Beset with plummeting prices of crude oil and a huge drop in revenue from the federation account, states are facing collapse over their inability to meet obligations, Katsina State Governor Aminu Masari has said.
In an interview with a Nigerian newspaper at the weekend, Masari painted a picture of the perilous state of the finances of state governments.
“I think if there is any word that is more than serious, it is more than that. I am telling you as at today, some states after federation accounts (allocation) are going home with less than N60 million”, he told THISDAY, adding, “Some are in the negative, majority cannot pay salaries from the federation account allocation.”
While noting that some states were already mulling the option of reducing their workforce, Masari said, “every state governor is looking for where to block leakages so that at least at the end of the month they will be able to pay salaries.”
He however said that what states needed at this time was far beyond what bailout, which he described as “ad-hoc measure,” could address.
“The reality is that the problem is deeper than this ad-hoc measure of bailout. We have to have a budget support programme – that this is the budget of a state and this is what the state can get, then the central bank with the Federal Government and whatever agency will have to have a way of supporting that project.
“Because we cannot allow the country to collapse. We have to sit down and see how we can have these budget support funds. It is too costly to allow this system to collapse. The consequences are more than any measure that one will take now in order to restore sanity.”
Giving further explanation on what he meant by budget support programme, Masari said it involves starting a conversation between the states and Federal Governments and its relevant agencies.
Such conversation, he said, would go thus: “This is the budget of the state and this is the amount accruable to the state; the difference, how do we finance it? Do we finance it by ways and means? Or do we finance it by borrowing from outside? Or do we support it by inviting World Bank? How do we support it?
“Do we raise bonds, which have maturity period of 20, 30, 50 years in order to aid the budget support programme and have a much more realistic budget approach, planning approach to predict that in the next two, three years this is the likely economic scenario. If we can build about two or three more scenarios, whichever one comes, this is the approach.”
Buttressing his point, he said the best option was the budget support approach built around a permanent solution and not an ad-hoc solution.
The governor however warned that, “the way we are going, even the Federal Government will start asking for bailout.”
He said the reality on ground shows that unless something happens in the global oil market and the price of oil and other commodities rise, the issue of revenue accruable to states, including the Federal Government will be going down to a level that no any tier of government can manage.
In order to avert social crisis and rally people to support governments at this difficult time, Masari said leaders must have the courage to look at the people and tell them the truth.
“We must invite them and be truthful to them by telling them what the situation is. It is now time of what can you do for Nigeria because Nigeria has nothing to do for you now. It has done (a lot for Nigerians) before, because when people were getting everything free they thought it will be free forever. Now it is payback time,” he added.
The governor who served as speaker of the House of Representatives between 2003 and 2007, put the blame of the parlous state of the economy on the failure of leaders to plan.
Describing Nigeria as a “planless nation,” he said “that is why we find ourselves in the position we are.”
“We had the money, we had the opportunities, but there was no foresight to see what was coming. We were busy expanding consumption, we were not creating sources of revenue, we were not investing,” he added.
Masari’s remarks confirmed THISDAY report of last Sunday that states had been hit by another cash crunch and were seeking another bailout, six months after the Federal Government bailed out 19 of the 27 states that were enmeshed in financial crisis.
In that report, THISDAY had revealed that most of the states that benefitted from the N400 billion intervention fund, in form of loans, offered by the Federal Government through the Central Bank of Nigeria (CBN), were now approaching the presidency and the CBN for another bailout.
The Federal Government, in accordance to the decision of National Economic Council (NEC) in July last year offered of 19 out of the 27 states affected by cash crunch a relief package to pay backlog of their workers’ salaries.
The states included Ekiti, Nassarawa, Kwara, Kebbi, Zamfara, Osun, Niger, Bauchi, Gombe, Abia, Adamawa, Ondo. Others that enjoyed the facility were Imo, Ebonyi, Ogun, Plateau, , Sokoto, Edo and Oyo
Following the approval of the intervention fund, the CBN spokesman, Ibrahim Mu’azu, had clarified that the facility was made available with 20-year tenure except Ogun which had its own on a 10-year tenure.
Essentially, President Buhari endorsed a three-pronged relief for the distressed states. One of it was the intervention from the CBN in form of soft loans to the states for the purposes of paying backlog of salaries and the second one being the NLNG proceeds
The third part of the bailout is a debt relief programme to be proposed by the Debt Management Office (DMO) which will help states restructure their commercial loans currently put at over N660 billion and extend the life span of such loans while reducing their debt-servicing expenditures.”
Already, workers have down tools in some states over unpaid salaries while several other states are currently contending with brewing labour crisis as the states are consistently unable to meet their obligations to their workforce. Projects initiated by states prior to the dip in revenue allocation have stagnated while governors are unable to fulfil their campaign promises.
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