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Friday, March 23, 2018 12.53PM / Opinion by Jideofor Adibe
There
are lots to be read into the recent report by the Fiscal Responsibility
Commission on the debt profile of various state governments in 2016. According
to the Punch of March 20 2018, which reported extensively on the report, the debt profiles of about 18 states exceeded their gross
and net revenues by more than 200 per cent.
The paper quoted the FRC as saying that the debt may have
increased by 2017 since “there was no effort by the states to clear them”. It
also quoted the FRC as saying that the development was contrary to the
guidelines of the Debt Management Office on debt sustainability, which
recommends that the debt status of each state should not exceed 50 per cent of
the statutory revenue in the previous 12 months.
“In the light of the DMO’s guidelines on the Debt Management
Framework, specifically, sections 222 to 273 of the Investment and Securities
Act, 2007 pertaining to debt sustainability, according to the guidelines, the
debt to income ratio of states should not exceed 50 per cent of the statutory
revenue for the preceding 12 months,” the FRC was quoted as saying.
Analysis of the FRC report (which was based on the debt profile of
the states as of December 31, 2016) showed that most of the states of the
federation flouted the regulation as they exceeded their debt to revenue ratio
by more than 100 per cent. According to the report, the worst offenders were
Lagos (670.42 per cent), Osun (539.25 per cent), Cross River (486.49 per cent),
Plateau (342.01 per cent), Oyo (339.56 per cent), Ekiti (339.34 per cent), Ogun
(329.47 per cent), Kaduna (297.26 per cent) and Imo (292.82 per cent). Others
were Edo (270.8 per cent), Adamawa (261.96 per cent), Delta (259.63 per cent),
Bauchi (250.75 per cent), Nasarawa (250.36 per cent), Kogi (221.92 per cent),
Enugu (207.49 per cent), Zamfara (204.91 per cent), and Kano (202.61 per cent).
According to the report, the debt to net revenue of the states
puts some of the states in even more precarious situation. For instance while
the debt to net revenue of Lagos State is a whopping 930.96 per cent that of
Cross Rivers State is 940.64 per cent.
The report found that the only states whose debts did not exceed
the recommended 50 per cent ratio by more than 100 per cent were Anambra,
Borno, Jigawa, Kebbi, Sokoto, Yobe and the Federal Capital Territory.
Several extrapolations could be made from the above set of
frightening figures:
One, the amount of revenue accruing to a state has no relationship
with its debt profile. For instance Lagos State which has the
highest debt to gross revenue ratio of 670.42 per cent (and debt to net
revenue of 930.96 per cent), is one of the highest receivers of
funds from the Federation Account. It has also one of the best internally
generated revenue profiles (thanks in part to the location of prime businesses
there).
In September 2017 for instance, it received from the Federation
Account N8.8bn, compared to say Borno and Anambra which received less than half
of what it got from the Federation Account alone during the period and yet
stayed within the recommended 50 per cent to revenue ratio. Remarkably none of
the top receivers of funds from the Federation Account – Akwa Ibom, Delta, Rivers,
Bayelsa, Kano and Kaduna States – made it in the ‘honours’ list.
In fact the states whose debt did not exceed the recommended 50
per cent ratio by more than 100 per cent according to FRC received the
following sums in September 2017 from the Federation Account (I am using a
random month and year for which data on what was received by all the states are
available): Anambra (N4.3bn), Borno (N4.9bn), Jigawa, (N4.67) Kebbi (N4.26),
Sokoto (N4.1bn), Yobe (N4.15bn).
In contrast, the top receivers of funds, which did not make the
‘honours’ list received the following sums during the period: Delta (N14.2),
Akwa Ibom (N12.94bn), Rivers (N12.45bn), Kano (N6.8bn) and Kaduna (N5.4bn). In
the same vein, Osun, which is the poorest state in the country in terms of sums
received from the Federation Account, (it got only N1.6bn during the period)
was not listed among the states with the highest debt to gross revenue ratios.
One of the conclusions from this would be the wise words of Benjamin Franklin,
one of the founding fathers of the USA: “Money never made a man happy yet, nor
will it. The more a man has, the more he wants. Instead of filling a vacuum, it
makes one.”
Two, a survey published in May 2017 by BudGIT, (a
civic organisation founded in 2011 to simplify the
budget and matters of public spending for citizens), found that
most states, including some top receivers of funds from the Federation Account
and many heavily indebted states, owed workers arrears in salary and pension
payments.
Among the States which it found were not owing salaries were
Anambra, Borno, Akwa Ibom, Cross River, Kaduna, Kano, Kebbi, Lagos, Plateau,
Sokoto and Yobe.
Remarkably while rich Delta State and Bayelsa States owed upwards
of six months salaries, Yobe, Kebbi and Anambra which receive less than half of
what they get from the Federation Account did not owe any salary arrears.
The above raises the question of whether revenues accruing to states are good
indicators of the viability of states. It will seem from the above that the
capacity for governance and managing resources may be better indicators of
state viability than the quantum of money that flows to states.
Three, while oil money controlled by the federal government has
made it the central site of the intra elite struggles for power and privileges,
a commensurate attention is not paid at what happens at the state levels. In
fact while the country’s democracy is in a transition mode at the federal
level, it appears to be suffering from arrested development at the state
levels. Just consider these: In Imo state, which was found by BudGIT to owe primary
school teachers two months arrears of salary and pensioners 24 months arrears
in May 2017, the government strangely found enough resources to build statutes
of personalities that caught his fancy, including that of Jacob Xuma, former
President of South Africa, who is now facing corruption charges in his country.
The same Governor gave the ministerial slot for his state to his father-in-law
and is now pushing for his son in-law to succeed him.
In Kaduna state, an otherwise smart governor had to pull down a
house belonging to his political opponent. In virtually all the States, the
Governors behave like monarchs rather than elected executives that are
accountable to the electorate. Is there any State in the country where
the State House of Assembly is not a rubber stamp of the Governor? Is it
possible for a State Governor to lose a court case in the State’s High Court?
Can the party of a state Governor lose Local Government elections in the State?
Compared to what is happening at the state level, the federal government seems
to be doing well.
Four, what the different ethnic and regional factions of the
political class demand from the federal government, they often negate when it
comes to their own states. For instance, while we all extol the unwritten power
rotation agreement between the Northern and Southern parts of the country, will
it be a crime for the politicians to respect the same principle in their
states? Will it for instance be a crime for a power rotation arrangement in
Benue, Kaduna, Taraba and several other states in the country so that all the
key constituents of a State will have a good opportunity of producing the
Governor of the State? Several states in the country need restructuring, not
just the federal government.
The hullabaloo over Senators’ N13.5m monthly ‘running cost’
The recent revelation by Senator Shehu Sani (Kaduna Central) that
each Senator receives the whopping sum of N13.5m as running cost - on top of N700,000 monthly consolidated salary and
allowances - has led to justified anger in the land. I join in
condemnation of bogus payments. But I will like also to put a caveat: several
comparisons of what the Senators earn with what their counterparts earn in
Europe, USA and elsewhere earn, miss the context. The truth is that
the electorate in Nigeria (and virtually all parts of Africa) are manifestly
different from their European and American counterparts.
For instance while the constituents of a Nigerian
Senator expect him or her to attend funerals, naming ceremonies and launchings
of all hues and to be among the highest donors in such events, there are no
such expectations on their American and European counterparts. Nigerian
Senators, like political office holders, are also expected to become cash
cows and to donate handsomely wherever they go and their presence is
acknowledged including in churches and mosques.
This is not a justification for any jumbo pay
when most Nigerians are just trying to scrape by but to give a sense of
proportion to the conversation.
Again, it is important for us to compare
like-for-like. So if we are justifiably angry at what Senators take home every
month, we must also know how much top members of the executive and the
judiciary take home – in consolidated monthly salary and monthly ‘running
cost’.
The author, Jideofor ADIBE can be reached
vide: Email: pcjadibe@yahoo.com and
Twitter: @JideoforAdibe
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