Hard
times provide the opportunity for deep thinking, creativity and
innovation. Obviously, the hard times are here as the Nigerian economy
faces challenges on all fronts.
First,
the price of crude oil, which is the mainstay of the economy, collapsed
from over $100 per barrel, pre-June 2014, to about $50 per barrel.
Second, the country’s crude stock is no longer sought after by
international refineries and we have large cargoes of unsold crude
stored in super tankers in the sea awaiting buyers. We are still
producing crude oil with the unsold stock outstanding. Oil revenue
provides up to 70 per cent of Federation Account revenue normally shared
by the three tiers of government. In this scenario, the fiscal buffers
that would have cushioned the fiscal crisis have been drawn down and
only about $2bn is left in the Excess Crude Account.
With
the exception of two or three states, virtually all the states in the
federation depend on statutory allocations for their survival. Yes,
survival in terms of recurrent and capital expenditure. In many states
of the federation, workers are owed arrears of salaries and there seems
to be no immediate plan about where to get the money from to settle the
indebtedness. Capital projects have ground to a halt and there is an air
of despondency across the land. Media reports indicate that states
owing salaries or pensions include Abia, Adamawa, Akwa Ibom, Anambra,
Bauchi, Bayelsa, Borno, Benue, Cross River, Delta, Edo, Ekiti, Gombe,
Imo, Jigawa, Kaduna, Kano, Katsina, Kwara and Kogi. Others are Ogun,
Ondo, Osun, Oyo, Plateau, Rivers and Zamfara states. But the political
class at the state level, led by governors, seems not to understand the
magnitude of the fiscal crisis. For them, it is still business as usual.
The desperation with which political offices were contested at the
state level created the picture that the contestants understood the
challenges ahead. Many of the newly elected governors are now regaling
Nigerians with tales of empty treasuries and overbearing debt burdens.
We
need to understand simple propositions. The fiscal crisis at the state
level is directly and indirectly proportional to the level of fiscal
rascality, lack of transparency and planning, and unbridled
mismanagement of resources at that level of governance. It is also tied
to a budgeting process that is not evidence-led and to the docility of
citizens that shy away from holding elected leaders accountable.
Governors run the states as their personal fiefdoms; they brook no
opposition and personalise the instruments of governance to respond to
their whim and caprice only. In this scenario, budgets provide no guide
to the management of state resources and the budgets are hardly
available to the public. For Nigerians in this day and age to be
governed by emperors at the state level who think that the budget is a
secret document that should not be made available to citizens is as
unfortunate as the outcome of such governorship imbecility. Thus, state
budgets are filled with frivolities as the civil society merely grumble
and take no action. Even the lead intervention on the budget which the
Nigeria Labour Congress used to take in the military days is now
history.
The state House of Assembly that is supposed to provide
checks and balances and oversight functions in most instances is filled
with the governor’s lackeys and nominees and they simply rubber stamp
whatever comes from the Government House. This is made possible by the
lack of internal democracy in parties where the governor as the leader
of the party at the state level determines who gets what in terms of
nominations and tickets to fly the party’s flag at any level. Further,
many state legislators lack functional education to perform their
duties. When they get elected, they fail to utilise the plethora of
training and courses provided by state funding and development partners.
When money is made available to them to hire assistants, consultants
and experts to facilitate the legislative job, they end up not utilising
the money for the purpose. At the end of the day, we have legislators
who do not understand what they are elected to do. They identify their
job schedule as starting and ending with supporting the state governor
and endless politicking.
Why would states with huge statutory
allocations like Rivers and Akwa Ibom owe workers? And these states also
have a huge debt profile. What exactly did the governors do with the
state resources? In the same Rivers State for example, the new governor
just got approval to borrow N10bn from Zenith Bank to run the
administration. The request and the approval are illegal and unlawful
considering the clear provisions of the Fiscal Responsibility Act which
only allow borrowing for capital expenditure and human development.
Running the administration is a euphemism for recurrent expenditure
especially overheads. And the approval in the rubber stamp legislature
was virtually unanimous. This scenario is replicated across the
federation and it is only during periods of political disagreements that
issues are raised about this kind of fiscal recklessness. The dispute
between a faction of the Enugu State House of Assembly and the outgone
governor of the state is a case in point.
Thus, the scenario is
to wait for the end of the month to share the statutory allocation
coming from Abuja. No attempts and reasonable efforts are made to tap
Internally Generated Revenue because the government knows that it will
be compelled by citizen’s power to open up the fiscal space if it
insists on getting everyone into the tax net. So, taxation and IGR
source are severely limited to those who suffer compulsory deductions
from their salaries and a few other avenues.
Hardly has any
state conducted a public expenditure review and sincerely implemented
the findings of the review. Since 2007, only a few states of the
federation have enacted the Fiscal Responsibility and Public Procurement
Laws. And where they have been enacted, the institutions to
operationalise them have either not been established or where
established, have been poorly funded to ensure that they cannot serve as
a check on the executive. Audit reports and follow-up on the audits are
a virtual luxury; value for money is relegated and at the same time, we
believe that state resources will not be mismanaged.
There is a
way out of the dwindling oil price. It is the age old taxation and
raising of internal revenue. For the people to willingly accept to pay
and increase the revenue available in government coffers, governors must
agree to open up the fiscal space and process. They must render
monthly, quarterly half-yearly and yearly accounts of the resources
placed at their disposal by citizens and what they did with the
resources. They must also cut down on the costs of governance; long
motorcades, huge security votes and bulging overheads should be reduced
to manageable levels. Governors and legislators should stick to their
official and approved remuneration which is reasonable as against the
scandalous perks of office which they appropriate to themselves.
Inflation of contracts should also be a thing of the past.
Over
the medium term, states may consider cutting down their bureaucracies to
manageable levels that can be financed with their IGR so that statutory
allocations are dedicated to capital expenditure. Finally, the citizens
and the civil society must wake up to the unfortunate but true fact
that our states are mismanaged because we failed to hold elected
officials accountable.
- @censoj
No comments:
Post a Comment