States and the federal loan package
Recently, the federal government announced another loan package of N90 billion for states. The loan package announced by Minister of Finance, Mrs. Kemi Adeosun would be accessed through bond only by those states that meet the 22 conditions contained in the fiscal sustainability plans of the government. Parts of the plans, include the implementation of a centralised Treasury Single Account (TSA) and the publishing of their audited annual financial statements by December each year.
Nigerians have watched in utter dismay the daily singsong by state governors at the lack of funds to meet the statutory obligations in their respective jurisdictions, especially for the payment of workers’ salaries. These governors have consistently pointed accusing fingers in the direction of the Federal Government as the main culprit in this curious saga. Such outcries by the state chief executives are becoming commonplace, thereby giving the impression that they lack the vision and creativity to generate revenue internally without constantly going caps in hand for bailout. Definitely, Nigerians are wondering why it is becoming a habit for state governors to wait for allocation from Abuja before embarking on any programme or projects.
Expectedly, Nigerians are becoming uncomfortable with the consistent show of public outcry. Of course, the most often quoted reason for the demand is the dwindling allocation to the states from the federal government.
We are aware that the country’s constitution gives the central government an overwhelming influence in fiscal matters in comparison with the constituent states. A number of factors account for this, which include the growing importance of crude oil, the civil war, military incursion into politics, and state creation exercises that reduced the geographical size of the former regions which made them inherently weak and excessively dependent on statutory allocation. In view of this, revenue sharing and allocation between the federal and other tiers of government have become the most contentious issues in Nigeria’s fiscal federalism.
For example, the current revenue formula has the federal government getting more than 40 per cent of all revenue; the 36 states receive only 30 per cent, while the 774 local governments get the remaining. However, until a new revenue sharing formula comes into effect, the states must make do with what the constitution entitles them. It is therefore imperative for governors to seek creative ways of bringing more money into their states’ kitty.
It is time like this that Nigerians differentiate those governors who think outside the box from those sitting on their hands and waiting to be spoon fed from Abuja. We have always believed that the difference between one state governor and the other is their individual abilities to see opportunities where others would normally see threats.
On the other hand, we are at a loss knowing why some governors have become spendthrifts in the face of dwindling revenue. Rather than engage in productive ventures to raise revenue for their states many of them still live like modern day Pharaohs. Even at this, Nigerians need a constitutional reform that will launch the federating units into the productive industrial orbit; not one that would reduce them to indolent unproductive beggars that will always be looking forward to monthly subventions.
