come out in the open to explain away their inability to meet their states’ financial obligations which they freely blame on the delay in the release of bailout funds to them. They now see the fund as another revenue allocation from the federation account. They are not ashamed to ask for it. Some of them are even demanding it. They are doing so because we asked them to suspend reason. They have, consequently, thrown their thinking faculties overboard in place of easy money. I call this the revenue-sharing mentality.
It is this same mentality that is crippling and has, indeed, crippled the economies of most states, as well as that of the federal government. Because the government at the centre appropriated to itself the revenues that should have been controlled by the states, no state of the federation is thinking of how to improve its own economy outside the oil revenue that is exclusively controlled by the federal government. Every month, states line up in Abuja to collect the handout from the federal government. It has become routine, indeed, a way of life in Nigeria. Because every mineral resource belongs to the federal government, the states have decided to do nothing except to wait for the federal government to give them their own share. No provision is even made for savings. The constitution provides that every revenue that goes into the federation account must be shared by the federating units. And because oil revenue has continued to flow, Nigeria has conveniently forgotten that there could be other sources of revenue. Every government that we have had since after the oil boom of the 1970s vowed that the economy must be diversified. But that has remained a mere precept. No step had ever been taken to make this happen.
Even the present regime of Muhammadu Buhari is singing the same song. It has told Nigerians that it will diversify the country’s source of revenue. But a government that is committed to this declaration should not have gone for the bailout option. It should have tasked the states on alternative sources of revenue, as the first step towards diversification. By approving bailout funds, it has simply institutionalised the culture of laziness and absolute lack of creativity that have bedeviled our quest for a vibrant economy.