The bail-out recently approved by President Muhammadu Buhari for states owing workers months of salaries arrears will, no doubt, be a welcome development to concerned workers across the country and, indeed, many of the affected states. It should be stressed that more than a quarter of the 36 states of the federation owe workers’ salaries believed to be in the region of over N110 billion. The worst hit states are Osun, Rivers, Oyo, Ekiti, Kwara, Kogi, Ondo, Plateau, Benue and Bauchi.
An integral part of the bail-out strategy as announced by government is for the federal and state governments to share $2.1 billion (about N497 billion) sourced from recent Liquefied National Gas (LNG) proceeds to the federation account.
Equally, the federal government has directed the Central Bank of Nigeria (CBN) to arrange a special intervention fund that will offer steady financing to the states. The package, which is between N250 billion and N300 billion, is to serve as a soft loan available to states to settle arrears of salaries.
Additionally, the president has approved a debt reprieve plan devised by the Debt Management Office (DMO), which will help states to streamline their commercial loans which is presently put at around N660 billion, and extend the lifespan of such loans while reducing their debt-servicing expenditures. Another part of the plan is to free up more money currently being used for debt servicing by guaranteeing the elongation of the loans in the benefit of the states.
Various public affairs analysts and social commentators have taken divergent positions on the presidential bail-out since it was announced by the federal government. While some applauded the initiative, others simply denigrate it. To those in support of the move, it is the best option available, for now, especially given the parlous state of the nation’s economy occasioned by dwindling global price of oil. With the sharp drop in the monthly revenue allocation to states coupled with their various debt commitments, there is no way most of the states could offset unpaid salaries arrears.
However, those who are against the move hinged their stand on the fact that it would further entrench corruption in the system. They argued that, in as much as it is true that the national economy is experiencing a downward trend, most of the states actually compounded the situation through unbridled financial recklessness. Bailing them out would, therefore, amount to promoting and commending their perceived corrupt tendencies.
In a democracy, these conflicting views and opinions are quite understandable. It is, however, essential to point out that in a troubled economy like ours, government bail-out is one of the economic measures that could rescue the polity from a possible or a definite collapse. It is customary, even in advanced democracies, for government to roll out bail-out strategies to preserve democratic institutions and provide succour to the downtrodden. Without a doubt, most of the states might possibly go insolvent partly in view of the parlous state of the national economy. It is equally important to stress that but for the bail-out, we would have had an unavoidable workers’ rebellion that could pose a serious threat to democracy.
The snag, nonetheless, is for how long will the federal government continue to bail out the states, especially if the economy doesn’t record a significant improvement as soon as expected? This, of course, is where the states need to be more creative and inward looking in shoving up their Internally Generated Revenue (IGR) base. It is better not to have states than to have states that are not economically buoyant. Such would only serve as a huge burden on the country.
According to the National Bureau of Statistics (NBS), the IGR of most states in the country is recording a downward slide. For instance, the IGR of Lagos State in 2014 was N276,163,978,675.95 as against N384,259,410,959.19 collected in 2013. Next to Lagos is Rivers State with an IGR collection of N89,112,448,347.58 in 2014 compared to N87, 914,415,268.80 collected in 2013 fiscal year. Hence, there is a need for states to plug all loopholes for an improved IGR base.
To achieve this, we need to re-examine the idea of global taxation for all citizens. This major source of funding has for long been relegated to the background. Now is the time to reverse the trend. In most of the states, the source of government revenue is limited to taxes paid by the civil servants. Creative strategies must be evolved to drag more taxable citizens into the tax net. Governments all over the world run on the taxes paid by the citizens; we cannot be an exception. It should be stressed, however, that funds accrued from taxes should be judiciously expended, to encourage the tax payers.
Also, the states and other tiers of government should embrace prudent management of available resources. The cost of governance must be reasonably pruned down. There is no point keeping arrays of needless aides if the economy cannot afford such. Our leaders need to start leading by example. All meaningless extravagant tendencies that could plunge the states and, indeed, the nation into deeper economic mess must be shunned. Transparency and accountability must become the order of the day in all government establishments.
It is equally fundamental for both the federal and state governments to address the issue of over-bloated civil service. If it is true, as it is being alleged, that some ministries, departments and agencies (MDAs) keep more than the required number of staff, efforts must be made to deal with such. It is particularly undesirable for any government to spend the bulk of its resources in paying the wages of a lethargic and parasitic workforce. The bureaucracy that is required to drive democracy is one that is prompt, forthright and farsighted. In any nation where bureaucracy has become a drain pipe, democracy would certainly become endangered.
Perhaps, more importantly, the federal government should step up efforts to improve the national economy. One way of doing this is to develop the non-oil sector. It is unacceptable for a country of Nigeria’s stature to continue to be a mono economy.
Our current national economic predicament is a direct result of the failure of the federal government to diversify the country’s economy. Succeeding administrations has for long been paying lip service to the development of the non-oil sector, but have all failed when it comes to actualisation. This trend must change. For us to have a buoyant economy, generate more employment and increase productivity, we must diversify the economy.
On a final note, the federal government should improve the power situation in the country. Regular and stable power supply will enable Small and Medium Enterprises (SMEs) to thrive. Equally, multi-national firms that have relocated because of epileptic power situation could be lured back if the power situation improves. This would not only bring back lost jobs, but will certainly restore lost ones and our economy will be the better for it. God bless Nigeria!
• Ogunbiyi is of the Features Unit, Lagos State Ministry of Information and Strategy, Alausa, Ikeja.