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States’ Bankruptcy: Time to embrace the ‘R’ word?

States’ Bankruptcy: Time to embrace the ‘R’ word? By Jideofor Adibe

The Chinese are said to use two brush strokes to write the word, ‘crisis’. 

It is said that for them one brush stroke stands for danger while the other stands for opportunity. 

The critical question here is: what opportunity does the current economic crisis present to the country? 

I am using the virtual bankruptcy of our states to epitomize the current economic crisis.

Declining revenue from oil and consequently smaller receipts from the Federation Account is often blamed for the current economic crisis. 

For instance while the N305 billion shared by the three tiers of government in May 2016 was higher than the N281.5 billion of the preceding month, the marginal increase hardly improved the states’ balance sheets. 

Also though the state governments may get more money with the flotation and consequent depreciation in the value of the Naira, their receipts are unlikely to be enough to solve their cash problems, especially as inflation continues to gallop to the high heaves. 

Unemployment, says the National Bureau of Statistics, grew from 10.4 per cent to 12.1 per cent in the first quarter of 2016, a figure that does not take into consideration underemployment and disguised unemployment

The bankruptcy of the states is further reflected in the fact that 27 of our 36 states are currently unable to pay the salary of their workers – arguably the most basic of their functions. 

In some states, workers are owed more than twelve months’ salaries. 

For instance lecturers at the Tai Solarin College of Education, Omu Ijebu in Ogun state are said to be owed 13 months’ salaries as at the end of June 2016. 

Across the country, teachers and lecturers in several state-owned institutions are owed months of salary. 

And students who paid tuition in such institutions naturally feel angry that they are not getting value for money – if they are lucky for their institutions to be open and running skeletal services. 

Other state employees are not faring better.

The unviability of our current states has other far-reaching implications: for instance can we really have the moral unction to preach anti-corruption gospel to workers who have not been paid for months and who have families to feed? 

This is why we argue that corruption is not just caused by moral lapse but is largely systemic. 

It is another way of arguing that states’ inability to meet their basic obligations to their employees undermines loyalty and legitimizes corruption in the eyes of such workers. 

And add to the mix other problems created by the bankruptcy of the states – inability to pay contractors, high indebtedness of the states, lack of employment opportunities and inability to provide basic development infrastructure. 

The bankruptcy of the states also creates legitimacy crisis for the federal government – despite its penchant for blaming all the current challenges on the past government. 

For many people, the failure of the sub states is the same as failure of the Buhari government because the buck stops at his table.

The above are among the reasons why I feel it has become urgent for the government to find a lasting solution to the current problem of the bankruptcy of most of our states. 

Bailouts, even on generous terms, are at best palliative measures that are in themselves unsustainable and a sharp reminder of the unviability of those states queuing to meet the conditions for accessing them.

And it is unrealistic to keep hoping that revenues from oil would bounce back to the levels they were two or three years ago. 

This is unlikely to happen soon – unless there are unexpected major crises in key oil producing countries.

The truth is that oil revenue on which the country depends for some 80 per cent of its revenue has for long masked the unviability of our 36- state system and the structure of the country on which it rests. 

So in many ways it is good, as the Igbo would say, for the wind to blow harshly so that the anus of the fowl would be exposed. 

We need to see in the crisis the opportunity to finally admit to ourselves that the current structure has failed. 

I know that the ‘R’ word conjures different emotions among different people in our highly polarized and emotionally charged environment. 

I have in fact read about people who threaten that any talk about restructuring the country is an invitation for war or for the dismemberment of the country. 

Threats like these – age-old bargaining strategies by the different regional factions of the elite – now sound passé given the economic challenges facing the country. 

The irony with these threats though is that quite often those issuing them do not look strong enough to give anyone a good slap. 

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