The Crushing Burden of Debt in the Land
Last Wednesday, all 36 governors met in Abuja. The purpose was to seek a bail out from the federal government so they can pay the backlog of unpaid salaries to their state’s workers. At the end of the day, they dropped the bail out option and demanded that the debts owed them by the federal government accruing from the costs incurred in fixing federal government roads be paid to them, even though not all the debt-burdened states actually used their monies to fix federal government roads.
Before then, many states, led by Osun, have been groaning under huge debt burden so much that staff salaries have remained unpaid for upward of seven or more months, warranting churches to now charitably donate food items and other welfare materials to the civil servants of that state. It is a poor narrative of how low we have fallen.
Until Osun became the poster boy of a debtor state, it was Benue, whose teachers stayed away from work for many months in protest of non-payment of their salaries even when their then governor, Gabriel Suswan said he could not pay the minimum wage bill. Needless to say that was one of the reasons Suswan’s PDP lost the election in Benue.
The developments have revealed the underbelly of some of these states.
One point that can be deduced from the cash crunch is that many of the states are indeed not viable. They are hardly able to sustain themselves. They depend largely on statutory allocations from the federal government. And that since the federal government’s income has dropped sharply because of the dwindling fortune of crude oil in the international market, the financial fate of some of the states have been hanging in the balance. It is said that about eighteen states are suffering this acute cash crunch. That means half of the nation’s 36 states are in distress. Even the federal government is also in distress. With a federal debt burden put at $63.7 billion, the nation is indeed in an economic mess. The PDP had however explained that the said debt profile includes local and foreign debts, stressing that the debts owed by some states is also part of the said debt stock. Dr Ngozi Okonjo Iweala, former Finance minister, had clarified that former President Goodluck Jonathan incurred ‘just’ $21 out of the $63 billion debt. Whichever way it is viewed, Nigeria is in a mess.
But how did we get here?
The truth is that governments at all levels have been reckless with public funds. Nigeria with all her earnings, despite the fall in oil price, has no business being in economic distress. The managers of our treasury have been unkind to our collective commonwealth.
I recall very clearly how under late President Musa Yar’Adua, the argument arose about the accumulated revenue in the Excess CrudeAccount (ECA) which was established by former president Olusegun Obasanjo to save the “extra sum” from the budgeted price of crude oil in the international oil market. He had brazenly began saving up the money “for the rainy day” on behalf of the federal government and the states.
The present senate president, Dr Bukola Saraki, then the Chairman of Nigeria Governors’ Forum (NGF) however insisted that the money be withdrawn and shared among the states accordingly, with the wonky argument that the law says all monies accruing to the federal government must be shared by all the tiers of government.
The wisdom of saving in the time of boom so you are not stranded in the time of famine was discarded by the Saraki-led NGF at the time. Goodluck Jonathan, who was then Vice President (and standing in for Yar’Adua while he was ill) and desirous to be confirmed as acting President, pandered to the pressure from Saraki and co and they shared the money.And that became the standard practice: all monies must be shared.
Yet there is an oil producing country, Norway, which till date, has been saving up every dollar it earns from crude oil sales. The Norwegian government runs its affairs completely independent of oil earnings. It has only caused them to look inward and be more financially creative. But in Nigeria, the cheap oil money, not laboured for, which drops in every 30 days from the federalATM has caused us to be collectively lazy and look only to Abuja for economic breath. Sad!
What each of the governors did with their share of the money was immaterial. They spent money like vagrant school children, hardly thinking of tomorrow. With prodigal inclination they literally burnt their treasury hoping that the flow will continue non-stop. How wrong!
Now the rain has come pouring, and there is neither a back up, nor anything to shield them from the economic sandstorm. I had written my column then warning that the governors should not eat their future. They did not listen. They crushed down all they got and even went into debts by borrowing from banks.And the poor civil servants are now bearing the brunt of reckless state governors.
Many of the states that are seemingly not distressed are living on huge loans.
I am not surprised that we have come to such a sorry pass. Every perceptive informed person would have seen it coming.
Distressed as the states may be, the question is: has it stopped the governors from faithfully taking their security votes, which in some states is as much as N2 billion per month?
In Osun, Governor RaufAregbesola despite his claim of having a “heart rending” experience because of the debt is a little indifferent because he will not be seeking re-election. Could he have dared to owe civil servants this much in his first term knowing that he would seek their votes for a second term? The answer is NO! He says he is in a “quagmire”, but says it with some smile playing around his face. He cannot be in quagmire and will be smiling. He probably can smile about it because his bills are paid by government, unlike the hapless civil servants who face all kinds of threats from hunger, landlord, sickness, schools etc.
And it looks like the malaise of owing workers is not peculiar to government establishments. It happens even in the private sector. The story is told of a particular entrepreneur, who hails from across the Niger, who runs a popular eatery and entertainment outfit at the National Stadium, Suru-Lere, Lagos, who relishes the idea of owing his little-paid workers for as many as four or more months even while he makes huge profit and prefers, often times, that the workers leave his employ out of frustration, so he can be saved the imperative burden of paying.
The other point to make in this whole financial bind is that the crunch got accentuated by the March/April elections. There was undue desperation by political office holders, either so they can win back their seats or so they can ensure they got a successor they wanted. So, so much money, public money, that is, was poured into the very expensive campaigns. I had also raised alarm about the huge campaign costs, but INEC which ought to monitor campaign expenses was too cumbered by the issues of PVC and card readers to check how much the candidates were spending on campaigns. Beside the visible campaign items on which huge sums were expended, was also the large sums with which electoral officials were bribed. Most of those monies came from the treasury. The consequence is what is haunting most of the states today—raped treasuries. Little wonder the new governors are threatening to probe their predecessors.
The last point to make, which is related to the first, is the management of states’ IGR (Internally Generated Revenue). Last Wednesday, the National Bureau of Statistics (NBS) released what some of the states got last year as their IGR. The least state, Zamfara, got N3.1 billion, while states like Lagos and Rivers got as much as N276.1 billion and N89.1 billion respectively.All it shows is that there is no state without potential. It is the failure to harness the peculiar potential of the various states that makes them hang on federal allocations.
So the question is what did they also do with their IGR?
Amore pragmatic and business-inclined governor can grow the IGR-base of his state like Babatunde Fashola did in Lagos.
Surely, the states can earn far more than they presently do from IGR if they devote more time to a more thorough IGR drive in the states, as well as blocking all loop holes through which government funds are stolen by civil servants.
If well managed, every state should be able to survive, provided they cut their coats according to their sizes or their cloth, as they say.