States need fiscal balance, not bailout – Punch

States need fiscal balance, not bailout – Punch

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The report that President Muhammadu Buhari has approved the release of N713.7 billion intervention funds for the federal and state governments
to pay workers’ salaries should bring relief to civil servants who have
been bearing the burden of a drastic fall in oil revenues for some time
now. But the bailout should be seen as a palliative; the harsh forces
of economics demand that government at all levels learn how to live
within their means. The package contains N413.7 billion from special
intervention funds and about N250 billion to N300 billion to be
advanced as a soft loan to states by the Central Bank of Nigeria. Also,
the Debt Management Office will assist the insolvent states to
reschedule their over N660 billion bank loans.

So far, no fewer than 24 states have failed to pay salaries, some with a
backlog stretching up to 10 months. How the workers are surviving
under such a condition cannot cease to marvel. But no state chief
executive has been able to capture the stark realities of the situation
in as vivid a manner as the Osun State Governor, Rauf Aregbesola. In
an address to declare open the sixth Assembly of the state, the
governor painted a picture of total gloom and helplessness. Aregbesola
said he met a wage bill of N1.4 billion, upon assuming the mantle of
leadership in 2010. But, egged on by an unprecedented financial
windfall, fuelled by unparalleled boom in the oil trade, the wage bill
shot up to N3.5 billion by the end of 2012. At the same time, the
statutory allocation to the state from Abuja only recorded a marginal
increase of about N400 million, from N2.1 billion to N2.5 billion.
The Osun State scenario is not by any means peculiar; it actually
offers an insight into what obtains in states across the country. In his
comments at the Adegoke Adelabu Memorial Lecture in Ibadan last
year, the Oyo State Governor, Abiola Ajimobi, said the state’s wage bill
of N2 billion he inherited had more than doubled to N4.6 billion. Today,
it stands at about N5.2 billion, while the monthly allocation of N4
billion collected last year has plummeted in line with the current
dwindling oil revenues. In Rivers State, where the wage bill has
ballooned from N2.5 billion to N9.2 billion in the last eight years,
former governor Rotimi Amaechi said the monthly allocation had
reduced by 50 per cent.
Most of the governors have blamed their dire financial situation on the
minimum wage increase of 2011; but not many have been honest
enough to admit that the entities they preside over are mere cost
centres that cannot deliver development. At the slightest opportunity –
as was evident during the last National Conference – a motley group
of agitators demand the creation of new states. None of them ever
gives a thought to the viability of such states. So, rather than play the
role of agents of development, states now encourage laziness, and
wait, arms folded, for manna to fall from Abuja.
Perhaps, the time has come for a reappraisal of the states as they are
currently structured. As the immediate past Lagos State Governor,
Babatunde Fashola, said recently, there is the need to merge states
that are not viable so that the burden borne by one state can be
evenly sustained when two or more are bonded together. This makes a
lot of sense given that the country fared much better when there were
just three or four regions – salaries were more readily paid and
development delivered effortlessly. Some of the landmark
achievements in the South-West, such as the establishment of the
first television station in Africa, creation of industrial estates, the
building of the Cocoa House and a network of roads, among others,
were products of a period when the current five states were just one
entity, the Western Region.
By then, the federating units – Western, Eastern, Northern and Mid-
Western regions – were run as a business, producing their resources
and paying tax to the centre. Today, our states have become beggarly,
surviving mainly on hydro-carbon revenues.
The public finance approach of running government as a business
should be re-introduced in our national life. Contiguous states have to
pool resources and work towards self-sustenance in the true spirit of
federalism. They should review their fiscal management style in tune
with the current realities. For instance, how many of them have taken
a look at the staff strength of their civil service within the period that
their wage bill had been ballooning? How many of them have done a
biometric audit of their staff to weed out “ghost” workers?
At the level of the governors and their retinue of aides, it is important
to note that the pressure they put on wages is out of proportion to
their relevance. Apart from the need to cut down on the number of
commissioners and other aides, reviewing their bloated remunerations
has become imperative. The same goes for House of Assembly
members. The time has come to see politics as an opportunity to
render service; not to amass wealth. The newly-elected Governor of
Kaduna State, Nasir el-Rufai, Ajimobi and a few others have already
taken the right step by cutting the number of their commissioners.
These are short-term measures. Fiscal repair will not come overnight;
it requires serious planning and a strong political will to take difficult
decisions. In the long run, states should work assiduously for a
constitutional review that will enable them to explore and exploit
minerals within their territories. That is exactly what federalism is all
about.