That Governors’ Forum Warning on Looming Economic Crisis
Onyebuchi Ezigbo writes that despite the cheerless moment when accredited journalists were prevented from coverage of the main event of the induction programme for governors-elect organised by the Nigeria Governors Forum, the organisers succeeded in setting the mood for a smooth transition to the incoming administration
The ambiance of the gathering at the Banquet Hall of the Presidential Villa in Abuja suggested that things are no longer rosy. There were tell-tale signs the dire situation in which the country currently finds herself at the venue of the induction programme organised by the management of the Nigeria Governors Forum (NGF). The usual broad smiles and joyous expression that adored the faces of the governors about to ascend the glorious position were missing. The opposite played out at Presidential Villa that fateful Monday.
The restrained atmosphere pervaded the Banquet Hall of the Presidential Villa. The key issues that dominated discussions during the event centred on the economy, insecurity and implementation of the new minimum wage. Apparently aware of the serious challenges that lie ahead of the incoming administration in many states, the newly elected governors chose to be more reserved in order not to be swept off by the surprises and challenges of their new office.
On the whole, 29 governors were elected at the March 9 governorship election, while elections in seven other states are expected at the expiration of the tenures of the governors. Out of the 29 governors-elect,
12 were re-elected as chief executives in states while the other 17 are new on the job.
The Zamfara state governor and outgoing chairman of the Nigeria Governors Forum, Abdulaziz Yari became the man to fire the first salvo at the event and did so in a very succinct manner. The two-time governor presented the good, the bad and the ugly situation of things to the incoming governors in order to get them prepared for the onerous task ahead.
The Looming Economic Crisis
Yari got his colleagues on the edge when he warned that Nigeria stands the risk of serious economic crisis, if nothing was done to diversify her economy. Yari told the governors-elect that it has become imperative that all the tiers of government must work hard to increase their revenue base so that they would be able to meet the demands of the people. Yari who spoke from his experience as governor of Zamfara state in the last eight years said that it has been a challenging experience managing state economies that are totally dependent on accruals from the federation account. According to Yari, many states are facing financial difficulties due to poor internally generated revenue. He therefore told the incoming governors to learn from the challenges of the past administration in their various states and work hard to expand the revenue. Yari spoke of the stabilizing role played by President Muhammadu Buhari who was able to assist the states’ economy through offer of bailout fund. Yari also took up the issue of overburdening loan which he said no longer offered solution to economic problem facing the country. He told a bewildered audience that the states and federal government have resolved to discourage borrowing since it offers no solution to the present economic situation.
According to him, “It is imperative to note that the governors’ forum under my chairmanship and the National Economic Council under the chairmanship of the Vice President have agreed that borrowing is never a reliable alternative to solving our economic problems.” The Zamfara State governor, said that in order for states to meet their obligations, tax laws must be strengthened to bring in more revenue. Another issue raised by Governor Yari in his speech was the challenge faced by states over the payment of the N30, 000 new minimum wage. Yari said the federal government should ensure that key revenue earning agencies like the Nigerian National Petroleum Corporation, Federal Inland Revenue Service, Custom Service and other sister agencies are made to function efficiently and optimally to increase revenue returns.
Vice President Yemi Osinbajo further made the new governors more uncomfortable when he advised them to look inwards for ways to generate internal revenue to enable them pay the new minimum wage. For those who thought that the federal government was about to offer new bailout funds to states to pay the minimum wage, the Vice President’s was a kill-joy. Osinbajo said states should not continue to expect that the federal government can do more interventions because that may not necessarily offer much hope. He said the federal government has intervened in the financial crisis affecting states in the last three years through loans, bailouts and Paris Club refunds to the tune of over N1.1trillion. Giving details of assistance to states, Osinbajo said the FG had in the past three years, intervened through loans, bailouts and Paris Club refunds to the tune of well over N1.1trillion. He said the figure “represents the highest amount of federal government’s extra statutory allocations and interventions to states in Nigeria’s history and we are proud to say that there were no discriminations along party lines. “Speaking on the complaint by some state governors over the difficulty in meeting the demands of the N30,000 minimum wage, Osinbajo advised the states to devise a means of improving on their internally generated revenue (IGR) in order to cope. According to Osinbajo, states must strive in the next few years to earn more in internally generated revenue. He said states must leverage their most advantageous agricultural produce, and working with the federal government’s initiatives in agricultural credit and the recently launched Green Imperative, with the Brazilian Government, adding that it was possible for states to generate significant revenues from agriculture. He said, “We must more effectively collect Value Added Tax and increase our agricultural output, work with the federal government to make broadband infrastructure available all over the country, so our young people anywhere in the country can do jobs from anywhere in the world, from their villages in any corner of Nigeria.” Osinbajo, however, cautioned states against going on the over-drive in the effort to raise revenue from taxation. For instance, he said, “If a state is charging for right-of-way from communications companies and is hindering the laying of cables and other broadband infrastructure as an IGR measure, permit me to say that that will be penny wise and pound foolish. To tap into the millions of jobs in technology and other services that a country like India, for example, has tapped into, requires broadband infrastructure across the country.” Speaking on the federal government’s new policy outlook, Osinbajo said the president has made it clear that government will be focusing attention on human capital development and physical infrastructure. He said, “We will be working with the states on education, especially the education of girls, and we have begun some deep diving in this respect at the National Economic Council. We are doing the same with healthcare. We have already started to implement the one per cent of CRF in the Health Act and that was implemented in the 2018 budget and we intend to do so with the 2019 budget.”
Tackling Security Challenge
Osinbajo solicited collaboration between the states and federal government in designing more creative ways of decisively addressing the country’s security challenges. The vice president told new governors that one of the very critical issues that will take priority at the National Economic Council (NEC) is how to fund security more effectively. Osinbajo informed the gathering that the new thinking is collaboration between states, the federal government and the private sector on management of security in the country. He was full of praises for the governors for their support to the law enforcement agents through security votes. He reiterated the need for more effective collaboration of the federal government with the states, particularly in the area of community policing and involvement of citizens, civil groups, traditional institutions and the police. Osinbajo told the participants that, “As Mr. President has said, maintaining security is the first order of business for us as Chief Security Officers at the federal and state levels. We must work together and seek even more creative ways of making our country completely safe for its citizens. I must commend the excellent support that governors have been giving the Police and Armed Forces posted to your various states. I know that large amounts of money are voted practically every month in support of law enforcement and security. One of the very critical things that the National Economic Council will have to do in its next meetings is to look at how to more effectively fund security. This has to be collaboration between states, federal government and the private sector. I know that several private sector organisations and individuals are keen to contribute in one way or the other to funding law and order and security infrastructure in our country and I am sure working together with NEC, we can do a lot more than we are doing at the moment.” Beyond insecurity, Osinbajo said the country was facing a myriad of other challenges in the areas of human capacity development, education, healthcare and unemployment, noting however, that as huge as the challenges may be, they are not insurmountable.