Sub­se­quent Bailouts: Need for bet­ter de­sign

Daily Trust - - OPINION - By Su­laiman Sani

Alook at the three bailouts de­signed by the fed­eral gov­ern­ment (or any of her or­gans) for states-in-need re­veals that those whose re­spon­si­bil­ity it is to fash­ion the bailouts are ei­ther not aware of the kind of Nige­ria, Pres­i­dent Muham­madu Buhari is ex­pected to create for us or they are liv­ing in their past re­al­i­ties. This is be­cause the ar­chi­tec­ture of all the three bailouts looks sim­i­lar to that of de­sign­ing a Pan­dora’s Box; very beau­ti­ful on the sur­face but empty in con­tent, prom­ise and fu­ture re­al­iza­tions. More ex­plic­itly, the bailouts lacked strengths-in-de­sign that will en­sure the de­vel­op­ment of bailed states so that bailout col­lec­tion is not re­cur­rent in time. Take for in­stance, the ar­chi­tec­ture of the ninety (90) bil­lion Naira bailout in terms of strength and abil­ity to car­ry­ing out salary obli­ga­tions it is pre­sumed to solve. What is ev­i­dent is an im­pe­rial de­sign that con­tin­u­ously will weaken the states and in the long term makes them bailout-de­pen­dent. The con­se­quence of a bailout equipped with such de­signs is the spread of poverty in and across states and by ex­ten­sion; across the coun­try.

We wish to clearly spec­ify the weak­nesses in the de­sign of the three bailouts and how such poorly de­signed bailouts will im­pact neg­a­tively on the drive to solve poverty problems in the coun­try. The un­der­ly­ing mo­tive is that when the next bailout comes (ev­i­dently, in a mat­ter of months), it should have a func­tional de­sign that can achieve mul­ti­ple ob­jec­tives for the ben­e­fit of the people and the coun­try at large.

Ini­tially, the de­signed ninety (90) bil­lion Naira chunk for salary­pay­ment-failed-states is grossly in­ad­e­quate. It lacks the re­quired mag­ni­tude to bailout about 27 states that do not pay salaries to date. A sim­ple anal­y­sis proves this point. If a state with a monthly salary weight of one bil­lion and a salary un­paid bill of seven months col­lects a fif­teen (15) bil­lion bailout from this chunk, triv­ially, it im­plies that the same state will be back for an­other bailout in a re­turn­ing time not ex­ceed­ing ten (10) months. The anal­y­sis of the re­turn­ing time above takes ac­count of the ag­gre­gate fed­eral rev­enue ac­crued when the residue of the bailout pays up­com­ing salaries. Now, within this false bailout re­gion, the size of the bailout can only ac­com­mo­date less than ten salary-pay­ment-failed-states. The con­se­quence of this in­ad­e­quacy is the cre­ation of a homage pay­ing, lip ser­vic­ing, crony elites and a lobby group that will de­ter­mine who gets the bailout and who does not in ac­cor­dance with an­other set of hid­den con­di­tions dis­tinct from the norm at the detri­ment of the people and the pres­i­dent’s quest to erad­i­cate poverty in the coun­try.

Se­condly, the nine (9) per­cent in­ter­est rate ac­com­pa­ny­ing the cur­rent bailout is the worst el­e­ment em­bed­ded in the bailout. For, it de­picts clearly that the ar­chi­tects are still liv­ing in their past re­al­i­ties of serv­ing a cor­po­rate financial in­sti­tu­tion whose aim is to seek profit at the ex­pense of im­pov­er­ished cus­tomers fight­ing hard to make both ends meet. The ar­chi­tects of the bailouts should prove to the coun­try the role of the nine (9) per­cent in­ter­est rate at­tached to the re­cent bailout and how the rate will strengthen the bailed states and the people. Most im­por­tantly, how the rate will aid sup­port to erad­i­cate poverty in line with the gov­ern­ment’s change agenda.

Thirdly, the ar­chi­tects could not take into ac­count the dam­ag­ing ef­fect such bailouts for states will have on the ex­is­tence and au­ton­omy of lo­cal gov­ern­ments in the coun­try. This tier of gov­ern­ment is the most af­fected in the struc­ture of our democ­racy. For, her share of rev­enues is con­tin­u­ously wasted, mis­used and stolen by state gover­nors via du­bi­ous joint al­lo­ca­tion pro­ce­dures that end up put­ting the tier at the mercy of an­other tier of gov­ern­ment. If one stud­ies the salary prob­lem in Nige­rian states, it is triv­ial to see that those who states could not pay salaries are staff of lo­cal gov­ern­ments in most cases. Un­for­tu­nately, here is a bailout de­signed to fur­ther still sup­port such evil chan­nels that deny lo­cal gov­ern­ment staff their wages and now threat­en­ing her au­ton­omy be­cause of the medium it is de­liv­ered. The un­der­ly­ing con­se­quence such poorly de­signed bailouts could have on the struc­ture of the lo­cal gov­ern­ment is the le­gal­iza­tion by ac­tion and the com­plete hand­in­gover of the eco­nomic faith of the tier to reck­less state gover­nors who col­lect funds on their be­half, pay some bits of it and mis­use the rest leav­ing the tier and her work­ers in ab­ject poverty.

There is the ur­gent need to re-de­sign up­com­ing bailouts for max­i­mum uti­liza­tions and ben­e­fits. For in­stance, it will be in­ter­est­ing to see the next bailouts open to lo­cal gov­ern­ments in the coun­try in­de­pen­dent of states. This is go­ing by the fact that most salary-pay­ment-prob­lem-states are only and es­sen­tially tak­ing cover in the salary problems of lo­cal gov­ern­ments so that they con­tinue their cy­cle of reck­less­ness and po­lit­i­cal dom­i­na­tion.

More­over, if we do not have a ‘‘fed­eral min­istry for states’’ that co­or­di­nates the af­fairs of states’ income and ex­pen­di­tures, then there is also no log­i­cal rea­son apart from rea­sons to do with cor­rup­tion to have and sup­port the ex­is­tence of state min­istries for lo­cal gov­ern­ments by pol­icy such as the bailout pol­icy. This way the dom­i­nat­ing ef­fect of cor­rupt state of­fi­cials feed­ing fat on lo­cal gov­ern­ment funds will be ex­posed and nul­li­fied. Be­sides, the lo­cal gov­ern­ment is less com­plex in struc­ture, thus it is eas­ier to con­di­tion, su­per­vise, man­age and con­trol the real bailout process that takes de­vel­op­ment to the grass root from that end. In this sense, the next bailout must be re-strate­gized to en­sure less de­pen­dence on fu­ture bailouts. This could be achieved by eval­u­at­ing quick and short term suc­cesses and bailout­free adopted strate­gies for fu­ture con­sid­er­a­tions.

Dr. Su­laiman Sani is of the Dept. of Math­e­mat­ics & Com­puter Sci­ence, Umaru Musa Yar’Adua Univer­sity Katsina, 09037834473; man15j@ ya­hoo.com

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