- Ebonyi, Kebbi, Jigawa, Gombe, Ekiti top list
The current economic recession and alleged corrupt practices by some government officials in the states have put no fewer than 10 states in serious financial crises, The Point’s investigations have revealed.
One of the key indicators that these states are in financial mess is the sharp drop in their internally generated revenue figures for 2016.
Investigations showed that aside from the recession, many of the states were also battling with some internal forces that had created holes in their revenues.
According to findings, the states caught in the web of the revenue losses are Borno, Ebonyi, Kebbi, Jigawa, Yobe, Gombe, Ekiti, Katsina, Sokoto and Nasarawa, among others.
A check through the affected states revealed that the once celebrated states are now ghosts of their old selves, a condition that dates to 2015.
Consequently, many financial and economic analysts have been bemoaning the effects of the situation on workers and the economy of the affected states, now and in years to come.
The experts said aside from the fact that most of the states owed workers’ and pensioners’ salaries, ranging from three to 36 months, more salaries would be owed and that alone could pull the productivity of workers to the barest minimum.
Niger and Taraba states owe pensioners 36 months’ salaries, that is, the retired workers have not been paid for three years. Imo State too has not paid its pensioners for upwards of two years.
Besides, most of the ongoing capital projects in the states might turn to ‘white elephant’ projects and be abandoned.
The cost of completing such projects could increase by over 100 per cent or more, depending on the value of crude oil in the international market and dollar at the foreign exchange rate.
For example, a project that was supposed to be completed in 2016 at N200 billion (when the naira/dollar exchange rate was at N250/$1) would be completed at double price in 2017/18, (when naira/dollar rate might hover at N500/$1 or more).
While Ebonyi State managed to earn only N2.34 billion from its 13 Local Government areas at the end of 2016, Borno (27 LGAs), Gombe (11 LGAs), Ekiti (16 LGAs), Kebbi (21 LGAs), Jigawa (27 LGAs), Yobe (17 LGAs) and Nasarawa (13 LGAs) states made only N2.67 billion, N2.94 billion, N2.99 billion, N3.13 billion, N3.53 billion, N3.24 billion and N3.40 billion respectively. Others are Katstina with only N5.54 billion; Sokoto, N4.54 billion; Zamfara, N4.77 billion; Adamawa, N5.78 billion; Taraba, N5.89 billion; Kogi, N9.56 billion; and Osun, N8.88 billion, among others.
Meanwhile, some of the states mentioned above currently owe workers’ and pensioners’ salaries. For instance, as at May 15, 2017, Ekiti owed its primary school teachers and LG workers six months; secondary school teachers, about five months; pensioners, about 11 months; and others between two and four months.
While Kogi owes its civil servants and pensioners 15 and 17 months respectively, Taraba owes six and 36 months respectively, and Nasarawa, two and seven months respectively. Osun has been paying most of its workers 50 per cent of their salaries since April 2015.
FG FINALLY WADES IN
Meanwhile, Acting President Yemi Osinbajo has sought the approval of the House of Representatives for a $1.492 billion loan for 10 states. The loan is part of the 2016-2018 External Borrowing (Rolling) Plan.
The loan is expected to boost the financial capacity of the benefitting states to execute their projects and other programmes for the development of their areas. The states are Kastina, Ebonyi, Jigawa, Kano, Enugu, Plateau, Ondo, Kaduna, Ogun and Abia.
“The request for the separation of the states’ projects from the list became imperative in view of the current economic realities in the country and the pressing needs of these states to provide infrastructural and social amenities for their citizens,” Osinbajo said.
STATES ON BRINK OF ECONOMIC SABOTAGE – EXPERTS
Following the VP’s campaign for more loans for the states, economic analysts have frowned upon the request and the trend, which they believe could lead to economic sabotage. An economic analyst, Mr. Henry Boyo, admonished the states to devise more creative means of raising funds internally to boost revenue and meet other needs of their residents, especially for executing various projects.
Boyo argued that, though raising either foreign or local loans was a good means of meeting certain needs or addressing infrastructure decay, especially in a situation where allocations received by states from the federal purse are dropping, the states should be more careful in obtaining funds from such sources. “The level of the inherited debt should be considered before starting the process. Aside from economic implications, which are increasing debt portfolio and unemployment, it is more of lack of moral values,” he noted.
A council member of the Institute of Chartered Economists of Nigeria, Dr. Kehinde Oteje, said that the allegation of diversion of such funds and claims that some governors were living large while workers are suffering, were clogs in the wheel of progress of the affected states. Oteje observed that none of the governors had slashed their salaries or donated their security votes for the cause of workers’ welfare but were bold enough to owe salaries and in some cases, slash workers’ salaries.
He argued that the development could collapse the economies of the states, adding that the diversion of funds was responsible for the outstanding salaries being owed workers by such states, as it had also contributed to the dwindling fortunes of their IGR, because the productivity of the workers had dropped. He charged the Economic and Financial Crimes Commission to probe both former and incumbent governors owing salaries and ensure justice.
“Most of the states are owing workers because they have diverted the salaries to settle part of the outstanding debt they inherited from their predecessors. If care is not taken, more workers will go on strike and the IGR of the states will shrink further,” Oteje said.
However, if the states must borrow, Managing Consultant, Springs Consult, Dr. Ademola Esho, urged Acting President Osinbajo to adopt a more prudent approach to borrowing, to ensure transparency.
According to him, he must ensure such funds are channelled into productive purposes, which they were borrowed for, especially infrastructure and employment generation that could impact positively on the people. “A great disservice is done to residents if the governors fail to put money borrowed from the Federal Government and other institutions to productive use; whereas the state bears the burden of repaying the facilities with interest over a couple of years,” he said.
RE-ELECTION
Even as election is fast approaching, the financial analyst alleged that most of the state governors would find ways to raise funds for campaign.
“They must be discouraged from doling out free money to their party supporters and hangers-on while IGR is shrinking and workers are owed salaries. States should invent practical strategies to sustainably increase their revenue through legitimate but not from burdening sources like increased taxes.
Founder, BudgIT Nigeria, Mr. Oluseun Onigbinde, said, “Government should tighten its accountability structures for the series of extra-statutory funds that are provided to state governments, which currently has reached N1.75trillion. States should be transparent in the use of the funds released to them and it is pertinent that only seven out of 36 states – Bauchi, Kogi, Kano, Kaduna, Edo, Gombe and Yobe – have provided their full 2017 budgets to the public, when the year is half spent.”
BLAME RECESSION, PREDECESSORS’ DEBTS – GOVERNORS
However, governors of some of the states have denied the allegations of diversion of funds and insensitivity of the governors to workers’ sufferings, blaming the situation on the current economic recession.
The Governor of the State of Osun, Ogbeni Rauf Aregbesola, claimed that the economic recession had been affecting the economies of the states over the years and stalling projects.
“It is not in the plan of the government to abandon capital projects, especially those that had been started before the financial problems of the states started,” he said. The Special Adviser to the Ekiti State Governor on New Media, Mr. Lere Olayinka, alleged that the financial recklessness of a former governor of the state contributed to the poor state of the economy of the ‘Land of Honour’.
According to him, the former governor exposed the state to huge debt and abandoned projects shortly before the 2014 governorship election.
“N1.2 billion is being deducted monthly from the state’s revenue to service debts that the former governor took in the course of his four years. That is responsible for the inability of this administration to pay salaries,” Olayinka told The Point.
