Nigerian lawmakers launched a rescue mission, mandating the committees on Finance, Appropriation, National Planning and State and Local Government to probe what they described as the looming bankruptcy in states.
Besides, the Senate advised the Federal Government to expeditiously review the Revenue Allocation Formula in favour of states and local governments.
Governors are asking for a new formula which will give the Federal Government 35%, states 42% and local governments 23%. The current formula is Federal Government 52%, states 26.7% and local governments 20.60%.
The result: The Federal Government takes the biggest chunk of the cash, but does little, according to critics.
The probe, the Senate said, should involve in-depth study of the emerging bankruptcy indications in the states and suggestion of remedial measures to avoid total collapse of the economies of the affected states.
The Senate’s action followed a motion on the “Looming danger of bankruptcy in states: The need for fiscal evaluation”, sponsored by Senator Olubunmi Adetunmbi (Ekiti North).
The motion attracted an outpouring of emotions by Senators who agreed that steps should be taken urgently to address the precarious fiscal condition of states, in the interest of the country.
Adetunmbi, who supplied statistics to back up his argument, drew the attention of the Senate to the fiscal challenge and looming danger of insolvency and bankruptcy facing states as a result of growing wage bill.
He said the scenario is associated with the implementation of the minimum wage and other recurrent responsibilities of the states.
The lawmaker urged the Senate to note a recent research by the Nigeria Governors’ Forum, which revealed that 20 states faced the prospect of an unstable and unfavourable financial standing, given the high percentage of their wage bill to the total revenue accruable to them.
He noted that most states have become social employers of labour, with unsustainable high work force that does not reflect in improved service delivery to the people.
In most states, Adetunmbi said, the private sector is weak and unable to generate economic growth and jobs that are required, thereby making the states and local governments the largest employers of labour, with attendant fiscal imbalance.
The Ekiti State-born lawmaker said the Senate should be concerned that the bulk of the revenue of the states is financing pay roll of the civil service, which constitutes less than 4 per cent of the total population in the states.
He said: “Under this development, six states are approaching distress; Kano will spend 127%, Sokoto 62%, Niger 56%, Zamfara 54%, Katsina 50% and Osun 50% of their gross annual revenue on civil service personnel cost.
“14 states will deploy 30-49% of their total revenue on personnel; six states will deploy 20-29%; five states will deploy 15-19%. Only Abia, Akwa Ibom, Anambra and Jigawa will spend less than 15% of total state revenue on personnel.”
Adetunmbi is concerned that if the trend continued, many of the states will become financially insolvent and increasingly handicapped to finance real sectors and drive economic growth, jobs and improved livelihood.
He is worried that “most state governments now rush to the Capital Market to raise long term bonds to finance development projects”.
“Without an appropriate framework, misuse of such funds could spell doom for the future of the states,” he said.
The senator went on: “Some of the State Governments that have taken these route of funding between 2002 to 2011 are Lagos (Series 1 – N50bn; Series II – N57.5bn; Imo (N18.5bn); Kwara (N17bn); Niger (N6bn); Bayelsa (N50bn); Kaduna (N8.5bn); Ebonyi (N16.5bn, Ogun (N50bn); Delta (N5bn) in 2007; Kebbi (N3.5bn) in 2006; Lagos (N15bn) in 2002 and Yobe (N2.5bn) in 2002.”
The lawmaker noted that the financial quagmire of states further highlights the urgency of a review of the revenue sharing structure among the Federal Government, States and Local Government Areas.
He said “the continued centralisation of labour and wages legislation without reference to resource endowment of states is antithetical to the basis of true federalism in Nigeria”. “Such unitarist policies are unhealthy to the development of a competitive labour market in states.”
The infrastructural deficit and shortage of jobs in the states, Adetunmbi added, have led to massive out-migration of youths into key cities.
“This has further exacerbated the pressure on urban infrastructure and social services, with attendant slum growth, urban unemployment and worsening crime rate,” he said.
Adetunmbi observed that the State and Local Government Areas are the place of domicile and points of service delivery of dividends of democracy to the people. “Therefore, a progressive dwindling of resource availability for essential services constitutes a threat to peace and security,” he said.
As Senators elected by people in the 36 states and LGAs “we owe them a duty of representation, advocacy and negotiation for a better deal”.
Adetunmbi prayed the Senate to act with dispatch to prevent the collapse of the states.
Most Senators who contributed to the debate agreed that the motion is a wake-up call that requires a decisive action.
Senator Victor Ndoma-Egba described the motion as “timely”, saying that a situation where states rush to Abuja every month for Federal allocation is unhealthy.
He noted that the emerging situation is a warning to those demanding for new states that the time has come to merge some states.
Senator Ahmed Lawan noted that the emerging situation is an indication that states are not getting the allocation they deserve.
Senator Bello Tukur said that states were created on the understanding that they will be viable.
The Adamawa-born lawmaker called for the immediate review of the revenue allocation formula.
Senator Olusola Adeyeye recalled that in the past, regions flourished because they were autonomous.
He said the founding fathers of the country structured the regions in such a way that the salary structures of civil servants were not uniform.
“There is no federalism anywhere in the world where everything is uniform,” he said.
Senator Nenadi Usman agreed that the revenue formula should be reviewed in favour of states.
She added that more attention should be paid to local government areas.
Senator Ganiyu Solomon noted that too much power is concentrated in the centre.
Courtesy: The Nation