“Federation Account allocation dips by N31.8bn in October”. NATION, November 21, 2016, p 8.

“GDP growth rate drops further to -2.24%.” PUNCH, November 22, 2016, p 1.

By Dele Sobowale

Newly-elected Governor Godwin Obaseki of Edo State struck the right note in his maiden address to the people of Edo State when he declared that “there is more free lunch”. He has his reasons which the tables below will pertly explain. Contrary to what some consider an early rebuke of his immediate past predecessor, it was nothing more than a bow to reality. Facts remain the eternal enemies of illusions which still drive most of our politicians promising free everything under the sun.

Meanwhile, Ondo State is heading for the polls to elect a successor to out-going Governor Segun Mimiko. Irrespective of who eventually emerges as the new governor, he has a tough task awaiting him. It is doubtful if there is a single governor serving second term now who does not occasionally wish he had bowed out gracefully at the end of the first term – while there was still loud ovation. Few will enjoy that endorsement now.

From right- Governors Ogbeni Rauf Aregbesola of Osun state, Ayodele Fayose of Ekiti state, Abiola Ajimobi of Oyo state, Ibikunle Amosun of Ogun state and Akinwumi Ambode of Lagos state during the Southwest governor’s economic forum, at the Exco Chamber, Oyo state Governor’s office, Ibadan, Oyo state on Monday 21/11/2016.

Oil producing states illustrate the calamity best: Akwa Ibom: N14bn to N8.7bn; Bayelsa: N18bn to N6.3bn; Delta: N16bn to N5.6bn. While all the 36 states are in varying degrees of distress and will probably remain so in 2017, Osun State is in a class by itself. (See tables below).

The current governor will end his second term before 2019. But, if the monthly allocations from Abuja continue at this rate, anybody running for Governor of Osun state, after this one, might need to consult a doctor. Only a born masochist would be eager to take on that assignment. The state in October 2016 took home less than ten per cent of what it received in 2006 before Minimum Wage rose to N18,000 per month!!!

The reasons are not hard to discover. Few owed their staff unpaid salaries in 2013 and early 2014. The signs of things to come first appeared in the second quarter of 2014, when crude oil prices started their steady decline from over $100-plus per barrel and over 1.8 million barrels per day exported to where they are today.

VANGUARD must have published at least four articles warning the Federal Government, the Council of States and the economic policymakers that the downturn in crude prices and volumes was not temporary, but, will persist for several years. Nobody paid heed to the warnings; least of all the states whose fortunes depended on federal allocations. Even when crude prices and revenue fell drastically, the state governors still went on with business as usual. Today, the consequences stare them in the face.

Worse than the present hardships faced by people in the states is the fact that with Gross Domestic Productivity, GDP, declining, Value Added Tax, VAT collections, which had helped to cushion the impact of sharply reduced oil earnings will also start to shrink. Many companies which declared and paid taxes in 2016 on their operations in 2015 might also be declaring losses in 2016 and pay no taxes in 2017.

States face a more difficult future than most of the governors realize. Obaseki’s no free lunch might become no lunch at all. We need governors who can manage relative poverty. Our period of affluence is gone for now.