Monday, 2 May 2016

As reality bites in Nigeria

Written by the Editorial board of The Guardian Newspaper

As governments at all levels find it difficult to pay salaries to civil servants and there is a huge indebtedness of governments to contractors, the pangs of the dire economic situation are being felt everywhere. As many as 27 of the 36 states currently owe their workers salary arrears ranging from three to eight months. Similarly, the Federal Government owes about N1 trillion to road contractors alone.

Households and small businesses are feeling the heat of scarcity of funds.

It is little surprise that business shut-downs are being reported across the country. Inherent in all this is, of course, the on-loading of more able-bodied Nigerians into the already over-crowded labour market. That is why for a 10,000 job vacancies declared by the Nigeria Police Service Commission, over 700,000 applications were received. That is why too, the unemployment rate is pointing upwards. It is indeed, a very bad time in Nigeria and the government must do something to alleviate the situation fast.

One pathetic and unacceptable reason state governments hinge their inability to pay salaries on is the dwindling revenue allocated to them from the Federation Account. Reference is also made to reduction in internally generated revenue. These explanations or excuses are lame as most of the governments have no credible evidence indicating they have applied themselves to raising enough sustainable internal revenue from the abundant resources at their disposal. If the governments will apply themselves to innovative and creative ways to increase revenue without undue burden to the people, prioritise projects and effectively manage cost of governance, things would be better. Unfortunately, most of them not only lack the capacity to generate viable ideas in the above regards but also the discipline to manage available resources. Failure such as this finds expression in the life and governance styles of most of the governors who daily advertise prodigality and unwillingness to make needful sacrifices.

If the states know that no money will be shared at the federal level and there will be no one to bail them out of insolvency, they will begin to consider survival options seriously. As the saying goes, necessity is the mother of invention.

This is where one of the outcomes of the recent National Economic Council (NEC) meeting must be commended. It was reported that each state was directed to identify two business areas or agricultural products where it has comparative advantage. And if the areas of comparative advantages are properly identified and undertaken as serious business concerns, they can become game-changers in the income sustainability of the states.

While the revenue side of the divide must be addressed, commensurate emphasis needs also to be placed on the expenditure side.  It will be a surprise if the governments do not know their cost profile and major cost-drivers. If they do, they should be asking questions on the relevance and value being derived from their spending. And how cost rationalisation and management can be attained. Areas that should attract urgent attention include the number of ministries, non-revenue earning agencies and parastatals as well as appointees. Others are the number of vehicles and persons on the convoys and entourage of government officials; the class of travel, hotel accommodation and feeding, the number and amount involved in new project contracts being awarded even when many of the earlier awarded ones have either been completed but unpaid for or there is no money to facilitate their completion. Further, the question may be posed, for example: must a government that cannot pay salaries of its workers hold tightly to private schools it forcefully took from its owners? Would it not be wise and cost effective to return them to the original owners?

Unfortunately, however, the issue of reduced or reducing revenue and increasing cost is not peculiar to state governments, the Federal Government is also critically damaged. Meaning that the opportunity has, once again, emerged for the nation to review and take proper stock of its strengths and weaknesses with a view to finding best ways of service delivery to the people. In this wise, some of the obvious issues to be quickly considered should include the institutionalisation of true federalism (including fiscal federalism), a review of the subsisting bi-cameral national legislature and a look at the waste inherent in operating full-time legislatures at all levels.

When these and some other development-encumbering issues are sorted out, each state government or the central government will fend for itself and pay its workers in line with its earned and available resources. Further, areas of waste will be cut, the usually asserted high cost of the presidential system of government will be moderated and governance will be conducted by those who sincerely desire to serve and not those lured or enticed by huge amounts of free money that pass through government coffers. Then and only then will governments in Nigeria be able to meet their obligations to the people and businesses will thrive.

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