By Dele Sobowale

“Workers ground finance ministry over unpaid allowances.” PUNCH, June 21, 2016, p 1. “Nothing is more wasteful than doing with great efficiency that which should not be done.” Theodore Levitt. (VANGUARD BOOK p 270).

The first part of this series appeared last week after the Federal Minister of Finance reversed herself by announcing that the Federal Government was again considering a bailout package for the states.

Even, before writing last week’s column, it was clear that advising governments in Nigeria is just about as useful as talking to a wall.

They ask for “all hands on deck”; but they take cognizance of only the hands closer to the corridors of power and whose vested interests must be protected at all costs – even if the people pay dearly for it.

Like Greeks in Horace’s, 65-8 BC, era, Nigerians feel the lash for each folly of their leaders. The report by PUNCH regarding the closure of the Ministry of Finance, by its own staff, came six days after Mrs Adeosun had announced a N90 billion loan package for the states. But, it comes with several strings attached which might make it difficult, if not impossible, for most states to access the loan facility. Before going into further analysis of the loan package a diversion is necessary; even unavoidable.

The pathetic picture of Civil Servants locking out a Minister of Finance demanding to be paid arrears of allowances owed, coupled with known inability of the government to pay pensioners can only lead to one obvious conclusion. The Federal Government itself is totally broke. So, the Minister’s ill-advised attempt to add the problem of states to her own mandate demonstrates a lack of priorities in the Ministry.

This is akin to a dead drunk person offering to help other equally intoxicated persons to get home! They will all likely land in the gutter. And that may be the fate of the states as well as the Federal government – unless Mrs Adeosun reads her job description again and leaves the states severely alone to paddle their own canoes.

However, since she has stubbornly refused to face her job, perhaps she will at least realize that the N90 billion loan package is an exercise in futility and will solve no problems of the states. With 36 states, the average for each state comes to N2.5 billion. There is no state in Nigeria today with a wage bill of less than N1.7 billion a month; some are as high as N4 billion.

The arrears of salaries owed to staff range from three to five months. And, that excludes what is owed on allowances and pensions by each state. It requires no more than elementary school arithmetic to figure out that even the state with the smallest wage bill will exhaust its share of the loan within two months. Unless aggregate national revenue jumps suddenly, all the recipient states will once again be begging for more bail-out while at the same time increasing their debt burdens. So, what would have been gained, other than a little bit of time? Very little, clearly.

But what new problems would have been created? First and very evident is the increased monthly deductions in the future – which can only be less painful if aggregate revenue goes up. Unfortunately, revenues are unlikely to climb this year. Niger Avengers have to a great extent ensured that oil revenue will be far lower than expected this year. If anything total revenue might continue to fall steadily – making it increasingly difficult for the states to meet their financial obligations.

This will include payment of salaries and debt repayment. In fact, there is a distinct possibility that some states might default in debt payments later in the year. One reason is the new foreign exchange policy adopted by the Central Bank of Nigeria. The new inter-bank exchange rate of N288 per US$1 means an increase of 44.5 per cent over the previous rates.

Granted, the Federal Government and the states will henceforth receive more naira for the dollar receipts, but, the externally exposed states will have to use more naira to fulfill their obligations. Inevitable higher inflation rate will add to the cost of running governments and the gains made from dollar exchange rate will be lost to expenditures.

When the state governments finally realize that the bailout had failed to solve their problems, they will all point accusing fingers, deservedly, in one direction – Abuja. Mrs Adeosun had left undone what she should be doing; she is getting involved in things she should not be doing. In the end, there will be no “Thank you” from the Governors who can henceforth pass the buck to Abuja.