A Recompense For Profligacy | Independent Newspapers Limited
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COLUMNIST, Echoes of Business

A Recompense For Profligacy

Posted: Jul 12, 2015 at 12:00 am   /   by   /   comments (0)

Echoes of Business

President Muhammadu Buhari, last week in a magnanimous gesture ,approved  a bailout package   involving N713.7 billion,  for  states which are hard put to meet salary  obligation to their workers. Of the amount, while N413.7 billion represents special intervention funds, the balance of about N250 billion to N300 billion is a soft loan to states.

The specter of hunger, poverty and squalor which have become the hallmark of neglect and insensitivity by the governments at the state and local levels in the country makes this gesture not only worthwhile, but compelling.

Apart from mitigating the conditions of the hapless workers and pensioners, the move  would unlock the engine of spending, while opening the doors to those offering services.

Beyond this, the state and local governments in the country are stewing in their owns juice, having misapplied state funds meant for  development projects, and enhancing the economic well-being of their people.

That some state governments are owing salary arrears of up to ten months could not be justified by the vagaries of world oil prices.

Apart from regular allocations from the Federation Account, the states and local governments source funds from the capital  and money markets, in addition to their internally generated revenues.

To further strengthen their purse, the state governments have been sourcing funds from the local capital market and external sources for the development needs in their various communities. All these  have been targeted at bettering the living conditions and well being of the communities and rural dwellers through provision of  employment,  shelter,  power, portable water, functional healthcare services, access and good roads amongst other infrastructural needs.

So, what have the state governments been doing with these resources if they cannot pay the salaries of those who toiled to generate them?

In the midst of this perceived lack, some state  chief executives are known to have acquired choice property in different parts of the world while others  are competing for the state of the art private jets with oil barons in other parts of the globe. This is nothing less than a rape on the  nation’s lean financial resources and the perpetrators should be made to account for them.

The Government’s intervention, at best, is a stop gap measure as the implications are unimaginable.

Already, the country’s debts provision in the 2015 budget has whittled down by about 50 per cent. This is becauseout of the N882 billon  budgetary provision for borrowing, the  federal government has already borrowed N473 billion  to meet up with recurrent expenditure, earlier by the previous administration. The Federal Government debt, as a result of the bail out, would rise, raising domestic interest rates and yields on government bonds, which could hurt economic growth.

What’s more?  Available statistics showed that instead of showing more commitments to the issue of internally generated revenue (IGR), state governments are hooked to the calendar, awaiting the next allocation from the Federal Government.

National Bureau of Statistics (NBS) figures indicated that a good number of states have  even witnessed a decline in their IGR for last year.

Lagos,  the highest IGR state was not spared as it  generated N276.2 billion in 2014 compared to N384.2. While Enugu IGR dropped to N19.2 billion from N20.2 billion; Delta declined to 42.8 billion from N50.2 billion.

On the aggregate, six states generated a total of             N365.9 billion in 2014, down from N483.3 billion in the previous year.   Eleven states, out of 23 captured in the NBS statistics did not make appreciable change in their IGR during the period.  Even so, 13 others are yet to compile their returns.

The profligate expenditure style of  past state governments does not need to remind any one that unless specific conditions such as insisting that the money to be released should be tied to only payment of salaries, are attached to the bailout, it could again be lost in the drain pipe of the politicians.

But the Bailout package is not only for state governments as some agencies of the Federal Government are also indebted to their workers. This calls for a holistic approach to curtailing recurrent expenditure which a recourse to Oronsaye Committee report can no longer be taken for granted.

The Committee amongst others,  had recommended the scrapping of 102 Federal Government statutory agencies from the then 263; the abolition of 38 agencies; merger of 52 and reversion of 14 to mere departments in some ministries. In addition, the report recommended the discontinuation of government funding of professional bodies and councils.