SmartMoney

Featured News

SURVEY: Nigerian states plot ways to be financially viable

It is no longer news that the current economic crisis facing Nigeria has made it extremely difficult for most states across the country to remain afloat financially.

The economic situation appears to be quite dismal, as 27 states have been unable to fulfil their basic financial obligations, especially paying workers’ salary.

President Muhammadu Buhari has described the situation a “national disgrace’’ and blamed the errant states for not saving for the future.

The Nigerian Labour Congress (NLC), whose members are bearing the brunt of the financial collapse, has threatened to declare a state of emergency over salary default.

“We will declare a state of emergency because workers should not be made to bear the brunt of the challenges because they are not responsible.

“When the economy was good they did not enjoy, now that there is a challenge, they are the worst-hit, it should not be so; these are our arguments,” declared Ayuba Wabba, President of the NLC.

A nationwide survey conducted by the News Agency of Nigeria (NAN) confirmed that over two-thirds of the states were still defaulting with the payment of workers’ salaries in spite of the N338 billion bailout funds which the Federal Government gave 27 states in 2015.

As the parlous financial situation continues, some of the cash-strapped states are now cutting workers’ wages, to the dismay of workers and their unions.

Nigerian states have never experienced this financial hellhole before. And no one knows when it will end as allocations from the Federation Account to states continue to plummet as a result of a drastic fall in crude oil prices in the international market.

States are groaning, as the funds allocated to them by the Federal Government are not even enough to pay their workers’ salaries.

Gov. Abiola Ajimobi of Oyo State lamented that Oyo State, with a monthly wage bill of N5.2 billion, has been receiving an average of N2.6 billion from the Federation Account.

He, however, said that the economic crisis was an opportunity for government to diversify the economy, saying: “I am very happy that we are facing this economic crisis as a nation.

“We have learnt a lesson now that there is need to diversify the economy and depend less on proceeds from crude oil,’’ he said.

The governor’s reassuring view notwithstanding; majority respondents in the survey blamed the current economic crisis on corruption, financial mismanagement and misplaced priorities, among others, and they outline the way out. The consensus is that the states must diversify both their economies and revenue sources to survive.

Ms Rahinat Abu, a retired banker in Lafia, Nasarawa State, blamed the crisis on government’s failure to invest its huge oil revenues in the past in the development of other sectors.

Mr. Ntudo Udoessien, a chartered accountant in Calabar, said states had no reason to go bankrupt if the governors had managed their resources from 2007 to May 2015 judiciously.

Insisting that Nigeria was undergoing economic crunch because of gross mismanagement of resources, Udoessien recalled when oil sold for over 100 U.S. dollars per barrel, the state governments never thought of saving or investing for the future.

“I could recall that the Federal Government used to reiterate the need to set aside excess crude funds for the rainy day but state governors vehemently opposed the idea,” he said.

Udoessien, nonetheless, called on the government at all levels to diversify the economy and depend less on proceeds from crude oil sales.

Mr. Timothy Odaa, a former Commissioner for Finance and Economic Planning in Ebonyi, urged the federal and state governments to initiate pragmatic strategies to diversify the economy.

He stressed that the prevailing economic crisis required a structured diversification of the economy for enhanced revenue, instead of the reliance of states on monthly allocations from the Federation Account.

READ ALSO  U.S envoy commends EFCC chairman

Malam Danraka Dari, a lecturer in Kaduna State University, who blamed the current economic crunch on “misplaced priorities and mismanagement of resources’’, urged the states to diversify their revenue base.

“State governors must explore the revenue potential of agriculture, tourism and mining, among others. If they can invest in such sectors, their states will be able to break even,’’ he said.

Mr. Udo Agoha, Imo Commissioner for Agriculture, Environment, and Natural Resources also urged the states to increase their investment in agriculture to overcome their current economic challenges.

“In Imo State, for instance, if the state government can massively invest in cassava, cashew, palm oil, fishery, aquaculture and livestock, it will earn billions of naira monthly and provide job opportunities for the unemployed.

“Prior to the discovery of oil, agriculture was the mainstay of Nigeria’s economy; with the current slide in crude oil prices, all that is needed is for the government is to return to agriculture,’’ he said.

But some states are already thinking along those lines. Mr. Kehinde Odebunmi, Ondo State Agriculture and Natural Resources Commissioner, said that the state government in January launched its agriculture development initiative.

He said that the fundamental aim of the project was to generate about 50 per cent of the state’s monthly internally generated revenue (IGR) from agriculture and create about 20,000 job opportunities.

However, Mr. Cletus Obun, a former member of Cross River House of Assembly, advised the states going into agriculture to invest in areas where they had clear comparative advantages.

“In Cross River, such areas include cocoa farming, rice farming and cassava cultivation. The state government should look inwards; we have the potential to overtake Benue as the food basket of Nigeria.’’

In line with such recommendations, Gov. Darius Ishaku of Taraba State told NAN that his administration has taken practical steps to support tea and rice farmers to boost the production of the two crops in the state.

He said the commitment would enable the state produce at least 10 per cent of the country’s tea requirements by the end of 2016.

Mr Hakeem Olagunju, an Abuja-based investment consultant, urged state governments to pool resources and go into joint ventures, in agriculture and manufacturing, citing the recent joint venture between Lagos State and Kebbi on rice.

“Under the arrangement, Kebbi is expected to provide land and labour for the rice plantation, while Lagos State, which is more buoyant, will finance the project,’’ Olagunju said.

Chief Kevin Mbawuike, President, Imo State Chamber of Commerce, Industries, Mines and Agriculture, stressed the need for state governments to revive their moribund industries and build new ones.

He said until the manufacturing sector was revived and fully developed, the economic crisis facing the states would persist.

“Nigeria’s quest for economic growth will continue to be a dream until adequate attention is paid to the manufacturing sector and small and medium enterprises (SMEs),’’ he said.

Programmes supporting SMEs are being touted as the best ways to boost the economy of the states. Mr. Chinedu Berechi, a tailor at Nworie Lane Industrial Cluster, Owerri, believes so as he advised state governments to develop the SMEs sub-sector by creating more industrial clusters to accommodate numerous artisans and create wealth in the process.

Mr. Lawrence Ewrudjiakpor, Bayelsa Commissioner for Works and Infrastructural Development urged state governments to initiate policies to develop SMEs.

Mr. Emmanuel Agbo, the owner of a leading bakery in Abakaliki, urged state governments to facilitate the growth of SMEs via the provision of grants and soft loans.

READ ALSO  No leadership crisis in NFF - FIFA president

“Countries such as China, Singapore, Malaysia and Japan developed their economies via structured development of their small and medium enterprises.

“Nigeria can indeed grow its economy by emulating these countries that have now become world economic giants,’’ he added.

However, Dr Innocent Mbazu, a lecturer in Ebonyi State College of Education, Ikwo, urged states to adopt the Public-Private Partnership (PPP) initiative in efforts to revive moribund government enterprises, many of which were destroyed by politics and bureaucracy.

Mbazu rejected the notion that government should not be involved in business, insisting that government ought to be a catalyst to the growth of businesses via investments and by helping existing entrepreneurs to survive.

Some other respondents urged state governments to develop their tourism potential, insisting that the tourism industry was “a potential gold mine’’.

Ekiti State Commissioner for Information Lanre Ogunsuyi said that the current economic realities had compelled the state government to give priority to the structured development of the tourism and culture sector.

According to him, some of the developed tourist spots, which are now yielding appreciable IGR for Ekiti State, include Arinta Waterfalls in Ipole-Iloro and Ikogosi Warms Springs.

Delta State Commissioner for Economic Planning, Dr Kingsley Emu, underscored the need for states to harness their mineral resources to boost their IGR.

Gov. Mohammed Abubakar of Bauchi State said that plans were underway to boost the state’s IGR via the exploitation of the state’s mineral resources.

He bemoaned a situation in which certain individuals and corporate organisations were exploiting the state’s mineral resources without paying anything into the government’s coffers.

Abubakar cited a foreign mining company, which generated N2 billion monthly by operating in the state, with nothing accruing to the state government.

Gov. Muhammad Badaru of Jigawa state is already a step ahead in this area, as some foreign and local investors have commenced mining activities in Dutse local council area.

He said that plans were underway to establish two additional granite factories in Birnin-Kudu and Gwaram Local Government Areas.

He projected that the three factories would be exporting over 30 containers of granite to China every month, thereby generating substantial income for the state.

Plateau State is also ready to exploit the state’s solid mineral deposits to boost its IGR, Mr. Abdullahi Abas, the Commissioner for Environment and Solid Minerals Development said.

According to him, some investors have indicated interest in investing in the sector.

As the states continue to wobble financially, governments are also strengthening their tax systems to boost their IGR.

In Oyo State, Gov. Ajimobi said that his administration has embarked on an aggressive revenue drive through taxation, while the Enugu State Government said that it has dragged more taxable residents into the state tax’s dragnet.

Mrs Eucharia Uche-Offor, Enugu State Commissioner for Finance and Economic Development, said that the effort had increased the state’s IGR from N450 million to N700 million per month.

Taxation as a way of boosting revenue base is always unpopular among citizens.

Thus, Prof. Hassan Oakhenan of University of Benin warned states against any temptation to increase taxes.

“There are lots of avenues available to states to earn revenue apart from the dependency on taxation which, in itself, diminishes the income available to households.

In the meantime, views are being canvassed that the governors behave more responsibly by reducing the cost of governance. Also being canvassed is that the Federal Government should reduce its share of the national revenue and allow states take the lion share.

Dr Edidiong Ebitu of the University of Calabar is one of the experts who argued that the Federal Government should take less from the Federation Account.

READ ALSO  FOREX: CBN makes promises to MAN

In his view, the current economic situation has somewhat reinforced calls for the upward review of the states’ share in the country’s revenue sharing formula.

Mr. Kayode Akinmade, Ondo State Commissioner for Information, said that the revenue allocation formula should be reviewed as a short-term panacea to the economic crisis bedeviling the nation.

Describing the current revenue sharing formula as unfair and unjust, Akinmade said: “The Federal Government alone takes 52.68 per cent of the revenue, which is more than half.

“The remaining 47.32 per cent has to be shared between 36 states and 774 local governments of the federation.’’

Governors must also brutally cut the expenses of governance, Nigerians said.

“In the short-run approach to the problem, governors should prune the number of their aides and convoys as well as other actions which make the cost of governance very high, ’’ argued Prof. Hassan Oakhenan.

The high cost of governance in the country has been a source of worry to Nigerians, since Nigeria embarked on the democratic journey in 1999. But governors have never heeded the warning bells of fellow Nigerians.

Mrs Rosemary Umoh, a Calabar-based activist, condemned some governors who are fond of making bogus appointments, which gobbled public resources.

“Here in Cross River, for instance, we have over 500 political appointees of the state government, with so many of the offices being duplicated; and all these people have to be catered for.

“How will the government get money to satisfy all these appointees and still have something left for genuine development programmes?’’ she quipped.

Even though 27 states are reeling in financial agony, some states, such as Lagos, Kano, Sokoto and surprisingly war-ravaged Borno, have been able to stay above water.

Kano State Commissioner of Finance, Dr Kabiru Dandago, revealed that the state’s financial reform was responsible for its ability to surmount the crisis. He said that the system accented the strict utilisation of sources of revenue belonging to the state.

“The Federation Account belongs to all the three tiers of government and the share allocated to Kano is effectively managed in solving all financial issues of the state,’’ he said.

He said that the system also identified priority projects for execution, thereby ensuring proper utilisation and management of the funds allocated to the state.

Besides, Dandago said that the Ganduje-administration had come up with a strong IGR reference, which has put in place effective machinery for effective revenue generation.

“With the utilisation of expert advice, the strategy has started yielding results because recently, a nationwide assessment was conducted and Kano State came first in the North and 10th in the whole country in terms of IGR.

“We are optimistic that by the end of this year or the middle of next year when the next assessment will take place, our position will improve.’’

Dandago urged other states to emulate Kano State, saying: “They need to rise up to the challenges and be economically independent or else they will be dancing in the same circle.’’

The NLC, which has been quite vociferous in the agitations against non-payment of workers salary, has voiced its admiration for Borno State Government for safeguarding the workers’ welfare.

The NLC Chairman in Borno, Mr Titus Abana, told NAN that in spite the economic challenges, the state government has consistently paid the workers’ salaries.

“We must commend Gov. Kashim Shettima for paying salaries as at when due, even when the economy of the state has been badly affected by activities of Boko Haram insurgents since 2009,’’ Abana said.

Comments

Most Popular

To Top