States should be creative, while waste should be  eliminated

From Katsina where employees of its Hotels Management Board recently held a peaceful protest over four-month salary arrears to Imo where the Nigeria Labour Congress (NLC) leadership and authorities are locked in battle, workers in many states across the country are owed salaries for months. While the action of the affected states undermines the workers’ right to life, livelihood and dignity, there is an urgent need to begin to examine why this problem persists and what should be done to address it. Federal bailouts and emergency handouts will not solve the problem. Nor will mass retrenchment help in an economy where unemployment and plain poverty have reached emergency dimensions.   

What the situation calls for is a serious re-think of the fundamental assumption of our fiscal arrangements. The template under which state governments exist as mere pay offices for redistributing the monthly proceeds of oil rent from Abuja has outlived its value. Going forward, several things need to be done. One, cutting down on the enormous costs of governance will free resources for development and payment of salaries. Two, waste must be eliminated. Dozens of officials who accompany governors to inspect projects including boreholes and markets must be trimmed.  

The inability of the states to pay salaries had in 2015 attracted the attention of the federal government. A special intervention fund packaged by the Central Bank of Nigeria (CBN) doled out between N250 billion and N300 billion in form of soft loans to enable the states meet their salary obligations to their workers. In addition, the Debt Management Office (CBN) also helped them to restructure their commercial loans to the tune of N660 billion. There is no sign that it has had much effect.  

A recent report indicates that the internally generated revenues (IGR) for no fewer than 15 states were far below 10 per cent of their Federation Account Allocations in one year. Outside Lagos, Rivers, Delta, and Ogun States which have relatively impressive IGR, the remaining 32 states rely more on the dwindling allocations from Federation Account to fund their services. States like Yobe, Zamfara, Ekiti, Borno, Kebbi, Taraba, Nasarawa, Adamawa, Gombe, Jigawa, Bauchi and Katsina that generate little to nothing in internal revenue are particularly marked for hardship.  

The issue of bankruptcy for many states poses the same challenge as the structural viability of Nigeria and the mockery of our federalism. When the government of Nigeria is mentioned today, the only unit that comes to mind is the central government–a symptom of the malady of over-centralisation. But the chicken is finally coming home to roost with the outright economic bankruptcy of many of these so-called states. Things have degenerated to an extent that the fiscal law of matching federal allocation proportionally with states internally generated revenue had to be violated to maintain what the preponderance of states receive, which is now not even sufficient to pay salaries.  

 To compound the problem, each of the state governments has scores of agencies and commissions which add no value to governance. Public funds are diverted to political activities while the burial and wedding ceremonies of family members of political office holders are turned into state events at huge expense to the public. These challenges must be tackled before the crisis of non-payment of wages can be resolved. But that would require a critical review of the socio-economic system operated in the country. The states must become centres of productive activities. Meanwhile, all the governors whose states are in default of payment of salaries to workers have no excuse for shirking their responsibilities. A labourer, as the holy book says, is worthy of his/her wages.  

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