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Consequences of states reducing budgets for 2016

By Dele Sobowale

The most obstinate illusions are ultimately broken by facts.” Trevor Roper, in THE LAST DAYS OF HITLER. (VAGUARD BOOK OF QUOTATIONS, VBQ, p100). Roper, in one of the best books on the last days of the German leader wrote about how Hitler, deceived by his field commanders set about deploying imaginary troops in order to halt the advance of the Allied Forces into his country. It was comical and historical. It demonstrates how political leaders can turn to clowns when faced with realities which are too harsh to admit.

Buhari presents N6.08trn 2016 budget to NASS
Buhari presents N6.08trn 2016 budget to NASS

Most Nigerian governors are now like Hitler with their 2016 budgets and the statements they make about the coming year. Before presenting the actual figures from some states of the Federation, it is important to substantiate the allegation that many of our state chief executives are living in Alice’s Wonderland.

Niger State Governor Abubakar Bello represents the common trend among state governments. First, he declared that “Our revenue has dropped by more than 50 per cent, but, it will not be an excuse for us not to serve our people.” Then, the governor who admitted the reduced revenue still went ahead to present a bigger budget for 2016 than for 2015- which is not being achieved. You must wonder if states like Cross River, Sokoto, Yobe,    intend to print their own currencies to finance their budgets given the absence of any demonstrable IGR source that is left to be tapped in those states.

The most common statement they make is the pledge not to retrench staff. Admirable as that might sound, the declaration flies in the face of other facts which cannot be ignored. Certainly, the same states still owe staff several months’ salaries with no more bail-out money or loan to help them pay. So, no retrenchment means assuming further obligations to pay the staff. All things remaining the same, it means the states will fall further behind in payment of arrears of salary.

Unfortunately, things will not remain the same for most of the states. In fact, for many states, the immediate future is frightening. At the same time they are promising not to retrench staff, they are also promising to “improve” on service delivery in many arrears of social like. Again, the reader of those statements is bound to laugh or cry. The situation is simply ludicrous. Below is a chart of the 2015 and 2016 budgets for selected states of Nigeria. The rest are not different in many respects.

In fact, only twelve (12)  states expect to spend more in 2016 than they did in 2015. The remaining twenty (20) expect to spend less. That, however, is not the end of the story. On the aggregate the thirty six states plan to spend N14bn more in 2016 than they did last year. Remove Lagos which expects to spend about N174bn or 26% more in 2016 than last year, the rest will spend N159bn less than 2015.

Most states depend on federally allocated revenue for most of their expenditure; those dependent states generate less than five per cent of their expenditure from Internally Generated Revenue, IGR. Even Lagos which generates the highest IGR as well as the highest ratio of IGR to total revenue will have to almost double its IGR revenue in 2016 in order to reach the N662.59bn budgeted.

“Morning shows the day or at least a good part of it.” Meanwhile, the price of crude oil tumbled to an 11-year low by Wednesday last week. That is $4 or 10.5% less than budget per barrel. The Federal budget is lower for 2016 than 2015. Clearly states budgeting increased expenditure must know something the rest of us don’t. It will be interesting to see how they pull it off.

The GDP 0f any nation consists of the aggregation of all the units constituting that economy. States, as a group, remain a key variable in the determination of the end result. With states intending to spend less, and even the reduced budgets not assured, it is clear that all the political promises about improving services, not retrenching staff, etc, are nothing more than the usual promises by politicians which they are bound to break as the year proceeds.

With states consuming less of everything from cars to computers, gasoline and “Ghana-Must-Go” bags, the marketers of those products and services can also look forward to a difficult year. Those states still promising anything “free” are either guilty of self-delusion or deliberate falsehood. There will be nothing free in 2016. Not even a vault in the graveyard – whose costs are also going up. The year 2016 will be the most expensive year to live or die in Nigeria – in any state.



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