Rethinking the states and bailout

THE Federal Government’s succour to the states to clear workers’ salary arrears may appear logical, given the states’ near bankruptcy, yet, it is an unsustainable governance model. Interventionist gestures have never worked in Nigeria’s warped federal system and this one is particularly viewed with much suspicion on account of the road leading to the states’ prostrate circumstance.

This should be the last time incompetence, profligacy and visionlessness would be lent a raft to stay afloat.

While Nigeria’s revenue may have dwindled due to low oil prices, leading to much smaller accruals to the states from the federation account, poor governance, laziness and corruption, among other vices on the part of the states’ leadership combined to compound their woes.

Many of the governors as chief executives have proven time and again to be profligates, lacking in decency of character and boldly wasteful with resources while totally bereft of ideas on governance and how to raise funds to supplement income from the federation account.

This current intervention, announced the other day, by the Federal Government should, therefore, be the last. And to underscore that resolve, the Federal Government should no longer talk to the states collectively as a pressure group for funds.

Each state must henceforth find its own way of running a balanced budget, and if in need of any help, negotiate strictly on own terms while the governors are held accountable by their people for any financial impropriety, if that would at least force a return to the path of rectitude. This, of course, calls for openness on the part of the state governments and vigilance by the people.

The lesson is simply that politicians need character in service in an atmosphere of change envisaged by citizens in the current dispensation.

Painfully, gaps in initial public information about the actual source of the announced ‘bailout’ had left much to be desired. Whence did the money come? And on what conditions? What are the implications for the future?

Official clarifications later talked of non-interference with the supposed national savings, the excess crude account (ECA) which itself was a nebulous creation. Details on attached conditions (if any) to the financial support were sketchy, as the public grappled with the conflicting reports from the Presidency.

The implications and the sub-texts of these will certainly bother Nigerians for a while as poor information has almost compelled conclusions by the people that another opaque style of governance is in the making. This is an unnecessary dent on the image of the nascent Muhammadu Buhari administration.

Government workers (and their families) have suffered a lot in the hands of the about 23 states defaulting on salary payments running between two and nine months. The respite is, therefore, welcome, provided the defaulting governors will deploy the funds to honour their commitments.

The expected relief from the festering crisis will lead the Federal and state governments to share about $2.1 billion that accrued from income tax and other earnings just paid by the Liquefied Natural Gas Limited (Nigeria LNG) and a loan rescheduling for states by the CBN. The latter measure is expected to free the huge monthly deductions from defaulting states’ accounts by banks from federal accounts relative to allocations.

The relief package includes N413.7 billion from the LNG proceeds and the balance of about N250 to N300 billion special intervention soft loans to states as packaged by the CBN. Moreover, the Debt Management Office (DMO) is expected to assist states with a debt relief programme to restructure over N660 billion commercial bank loans, targeted at extending the life of such loans while reducing their debt-servicing expenditures.

The affected governors whose indebtedness on salaries of workers totalled over N110 billion, it must be said, have failed completely in their pledges to the people and it is equally bad that some federal departments and agencies are in similar messy positions as the states. However, it is gratifying that the interventionist gestures were specifically designed to alleviate workers’ plight and they would have immediate effect to ensure stability in the system.

It must, however, be pointed out that the declining economic fortunes of the country which affected the states’ monthly share from federal allocation notwithstanding, many governors, especially in the past, ran very poor shops and lived unsustainable lifestyles devoid of transparency or accountability. Although the current dispensation is just rolling off, it is obvious that many still have not learnt any lessons. They must either change their attitudes or have the train of change leave them behind.

Governors should know that public office is a platform for service and not an avenue for making money. It is in their predilection for graft, self-aggrandisement and outright incompetence that many governors have run their states bankrupt. Their failure as persons and betrayal of the peoples’ trust is advertised by a certain moral bankruptcy that makes such chief executives who, for dubious reasons, ran their state economies aground, shamelessly line up for federal support or further fund sharing.

For instance, flying around in chartered aircraft by a governor adds no value to governance and is inconsistent with service to people. Mismanaging funds in the guise of security votes or constituency allowances, wardrobe allowances, office of the first consort and the like is not only fraudulent, it is an insult to the people a governor is elected to serve.

Needless to say that unrestrained wastage of states’ resources is criminal. Therefore, there must be an end to such profligacy. The country, of course, has enough laws and institutions to take care of opportunistic parvenus in high places and these have to apply henceforth as appropriate. It is high time citizens were granted some confidence in the system by their leaders.

Clearly, from the current bankruptcy of the states, the danger now and ahead of Nigeria’s warped federal system is becoming more obvious, calling for the political will to institute a true and balanced federation. The country cannot function effectively without a properly structured true federal system. As the stress on financially weak states is beginning to tell on them, the whole country can only continue with such interventions as has just been witnessed with national collapse in mind as the final result.

These difficult times avail the country the chance to embrace the truth, let governance be liberalised in a way that states can be truly federating units. In this regard, the government can ride on the last National Conference’s recommendations to restructure the country for efficiency and prosperity.

The lesson from the present debacle is that a bailout, desirable as this one is, and by whatever designation, cannot solve the states’ problems. A regime of good governance, accountability and prosperity for all can only be created in a well-structured truly federal Nigeria, shorn of laggards in office and rent-seekers in power.

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  • OkwuBndu

    Thanks for this balanced editorial. We are supposed to be in the era of “Change”. But let’s be honest with ourselves that any “Change” that doesn’t end in the restructuring of Nigeria to true Federation of the states will only be an excercise in self delusion. The recommendations of the last national conference needs be implemented. And we need realize that Nigerian corruption is rooted in the corrupt unitary system which we mischievously call “federal”.

    • Julian edgogiwe

      True Federalism is fanned by the embas of true fiscal arrangement. The current intervention by fiat by the Federal Government to assuage State goverment’s clear finnaicial recklessness clearly contradicts the vibre called change echoed by the present governmment. How on earth can a government riding on the euophoria of change and reform suddenely endorse blatant financial mess and profligacy promoted by lack of financial discipline, due process or adherence to extant financial instructions. State govenors’ total deliberate abroagation of extant financial instructions and their blatant abuse of fianncial regulations in theeir public expenditure behavior cannot just be swept under the carpet or rewarded with such a largese. Habbabh!!! Let the ”Change” begin by asking key questions regarding the whereabout of huge and unprecedented Revenue allocated to State govedrments, realising that by the extant law, SALARIES, PENSIONS AND GRATUTIES ARE THE FIRST LINE CHARGE TO THE CONSOLIDATED REVENUE (CRF). There should be no excuses at all for any arrears of salary, the reduction in fiscal reciepts from oil and gas nothwisthstanding. Good governance are proactive and not doomed by a familiar economic osciliiations. Public Funds are entites carefully wrapped according to ”Heads” and ”Subheads ” in tandem with extant Appropiration law and should not be confused with incidence of net negative cashflow arising from sheer corruptiona and recklessness!!! There is always a clear distinctive line btween prudence and ipuntence in public expediture where state Governors willifully personally acquire private Jets, build personal estates and convert government treasury into personal wallets and spends according to personal idiosyncracies and desires without regards to public expenditure guidelines. Who is fooling who??? And let us not quickly forget that these are Governors who went all the way to the Supreme Court to obtain judgement agaisnt the FGN to share all that was reserved as SPECIAL RESERVE FUNDS/EXCESS CRUDE ACCOUNT that would rather been applied to day to cushion the effect of any cashflow deficits. The error by Jonathan administraiton to exhaust the Special reserve account in order to curry favor from the governors has now boomeranged. It is clear from all indications that the exisitng politicial structure likened to that of the USA cannot be sustained now or later. It is better to quickly revert to a less costly all inclusive politicial structure that takes into account Nigeria’s perculiar economic and social circusnstances. The time is running fast and we better race ahead of the time. The Greece, Ghana, South Africa and even Cameroun can survive a political rapture, I doubt if we have the capacity to survive a national economic catastrophy.

  • sonofgoddavid



    “Government of the people” it is
    time to stop all these tariff increases or blocking our access to
    hard currency.

    Let us get to the root of our issues,
    apart from corruption, we need to start:

    Providing power or gas 24/7 to
    existing industrial zones or build new zones and powering them. You
    do not need FDI, your brothers and sister that ran away because of
    power will bring their money back and attract new ones will as well.
    This will provide employment.

    Provide loans at low rate not 25%
    (effective rate) to manufactures. How come when developed economies
    are in recession, they reduce their interest rate to zero or close
    to zero? Production of goods CAN NOT BE DONE at 25% rates, only
    buying and selling.

    Lastly let make #NAIJAGOVBUYNAIJA.
    This will
    have a quick boost to our economy. Local production will be consumed
    and keep local employment going with NO need to put tariffs on used
    cars etc. Remember by law the governments have taken all our
    resources and we do not have anything to show for it. We have to
    build our roads, provide our water, light, security and sewage.

    will go as fellows:

    governments Federal, State and Local governments and all agencies
    must buy locally assembled cars ( it happen in the 70s). And leave
    the poor man to his tokubo.

    food and drinks, and household items (dishes, soap etc) at official
    functions and resident must be produced locally.

    clothes, shoes etc. worn by high end official at official resident
    or function must be produce locally.

    air conditioners used in official structures must be assembled in