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DEBT PROFILE: The Alarm On Debt Overhang In States

By Ikenna Onyekwelu
21 June 2015   |   12:35 am
BLAME it on politics, stupid! Rephrasing former Bill Clinton’s great quip, blame it on economy, stupid, is about the best way to describe the loss of cash and socio-economic traction in various states of the federation. Alas, Osun State, where the governor ruffled feathers with his dialectical imputation of a State of Osun, has become…
Okowa

Okowa

BLAME it on politics, stupid! Rephrasing former Bill Clinton’s great quip, blame it on economy, stupid, is about the best way to describe the loss of cash and socio-economic traction in various states of the federation. Alas, Osun State, where the governor ruffled feathers with his dialectical imputation of a State of Osun, has become the poster child of the unsure state of finances of state governments.

The bourgeoning economic crisis in the states raises questions as the nature of budgets and their faithful implementation. Each year, state governors assisted by their economic hatchet men, engage in the annual ritual of cooking of estimates that end up as voodoo documents. It is a common maxim among accountants that accounts do not lie.

By failing to pay monthly salaries of workers in their employ, state governors have revealed the lies in their accounting processes and books. The fiscal indiscipline that goes on in the state is traceable to the politics of imposition of state legislators most of who not only lack capacity but are incapable of representing the interesting of the people.

A responsible Governor should treat salaries and wages of workers as first line charge on the state’s income. If the number of workers is known then that in addition to the rudimentary running cost of the government should take primary consideration in allocation of cash backing. There is no other indicator of imprudence than the failure of a democratic governor to settle his financial obligations to the workers.

The state of shame in Osun is accentuated by the fact of the state government’s ownership of a helicopter. Osun’s situation brings up the vexatious extravagance of some state governors.

Apart from the call by the state chapter of the Peoples Democratic Party (PDP) on the governor to auction the copter and settle the mounting arrears of workers’ salaries, the Senator representing Bayesla East Senatorial District in the Senate, Mr. Murray Ben Bruce, took the matter to a jocular height by pledging a donation of his contentious wardrobe allowance to the pillaged workers.

Though, the Osun State government has declared that it would not dispose of the helicopter due to its assistance in the fight against insecurity and crimes in the state, the parlous nature of the economy demands critical analyses of the expenditure profile of state governments. It is not commendable to be insolvent but where the account is in red due to loud living, immediate reexamination of the spending pattern should lead to the path of recovery.

Like Osun, other states that are in dire financial straits have some bogus projects and programmes that hold no immediate need or impact to the people. One very important area for state governors to take a second look at is project conception and implementation. There is in development studies what is called prioritisation.

Governors who are in deep red could be said to be the ones that confuse political propaganda for development. There is insufficient needs assessment in some states before projects are embarked upon. The immediate past government in Enugu devised what was called VEC (visit every community), through which process functionaries from the ministry of economic planning went round communities to document priority needs.

Such policy direction enables government to pursue projects that have immediate value for the people or what is called bottom-up approach. What is seen in most states instead, are the imposition of projects that happen to be mostly prestige projects that serve as materials for media propaganda?

Most of the state governors mistake service for leadership. They do not fire the imagination of the people or challenge them enough to hold the driving wheel for social progress. This way they embark on jamborees and reckless spending of public funds.

The National Assembly has grave lessons to learn from the comatose state of financial situation of the federating states.

In the first place, Ben Bruce’s offer to donate his wardrobe allowance to the impoverished Osun workers is a clear indication that the legislators’ colossal stipends are supercilious.

They should shed some of their heavy take-home pay to lift their countrymen instead of accumulating much money they don’t need, except to build unprofitable hotels. Then when they want to tinker with the Electoral Laws, they should consider a clause that makes it mandatory that no governor seeking a second term in office should remain in office to contest the election.

The National Assembly should also examine the place of failure to pay workers’ salaries for several months in the fight against corruption. The legislators should come up with a grading index of viable, shaky and unviable states with a view to considering merging them or even barring them from going to the capital market for bonds.

For state legislators, they must insist on quarterly x-ray of the expenditure pattern of the state government and their findings made public.

There are some states that ought not to be involved in wage default. They include Rivers, Imo, Delta and Ogun states. Others like Benue, Kogi, Taraba, Ebonyi and Nassarawa that rank among states with sizeable workforce should be made to tailor their expenditure in such a way as to empower their population.

In the bid to play catch up or for chest thumping media hype, some of the governors embark on gigantic projects that tend towards asset depreciation and the likelihood of abandonment.

In Ebonyi State, for instance, despite the past government’s novelty of providing what it called budget stabilisation subhead in the yearly budget, it is surprising that the threat of industrial action by workers should be the lot of the state.

The cost to benefit ratio of projects funded by money from the capital market on the state is yet to be worked out. The idea of bailout could be the height of shrinking the nation into a unity government.

With fat security votes that are not accounted for and other perks, it is obvious that the governors are killing the economy. One sure way for them to reverse the ugly trend is: discipline!

After arm-twisting the federal ministry of finance to disburse earning in the excess crude account, the governors failed to see the danger signals in the economy due to the declining income from oil. Those asking for out are the governors that might take pool staking if not for institutional locks.

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