States, Hard Road to Economic Prosperity- By Arnold A. Alalibo

Posted by admin Arnold Alalibo, Articles, Columnists, NNP Columnists, State News Saturday, January 2nd, 2016

By Arnold A. Alalibo | NNP | January 2, 2016 – The economic downturn in Nigeria has become so drastic that almost every state is faced with severe economic woes. Many states are heavily indebted with little coming into their coffers after the mandatory deductions to service loans they have taken are made.
Driven to the wall by the situation they have found themselves, some governors are contemplating reducing the work force of their employees or in the alternative cut salaries to enable them cope with the dwindling resources accruing to them. But the workers’ unions (NLC and TUC) have since rejected the planned actions of the governors and threatened mass action if they carried out their intentions.
The real issues now are whether states are economically viable or they have become complacent because they have always depended on the centre. Does the nation have to revisit the revenue formula to put more money in the hands of states and local governments?
First, given the present economic development, it is absurd to ask whether states in Nigeria are bankrupt or not. Obviously they are. States are so bankrupt that they are faced with extinction if nothing is done fast. Some states have their bulk revenue accruing to them from the centre reduced to a paltry three percent. The survival of such states remains a mystery.
Take Osun State as an example. After all deductions are made from its monthly federal allocations, what is left in its coffers is not enough to pay the electricity bill of the governor’s office. The situation is as bad as that. So, isn’t it time for mergers and acquisitions to happen among the states? Can’t some states merge with others for effectiveness?
Ironically, most states had red warning signals about the economy before now but did nothing about it. If such states had acted timely, the current trend would have been averted. Some of them even had their warnings flagged off right from the time they were created. This indeed is an indication that many states were created for political expediency.
State creation in Nigeria is economic burden rather than asset. Because when a state is created there is an entirely new administrative structure that is put in place. That increases the recurrent spending component of the state, especially when it is not viable. The judiciary comes on stream. Then the executive and legislature will be established, while political appointments will be made. Unfortunately, at that time the economy of the country tolerated the creation of more states.
However, most state chief executive and their elites, who in most cases asked for the states, failed to put on their thinking cap when they were created. So, their economic bases were never secured. Most of them relied solely on oil since their creation. But with the current fluctuating crude oil price, many of them except few have crashed and are unable to pay salaries and execute capital projects.
It is really sad that when oil price was high, both the federal and state governments gallivanted and frolicked. Little did they know that it was an opportunity to diversify the nation’s economic base and generate economic activities. That would have insulated the country against the present economic situation arising from the reduced revenue allocation.
There is no doubt that states are bankrupt and are unable to pay workers’ salaries, but does the body language of governors show the bankruptcy or have they learnt their lesson? This is something we all should ask and understand. We have a situation where states have failed completely to take advantage of the resources they have in their domains, and we have been busy talking about oil that has completely lost value. Now, 2019 is closing in; the same governors who claim inability to pay salaries will suddenly have money to spend on election.
We need to be careful. This is the time every Nigerian should be interested in governance because government is too important to be left to the politician. Governors have no excuses for failing to perform their legal or legitimate roles. After all, they should have known before offering themselves for leadership that they ought to understand the revenue profile of their states.
That is why state chief executives have to emulate the resilience of the Kaduna State Governor, Malam Nasir el-Rufai, who has created a niche for himself. Given what he has done, el-Rufai has shown that he is ready for governance. Apart from running a sustainable development-oriented state, he has adjusted his budget so much that capital expenditure has been pegged at N109bn and a mere N69bn allocated to recurrent. Though His uncompromising stance on governance may not profit him politically, the state will reap the benefits in the near future.
Many people have attributed the deepening economic crisis in the country to the type of federalism we run. They say our federal structure makes it difficult for states to think creatively and harness their resources. While this is true, some have always made this assertion in the wrong context. Agreed we run a presidential system where the federal government and states have their responsibilities. But how many states know about or have even exploited the public-private partnership policy of the federal government that has existed for more than ten years? So many states have not even bothered to study that policy and see the benefits it contains.
The resources states share every month from the federation account are too meager to meet their development needs, so they ought to look elsewhere for resources, not only for economic growth for the benefit of a greater number of persons in their states, but for social stability as well. Agriculture and solid minerals are two vital areas that can do the magic. There is no single state that is not endowed with a mineral resource or a potentiality for agriculture which it could use to expand its economic base and possibly export.
The public-private partnership policy has provided a very good framework for partnership among the private sector, states and federal government. Many states rather than utilize the opportunity, go to Abuja every month for ‘handout’ whereas they could gain far much more resources through the policy. Kogi is one instance of a state that can break even financially if it exploits its solid mineral resources through public-private partnership. Some Australians approached former President Goodluck Jonathan while he was in office and signed some Memoranda of Understanding to mine solid minerals.
One of the Australians was given 10 percent acreage of iron ore existing in Kogi State which had a financial worth of $500m. That business would have enriched the state tremendously because the public-private partnership policy clearly states how much the state would get from the transaction. Unfortunately, the business never came to fruition till date. One of the things that greatly enrich Australia today is iron ore. The country is heavily endowed with the product and makes $12.5bn annually from exporting it to China and India. But that is what lies waste in Kogi and other states.
If I may ask, how have governors utilized Commerce and Industry Ministry in their respective states? Do they understand that through this ministry they can partner with the federal government to institutionalize initiative process that will take advantage of the resources and people in their states,s thus moving the state forward? The federal government cannot tell the state what to do or how to invest its resources because the people are in the state, the government is in the state and the investors are also there with them. Therefore, it is the states that should be proactive and look inwards and determine the kind of partnership and technical assistance they require.
State governors must sit up and be visionary. They must plan ahead for prosperity before it actually comes. If we are not ready today for possible economic prosperity in the future, how can we manage it when it comes eventually? That is why we need futuristic leaders that can think beyond today. We need governors that will make projections of where their states will be in the next 20 to 30 years and how such states will survive in the future. Not governors that are emperors.
State governors who claim they cannot pay the national minimum wage that has been in operation for some years are not taking a creative option as a salvage operation from the current economic woes. To survive the hard times, states should utilize the components of revenue generation systems which include different forms of taxes and investments. But in doing that they should be careful of the kind of investments they embark upon. The reality of the times demands the cooperation of all Nigerians particularly in the way we think and act. It isn’t the responsibility of the governors and the president only. It is a collective burden. But our leaders must show the way for the rest to follow.wp_posts

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Posted by admin on Jan 2 2016. Filed under Arnold Alalibo, Articles, Columnists, NNP Columnists, State News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry