The state governors had
declared that the only way out of their financial predicament was bailout from
the federal government. After much debates and acrimony, Buhari agreed to bail
the states out to enable them pay backlog of workers’ salaries. The federal
government, through the Central Bank of Nigeria (CBN), set out to disburse the
“special intervention fund” totalling about N338 billion to 27 states. The
money was given at an interest rate of nine per cent and payable over a period
of 20 years.
The states include Abia
(N14.152bn), Adamawa (N2.378bn), Bauchi (N8.60bn), Bayelsa (N12.85bn), Benue
(N28.013bn), Borno (N7.680bn), Cross River (N7.856bn), Delta (N10.036bn),
Ebonyi (N4.063bn), Edo (N3.167bn), Ekiti (N9.604bn), Enugu (N4.207bn), Gombe
(N16.459bn) and Imo (N26.806bn).
Others are Katsina
(N3.304bn), Kebbi (N0.690bn), Kogi (N50.842bn), Kwara (N4.320bn), Nasarawa
(N8.317bn), Niger (N4.306bn), Ogun (N20.00bn), Ondo (N14.686bn), Osun
(N34.988bn), Oyo (N26.606bn), Plateau (N5.357bn), Sokoto (N10.093) and Zamfara
(N10.02bn). Though, these funds were granted on very soft terms, they
constitute internal debt the states must pay in future. It was not clear to
what extent the bailout funds would go to alleviate the financial crunch facing
the states.
With the bailout funds, the
governors began to pay the arrears of salaries and allowances owed workers.
Reports indicated that the money was merely a drop in the ocean. Many states
owed workers huge salaries, allowances and other emoluments. While some
governors managed to offload part of the salaries, others are unable. The worst
hit was retirees, whose pension and gratuity could not be paid. Some state
governors declared that the bailout fund was not for pension and gratuity. That
has left many retiree old civil servants in abject misery.
While that was going on,
the governors were lamenting, once again that the bailout fund was half
measure, as they are still broke. This time around, they are saying that they
could no longer pay the minimum wage of N18, 000 to workers. Nigerians are
scandalised as to how governors, with their lavish lifestyle, cannot pay N18,
000 minimum wage, which at today’s exchange rate of N256/dollar, amounts to 70 dollars
per month! While some governors are threatening to downsize their work
force, others are threatening to cut salaries. As a result, the governors are
scheming for another bailout from the federal government. The question is for
how long will the governors and their states depend on bailout funds for
survival, especially, now that Nigeria’s oil revenue has tumbled.
Over the weekend, the price
of crude oil crashed to all time low of $39.43 per barrel, as the Organisation of Petroleum Exporting
Countries (OPEC), failed to agree on production cuts. Besides, there are
unconfirmed reports that a certain western power broker working in concert with
the International Monetary Fund (IMF) is rallying western countries to stop
buying Nigeria’s oil for refusing to devalue the naira. Naira has crashed to N256/dollar
at the parallel market. It is very easy to suffocate Nigeria for depending solely
on oil.
All that is required is to
shut the oil pipes from flowing to the buyers and the country would grind to a
halt! Nigeria is not thinking strategically? OPEC sources indicate a protracted
low energy prices, of which, Nigeria would be among the worst hit; at a time
when the states are broke and the federal government might not be able to bail
any state out.
The other day, President
Buhari declared that Nigeria was broke, which attracted much condemnation and
opprobrium. But the President was being frank. For us, there is nothing wrong
in telling Nigerians the truth. Nigeria is a country that lives on denials.
Given the ugly scenario in the world crude oil market, does one need to be told
that the country is heading to the doldrums? How many states would be able to
function if the emerging scenario continues?
That brings us to the issue
of diversification of the economy. It is sad and dangerous that virtually all
the money used in Nigeria comes from only one source – oil. If anything happens
to the oil, Nigeria grinds to a halt! The Vice President, Professor Yemi Osinbajo, has been hammering that the 2016 national
budget would be non-oil based. Good. Also, the government has been preaching
diversification of the economy. But how do you diversify the economy, when
little or nothing is happening on other economic sectors? For many states,
diversification means increased Internally Generated Revenue (IGR) through
multiple taxes on the citizenry. But is that what diversification entails?
Diversification requires
looking back to the huge resources the country is endowed with and fully
exploiting them to the benefit of the people and the economy. Every
individual, village, town, local government and state in Nigeria is supposed to
be an active player in the management, exploitation and use of our God-given
resources.
Apart from oil and gas, the
resources include land resources – coal, tin and columbite, iron ore,
uranium, limestone, lead, zinc, ignite, salt, marble, gold, etc; forest
resources – wild game animals, palm oil, palm wine, rubber, timber, cocoa,
firewood, fruits, a rich agricultural land for cultivation of high yielding
cash crops; water resources – fish and a host of aquatic resources.
The first issue has to do
with resource ownership. Who owns the resources, or the kind and right of
stakeholders, is what determines how the resources are exploited. The laws that
bestow virtually all resources on the federal government should be abrogated.
That is the only way to diversify the economy. The states are alienated from
their resources. Rather than asking for bailout, the governors should ask for
unhindered access to the resources of their states for revenue generation.
(guardian)
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