Nigeria Rethinking the States and Bailout
By Editorial Board
Nigerian Guardian
July 15, 2015
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.
Nigerian Guardian
July 15, 2015
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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