The reliefs are only temporary. The states must put their house in order
In an effort to end the lingering crisis of unpaid workers’ salaries in several states across the nation, President Muhammadu Buhari last week approved a package of measures designed to salvage the situation. The states with cash-flow problem would be allowed to draw from a soft loan worth N250 billion to N300 billion provided by the Central Bank of Nigeria (CBN). The Debt Management Office (DMO) will also help the states to reschedule the over N660 billion debt that they owe commercial banks and extend the life span of such loans while reducing their debt-servicing expenditures. In addition, the federal government and the states would share the $2.1 billion tax and dividends recently paid to the Federal Inland Revenue Services (FIRS) by the Nigeria Liquefied Natural Gas Company (NLNG).
Undoubtedly, the intervention will bring a glimmer of light to the embattled states which had been unable to perform their routine duties. The intervention will especially alleviate the sufferings of workers, many of whom were owed salaries for upwards of eight months. But there are costs. There are also questions to be asked as to why the federal government would abandon its initial stance that the ailing states should device measures to bail themselves out of the mess many of them created in the first place. But there is a point to be made that the money being shared actually belongs to the three tiers of government.
However, it is an open secret that the governors in some of these debt-ridden states are remarkable for their recklessness. Not a few of them embarked on inflated and gigantic projects that many of their people can hardly relate to. In fact, some of the governors cannot pick their wage bill because they used state resources to finance the last general elections, perhaps the most expensive in the annals of the nation. In a recent report on poverty findings, ActionAid alleged that state governments, Ministries, Departments and Agencies (MDAs) and local governments “have mismanaged public funds, while money laundering has become a major means by which the country’s wealth is siphoned and stashed abroad.”
Given the foregoing, the pertinent questions remain: Why is the nation encouraging impunity and fiscal laxity? How will these measures help the few governors who were able to manage their resources prudently and to popular acclaim? How does the bailout help the campaign against corruption? And also significant, what happens after these set of relief measures have been exhausted and the global price of crude oil remains depressed? Will the federal government arrange another round of public funds to bail-out the states, many of whose principals are, sorry to say, irresponsible?
Perhaps, nobody has captured the situation better than an analyst, Mr. Joe Attuenyi: “I think the governors railroaded President Buhari into this – and he had no advisers to ask the difficult questions. Some of these banks collude with the governors, grant them unsecured loans, share the money with the governors and here we are federalising the debt. The CBN and DMO are now going to guarantee the debts and restructure them over a longer period. Then the CBN will print N250-N300 billion of new currency not backed by any economic activity! What are the debtor governors giving up in return? And what is the message to the governors that have been more prudent than their peers?”
Those indeed are serious posers that should task the relevant authorities. While there is hardly a state in the nation without some deposits of “gold”, enough to sustain its needs if properly tapped, most of the governors rely entirely on the allocations from the Federation Account for virtually everything. It is therefore little wonder that many of them can no longer meet obligations as basic as payment of workers’ salaries.
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