By Dele Sobowale

“We are approaching an emergency on this crisis, because not only is the crisis spreading like wild fire across the states, it is assuming a dimension that would seriously affect the economy of the country…the Federal Government must address the problem now, even if it means having recourse to our reserves ..APC spokesman from South West State.

Readers would permit me if the APC spokesman is not identified. He is a long term associate and one of those who have helped me as a columnist in the early years. Like Shakespeare, 1564-1616, “I hate ingratitude more in a man than lying, vainness, babbling drunkenness or any taints of vice” (VANGUARD BOOK OF QUOTATIONS p 103). But, that far I will go and no further.

The crisis he spoke about is well-known: salaries crisis which has engulfed the nation. His own state might not even be the worst – but is very close to it. The state is definitely the closest to an eruption because the situation there is almost hopeless – given the monthly collection from Abuja, which had dwindled to almost nothing.

Unfortunately, the spokesman is not an economist. He is a journalist and a lawyer. That explains why he hinged his appeal on what amounts to grasping at straws by a drowning man. His reference to “having recourse to external reserves” if it represents the views of the government he serves would indicate that nobody in that state government has a basic understanding of economics and why countries maintain external reserves.

He and those in the state government who think along those lines probably think the external reserves are like a savings account which the owner can access and draw down any time he feels like it. Nothing can be further from the truth. Any state waiting for the Federal Government to deplete the external reserves just to bail her out of the salaries crisis is living in a fool’s paradise. Even if accepted and implemented, it will not solve the problem for more than three months. Then what follows?

The Federal Government’s response recently, granting relief to states from repaying one month’s installment on the bail-out received late last year, is in reality, too little, too late and an exercise in futility. It amounts to putting plaster on feet run over and badly crushed by a trailer. It would not help much. Quite the contrary, it will further promote fiscal irresponsibility by state governors for reasons too numerous to disclose in a short article. But, here are a few to consider.

CONTINUOUS LOW AGGREGATE REVENUE

Most problems caused by money can mostly be solved by money. Allied to money is financial discipline and wisdom. By and large, the Federal and State governments of Nigeria had demonstrated neither fiscal discipline nor wisdom. For instance, anybody reading the papers these days must ask if those who were going to the Central Bank to truck out billions of naira and millions of dollars, while infrastructure   decayed can be regarded as disciplined – or even sane.

Over N40 trillion is now being traced – more than six times this year’s budget and ten times last year’s budget. Obviously, our problem is not money; but discipline, sanity and wisdom. Let those hoarding those funds return only one quarter and we would not need a kobo of loan from anywhere and there will be sufficient funds to fund every project in the current budget.

However, since we are unlikely to receive reparations soon, it is important to understand where we stand, so that desperate state governments will stop making silly requests of the Federal Government which for political reasons Buhari wants to grant in one way or another.

For decades to come, the years 2012 and 2013 will be remembered as our golden years during Nigeria’s Age of Oil. Crude prices reached dazzling heights (up to $145 per barrel in one month) averaging over $110 per barrel in those two years, which unwise people in government at all levels assumed would never end.

When recently, Dr Ngozi Okonjo-Iweala, the Federal Minister for Finance at the time, accused the governments of lacking the will to save, many regarded the statement as intellectual dishonesty. If the states refused to save, what stopped the Federal Government from saving? The former Minister is now preaching what she failed to practice when in office.

From 2012 to early 2014, all the governments spent all they received. That was bad enough. They also went on a borrowing spree based on those high revenue allocations from Abuja. Nobody gave a thought to tomorrow. Tomorrow is here. Let us now look at what has happened.

Meanwhile, in 2009, all the states of Nigeria had foreign debts amounting to N242 billion with the top ten including Lagos (the perennial champion), Oyo, Kaduna, Cross River, Katsina, Bauchi, Akwa Ibom, Osun, Ogun and Imo. In 2015 alone, the same states borrowed from commercial banks N13.1 trillion. That figure excludes external debts piled up by some of the states as well as bond issues.

The top ten were: Lagos, Rivers, Kano, Oyo, Delta, Kaduna, Cross River, Enugu, Ogun and Abia. The interest on loans in 2015 was almost equal to the debts in 2009 and it was being incurred against dwindling revenue. In some states debt servicing exceeds monthly wage bill. That is one major reason why salary bail-out is an exercise in futility..