The same Chinese have been known to derisively refer to a person or government saying two opposite things at the same time as someone “speaking with forked tongues”. The Federal Government of Nigeria has been speaking with forked tongues with regard to fresh bail-out for the states, who despite a previous botched bail-out, are still in financial turmoil. Irrespective of political party in power, all the states are in various degrees in trouble. Even Lagos State, the Centre of Excellence, is feeling the pinch badly.
Governor Fayose, clownishly serious, after failing to pay his striking public servants for several months, said that he was joining the strike. Presumably his strike does not include making a joke out of deadly serious matters. Ekiti people succumbed to stomach infrastructure during the campaigns in 2014. They will pay dearly for it until 2016. It is amazing that none of the professors from that state told the people in 2014 that the only free food is found on mouse-traps. More serious is the Niger State Governor who told his people,
“I cannot sell myself to pay salaries”. Plateau State government received N1.1bn from the Federation Account in April – well below its monthly wage bill; Cross River N967.5 million; Bayelsa received N2.1bn, Oyo got N2.2bn against wage bill of N5.6bn and Osun, a mere N131.5 million. The list is not exhaustive admittedly, but is indicative of the financial plight of the states – even after the first bail out was handed out to them. Meanwhile, the Federal Government which is contemplating another bail-out for the states is also operating on hand-outs from the Central Bank, from lenders at home and abroad and is still unable to fulfill its financial obligations fully.
Abuja Ministries, Departments and Agencies account for the bulk of debts owed to power distribution companies today. The whole scenario reminds one of a heavily indebted elder brother who could not even provide adequately for his household considering helping his siblings in paying their own debts. There is only one word for it – ridiculous.
The reasons why the Federal Government cannot and should not consider any further financial assistance to the states are too numerous to discuss here. But a few will point to the problems and consequences of such a measure. Nigeria finds itself in a Catch-22 sort of situation with respect to global price of crude oil which had risen to $50 per barrel. Failure on our part, as well as some other oil-producers had created a supply gap which had driven prices up. Once we resume normal production and export, the mini-scarcity will varnish and prices will again tumble. In short, Nigeria is the sole victim of the scarcity of crude oil created by our so-called Niger Avengers.
Furthermore, the longer the tension in the Niger Delta persists the more likely that we would lose some of our long term customers for good. It is unlikely that our country will be able to produce and export anything near the budgeted volume for the balance of this year – and perhaps well into the first quarter of 2017. Meanwhile, non-oil revenue is likely to decline as well as the nation heads into inevitable recession. Obviously, the monthly allocation to states from Abuja will decline further and their capacity to service existing loans will be diminished. Adding the extra burden of a bail-out to their debt portfolio makes no sense under the circumstances. That amounts to throwing good money after bad –even if it can be found. More to the point, the Federal Government has not been established as a banker of last resort for the states.
States have been provided with fiscal autonomy. The Governors and the States Houses of Assemblies are elected to manage the affairs of their “kingdoms”. Hitherto, the State Assemblies, under every political party had been subservient to the state Governors. Without exception, they rubber stamp all the measures taken by the state Chief Executive Officer without performing their oversight functions.
When was the first or last time anybody read of a state Assembly querying any expenditure by a Governor? All the Speakers of the country are mere errand boys of the Governor. Recently, the former Managing Director of the DAILY TIMES of Nigeria, Chief Tola Adeniyi, writing in defense of a South West Governor listed all the “innovative” programmes embarked upon in the state. Virtually all were give-away programmes; everything was free and none of the projects was designed to be self-liquidating. Chief Adeniyi ended his article without mentioning that the state is now totally bankrupt.
In fact, if there is a classic case of road to hell being paved with good intentions, Chief Adeniyi had inadvertently written about it. No measure, however meritorious, embarked upon by a government or organization, which is not anchored on sound Economics will endure. Virtually all the projects Adeniyi praised have now ground to a halt. Meanwhile, the question should be asked: What were the state’s legislators doing while their state was being driven into a financial ditch by an Executive branch which obviously lacked good financial planners.
Engaging in several cash consuming projects at once, without adding others which generate cash is a recipe for disaster. If Chief Awolowo, after launching Free Primary Education, simultaneously launched Free Health, Free Money for the Aged, Free Money for Trainees, etc, the Western Region would have been ruined. Even the Free Primary Education was supported by a general monthly levy on adults. That is the difference. Governors ruined their states….
Read more at: http://www.vanguardngr.com/2016/06/another-round-bail-outs-states-god-forbid/
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