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Rescuing the bankrupt states

By Obi Nwakanma

The Vanguard reported on Friday that the Federal government had suspended the at-source deductions from state allocations from loans obtained by these states and guaranteed by the Federal government of Nigeria. It is apparently a short-gun measure to stem the financial crisis in the states, and to enable them fulfill their payroll obligations and stabilize the economy. In principle this sounds good. But its implications are a little murky. Rescuing states from insolvency is an act of charity that breaks the law. As a matter of fact, it is an unfunded mandate. It is constitutionally a mandate that must be backed by the Legislature of the republic. Every action of government connected to the expenditure of federal funds must be covered in the finance act as enacted by the National Assembly.

Even as a short term measure, the executive arm must seek the authority of the legislature before the federal government commits any federal fund to any objective, including ameliorating the dire financial situation of the federating states who now find themselves at the verge of collapse and bankruptcy. The decision therefore arrived at by the National Executive Council to suspended these deductions from the state allocations is not a “federal government decision,” because it is not backed by the appropriate funding mandate or act of the National Assembly, it is a decision of the Buhari executive administration, and it has no backing in law. It is executive overreach to expend federal funds without legislative oversight, for indeed, the reason which the constitution makes parliament the purser of the federation is so that it will assert financial control over government spendings and financial actions.

While the decision to suspend the deductions is a charitable, perhaps even prudent act by the central government to enable the states to meet their financial obligations, and possibly stabilize the economy, it fails in due process. It blindsides the legislature, and thus amounts to executive overreach and contempt for the parliament of the land.

For such decision to be enforced, it must have the backing of the necessary tool of law, which the administration must seek as a matter of course. Decisions to bailout states financially are not executive mandates. They must be backed by law. The Buhari administration is yet to understand this. It is true that the Finance Minister and Chief Treasurer of state says that the decision to stop the deductions is not a “bailout.” But pray, what is it? It involves federal funds. I do suspect that the president is either not seeking the proper legal advise on these matters regarding the financial laws, or he is being badly counseled, regarding the extent of his executive mandate.

I should point here that President Buhari is an elected President under the oversight of an established parliament of the land. He sometimes act as though he were still “Military ruler” with all the overwhelming power of the state inhabited in that title. As an elected Civilian leader of the nation, this president is bound by certain protocols, including governing within the ambits of the law, and the law establishing the republic places the National Assembly as the lawmaking and lawgiving institution of the land, from which the president is bound to seek the authority and guidance to govern.

There is a difference in that regard between “ruler” and “leader.” A “ruler” has absolute power unburdened by any parliamentary control. A monarch is a ruler. No president, elected by popular will and mandated by suffrage is a “ruler.” A “leader” is one who is backed by the will of the people, to take a lead, and steer the wheels of the republic. The legislature is the symbolic gathering of the collective will of the land that undergirds the power of the people. And as I have tried to point out on a number of occasions, Nigeria was founded as a republic, not a constitutional monarchy.

Distortions in military rule have often left Nigerians confused about the constitutional limits of executive power.

Years of absolutism, and the fact that the restoration of the republic was still directed by a man who had no ideas about civil governance, has further confused Nigerians about the nature of presidential power. Under the law, the federal government is governed by two mandated institutions: the executive arm, and the legislative arm, and the National Assembly as a matter of fact has the power to override the president, unless the president is able to mobilize public opinion that threatens the individual mandate of the Assembly on major issues. So, the federal government is not simply the office of the president, or executive authority simpliciter.

The federal government is the “three arms” in a union, acting in concert or not. I have gone to this extent merely to establish that the decision to rescue affiliate states of the republic is not an executive mandate, it will be an act of the parliament of the republic, mandating such executive action. The president might be advised to send a request to the National Assembly for an emergency financial rescue fund to use as bailout for the states, and stem their collapse, and stabilize the national economy. But until that funding request is approved by the National Assembly, and I hope it would be approved, the president acts beyond his mandate in “rescuing” the bankrupt states by the decisions of National Executive Council.

The National Executive Council is not the Parliament of the land. In any case, on its own part, the National Assembly itself is tardy in taking the full measure of the national crisis. The 8th Assembly must be a proactive parliament, rather than a reactionary body. It is about time for the National Assembly to empanel a parliamentary commission as a matter of urgency to examine the long and short term implications of state bankruptcy. Critics of Nigeria’s current federal union point to its fundamental weaknesses: the fact that the states are too weak, and deliberately so, to sustain the kind of financial autonomy necessary for their viability.

Nigeria wastes much money servicing elaborate but inefficient bureaucracies, rather than deploying the resources to real sector development. Nigeria does not need more than eight regional governments. Six would in fact be adequate. Perhaps we should let the states atrophy and die, and then reorganize them around the six regional structure to create more viability. Nigeria’s current state structure is unviable and unsustainable. It is prodded up on the illusion of oil wealth. With the crisis in the oil market, and the uncertainty of the future of the oil economy, these magi-cube states, have no future. Perhaps it is about time for the National Assembly to invite groups like the Lower Niger Congress, long critics of the current structure of the “failed state,” and begin to hear their perspectives on the possible restructuring of Nigeria.

The National Assembly has enormous powers, and among that is the power to amend the structure of the Nigerian state, and that is, if it chooses not to cede that power to a referendum. What is clear is that the bankrupt states in Nigeria mirror only the first stages of a national crisis: any state government that is incapable of paying its workers must as a matter of obligation, resign, because that is the most extreme example of failure.

The current federal system has failed in Nigeria, and it requires serious political will to renegotiate a new structure based on the viability of the federating states. States that fail financially must either be run as federal mandate areas, and therefore no longer independent states, or their current State Assemblies must be encouraged to work to unite with other affiliate states to form a new union for their own rescue.

It is not the job of the president of the federation to rescue states without the mandate of the National Assembly.

 


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