FG's Second Bail-Out for States: The Pros and Cons!!! - Ishola Adebayo

June 23, 2016

At the assumption of this President Buhari-led federal government on 29 May 2015, 23 states were in arrears of salary payment of between two and 13 months, with Benue, Kogi, Osun and Cross River States reported to owe the highest number of months, while states like Ogun, Kogi, Ebonyi, Gombe, Plateau owed workers various deductions and pensioners’ stipends ranging from four and 16 months.

The Federal Government did not fare better. The former Minister of Finance and the Coordinating Minister for the Economy Dr. Ngozi Okonjo-Iweala, few weeks before the expiration of the previous regime shocked Nigerians by informing the world that the Federal Government had been borrowing since January to pay civil servants as well.

The parlous state of the economy occasioned by dwindling oil receipts made the bailout inevitable. Little wonder the federal government had in July 2015 approved the sum of ₦804.7B as lifeline for states, to enable them pay their workers several months of arrears of salaries. The first 11 states that got their debts to commercial banks restructured were Osun, ₦88.6B; Delta, ₦69.8B; Ogun, ₦55.4B; Imo, ₦37.1B; Ekiti, ₦18.8B; Kwara, ₦15.6B; and Edo, ₦11.9B. Others were Benue, ₦10.9bn; Oyo, ₦9.1B; Bauchi, ₦6.5B and Kogi, ₦0.81B.

With a second bailout initiative in perspective, the Federal Government has spelt out fresh 22 stringent conditions Nigeria’s 36 states must fulfill to be eligible to draw from the ₦90B to bail out states facing severe financial difficulties, this surely has many economic implications on the economy at large, but some of these implications are negative. Most state governors and chairmen of councils have shown that they can’t be trusted with funds of their states and councils. They received of the first bailout funds, but what happened to those funds?

Corruption on the part of many state governors and the council chairmen was responsible for the inability to pay workers and pensioners because some states whose monthly federation allocation is low were able to manage such funds judiciously, while those with huge monthly allocations and high IGR are among states who owe workers for months.

States like Ondo, Bayelsa, Rivers, Akwa Ibom, Delta and others owe salaries for months or are huge debtors to local banks or contractors. A state like Delta currently owes ₦653B despite her monthly huge allocation from the federal government and high IGR.

If Delta state that collects one of the highest federal monthly allocation and said to have third highest IGR in the country could be owing workers and N635billion debt, then the state’s former governor like governors of many other oil producing states (such as Rivers, Akwa Ibom, Bayelsa, and Ondo) have much explanations to make to their people.

It’s a paradox that Borno, Yobe and Adamawa states which are the epicenter of the insurgents do not owe and still carry out some developmental projects. States like Sokoto, Katsina, and some states in the north which receive the lowest federal monthly allocations also do not owe workers. However, oil producing states and states in the South West (the most peaceful zone) owe workers for several months. This is difficult to understand.

Between 2011 up till when the last administration left in May of 2015, the country earned about $315B from crude oil sales alone. Other revenue sources were not included; so to now find ourselves in a situation where the country is unable to pay its few civil servants is unthinkable.

Until the anti graft agencies are able to tackle corruption at the various levels, would the state governments continue to cry to the Federal Government for a bailout. The governors and council bosses who collected their allocations and the first tranche of the bailout funds and failed to pay workers cannot be trusted to manage this second bailout judiciously.

As the federal government goes ahead with the planned second bailout, with an expectation to reduce the number of Nigerians who daily commit suicide, it is hoped that states governments will develop the agricultural sector in their domain as well so as to reduce corrupt practices which have made many states poor.

It is essential that the anti graft agencies bring to book corrupt political office holders. This is in respect to the reality that most states who owe workers and are contending with huge debts had their resources looted by governors and other political office holders.

I will also expect EFCC to prosecute the former Imo, Jigawa, Adamawa and other former governors standing trial to enable the states who are unable to pay salaries or in huge debt to have their funds returned to enable them meet peoples’ expectations.

The months ahead will show if the states utilized this second bailout and loan facility judiciously or are looted as was the case in the past. It is hoped that labour leaders and top civil servants who were alleged to assist politicians to loot funds of their states and local governments must have learnt from the salary and pension debts which almost crippled economic development of several states and councils. Questions arise:

Are they ready to do this?

Is the easy money called ‘bailout funds from Abuja’ not actually a disincentive to creative thinking by most States Governors?