The inability of most states of the federation to generate sufficient internal revenue (IGR) for sustainance, resulting in their near insolvency, can be traced to the detachment of the governors from the citizens and inadequate knowledge of the natural endowments, BusinessDay interactions with stakeholders show.
Investigations also reveal that some of the chief executives are non-resident politicians, lacking sufficient knowledge and understanding of the dynamics of their home states, and were foisted on the citizens by god-fathers.
The implication is that there is an absence of capital formation, as contracts are awarded to out-of-state cronies or relations, leading to capital flight.
Similarly, many cabinet members and advisers, particularly in sensitive ministries such as finance, budget and economic planning, are often absentee public servants or private practitioners residing outside the states.
Investigations further reveal that some of the governors in the north-central were resident in Abuja or Jos before they were elected as governors.
Many of governors in the south-east were believed to be residing in either Enugu, Aba and Owerri, while those in the south-west were mostly resident in Lagos or Ibadan.
Those in the north were mostly to be found in Kano, Kaduna and Abuja, before assuming office in their states.
“Some of the governors lack depth on the geography, resources and dynamics of the states they govern because they were not resident there until months or weeks to the elections. The implication is that they are largely ignorant of the natural resources in their dormains,” said a stakeholder who pleaded anonimity.
Opeyemi Agbaje of RTC Advisory Services limited, said in a published article, that“Most states do not retain capital, except salaries earned and invested or spent by civil servants, and therefore, cannot grow their local economies.
“Any notion of growing Internally Generated Revenue (IGR) in such states is fanciful and nonsensical, as long as they do not retain and regenerate capital for development.”
Agbaje further said, “Their indigenes earn and retain wealth in Lagos, Abuja, Kano, Kaduna and Port Harcourt. They do not repatriate or invest capital in their home states; their governors and commissioners export their ‘gains’ to Lagos, Abuja, Dubai, South Africa and London. “Contracts awarded predominantly go to businesses and individuals domiciled outside the states, the result being states starved of capital and resources for development.”
Chidi Odinkalu, chairman, National Human Rights Commisssion, (NHRC), who spoke on Channels Television last week called on the governors to ‘square up’ with the Nigerian people, as this is the only way of knowing and meeting their feelings.
Bismarck Rewane, chief executive, Financial Derivatives Company limited, sees the development as a consequence of financial irresponsibility and failure on the part of the governors.
Rewane says that only a restructuring of the economy and scrapping of security votes being enjoyed by the governors without account, can arrest the situation.
Rewane who also spoke on Channels Television, accused the governors of inefficiency and leakages in their administration. He further said the governors had failed to prepare for the rainy day.
Odinkalu does not see the recent cash disbursements by the Federal Government to the states as bailouts, as he maintains that the funds would have been shared among the three tiers, as statutorily required. He however said that the states should have been left to suffer the consequences of their failures.
Odinkalu sees the development as a structural problem, as the states now borrow for consumption. He also regards the security vote as ‘nonsense’, and wonders “why should a governor owing his people be elected to the Senate?”
Tilewa Adebajo, an economist fears that the development would lead to erosion of the nation’s savings, while at the same time bourgeoning the nation’s domestic debt by at least N5billion this year.
Already, the developmet is said to be responsible for the dissenting views within the board of the ruling All Progressives Congress (APC) coalition, as to the direction of economic policy, particularly on the issue of fuel subsidies.
Investors had hoped that Buhari’s government would end the regressive and corruption laden subsidies as part of his commitment to the promised structural reforms that have crimped growth in Africa’s largest economy.
Instead, Buhari and the governors are said to have resolved to continue with the monster which is believed to have eaten deep into the fiscal earnings of the cash strapped polity.
Nigerian governments, particularly the states are hugely indebted. The total debt stock as at March, 2015 is put at $63.5 billion or N12 trillion.
External Debt Stock (FGN + States) stood at $9.4 billion (about N1.9 trillion), according to the Debt Management Office (DMO) data.
Domestic Debt Stock (FGN Only) stands at $43 billion or N8.5 trillion, while that of states is put at $10.9 billion or $1.69 trillion.
Lagos is Nigeria’s most indebted state, with $1.17 billion in debts. It is followed by Kaduna with $234 million , Cross River ($142 million), Edo ($123 million), Ogun ($109 million), Bauchi ($88 million), Katsina ($79 milllion), Osun ($74 million), Oyo ($72 million) and Enugu ($69 million).
The states that are least indebted are Taraba, (N4.56 bn), Borno (N4.61 bn), Delta (N4.85 bn), Plateau (N6.19 bn), Yobe (N6.25 bn), Benue (N6.62 bn), Abia (N6.76 bn), Zamfara (N7.11 bn) and Kogi (N7.16 bn).
Osun State is one of Nigeria’s poorest states, but ranked 9th in the list of the most indebted states in the country. One of its debt-accumulating activities is the N11.4 billion Sukuk, which made headlines in 2013 (Sukuk is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds).
The Federal Government recently approved N714billion bailout to states to reolve their indebtedness to workers.
The Central Bank of Nigeria, (CBN) is expected to offer assistance in the form of concessionary rates to interested states, which is part of the comprehensive N713.7billion bail out package. The bail out package includes N413.7billion special intervention funds and the balance of about N250billion to N300billion, which is soft loan to states.
John Omachonu
