SHORTLY after President Muhammadu Buhari assumed office in May 2015, the Nigerian Governors’ Forum, NGF, started pestering him to give them financial bailouts following the low federal allocations coming to them as a result of the plummeting price of crude oil in the international market.
In September that year, the Federal Government issued a financial bailout package of at least $3.5 billion to no fewer than 19 states which the Central Bank of Nigeria, CBN, had identified as being on the verge of bankruptcy and unable to pay their workers. The President strongly harped on the need for the states to give top priority to the payment of the arrears of salaries and pension.
Since then, there has been a gradual improvement in the revenue profiles of the federal and state governments due to the steady rise in the price of crude oil. In addition, the Federal Government has also issued tranches of the Paris Club Debt Refund to the various states.
BudgIT, an advocacy group that tracks the budgets and public finance performance, recently reported that in spite of N1.8 trillion windfalls disbursed by the Federal Government to the states to offset the salaries of workers and pensioners, at least 17 states still owe their workforces.
There are many reasons for this. Top among them is the profligacy among state governors. There is virtually no authority to stop them from spending the finances of their states as they wish. The State Houses of Assembly have failed woefully to assert their constitutional powers in this regard, and the Federal Government has little power to intervene.
Due to the so-called “feeding bottle” system whereby the states run to Abuja every month to collect revenue allocations, governors spend state resources like emperors and live like kings.
Besides this, Nigeria’s unitary system of Federalism forces poor states to pay the same salary and pension profile as the richer ones, and very little is left to provide amenities and services to the public. Very few states are able to set aside more than 30 per cent of their budgets for services and capital development. The situation is bound to get more chaotic with the impending upward review of the National Minimum Wage. It is difficult to imagine how most states will cope.
The only possible way out of this unpaid salary morass is to redesign the entire fiscal architecture of the country to allow each state to cut its coat according to the size of its cloth. Restructuring and true fiscal federalism can no longer be avoided. Ways must be found to empower the people to watchdog their governors and hold them to account.
The current military-inspired federal system is no longer working and must be re-jigged.