The Price of ‘Parochial’ States

30^th April, 2016

By: AmirAbdulazeez

I

t has gradually but finally emerged that more than 20 states in Nigeria are still unable to pay workers’ salaries despite a Federal Government bail-out given to 27 of them through the Central Bank of Nigeria between July to September last year. Before the bail-out, the states owed workers from between 2 to 9 months salaries. Several months later, many of these states still owe workers. It is still not very clear whether this problem still persists because some of the states allegedly misapplied or even diverted the bail-out funds or the bail-out funds were not just enough to solve the problem. Whatever the case, one thing that is crystal clear is that majority of the states in Nigeria are not economically fit to exist as states and no short-term solution can change this.

With probably the exception of the first eleven states created by former Head of State, Yakubu Gowon, all later states created were largely and systematically done based on parochial considerations. Agitations for states creation by different communities have been to a large extent based on political, ethnic and religious considerations. Many misinformed Nigerians may think of peace, unity and progress as a scenario where everyone is of the same religion or tribe or at least something similar or close to that situation. This explains the agitation for disintegration in many quarters and the idea of confining one ethnic group to a particular boundary. The belief is that once we have entities of Igbos only, Yorubas only, Ijaws only, Muslims only or Christians only, then there would be unity and progress. Hence, we see states creation as means of settling some dispute. For instance, many are of the opinion that creating an additional state from Southern Kaduna will help solve the long-time ethno-religious crisis bedevilling the state. Advocates of a solution like this have forgotten that even within states occupied by one ethnic group, we still hear of some heated political crisis and the quest for power rotation among different senatorial districts.

Favourable crude oil prices over the most significant part of the last 15 years has largely helped in concealing not only the non-viability of the states but also the monumental corruption and political miscalculations that have prevented them from establishing a stable financial future. The unprecedented fall in oil prices which began in 2014 and got severe in 2015 was what exposed most of the states for what they are, fragile states that have been parochially created, corruptibly and incompetently managed over a significant period of their existence and those without any development plan for the future.

As it stands today, only Lagos can meet its financial responsibilities without depending on federal allocations. While this is so partly due to proper management, it is largely due to colonial and geographical advantages. Other states that can have a reasonable complementary source of revenue to federal allocations if the amount of internally generated revenue in 2014 is anything to go by are Rivers, Enugu, Ogun and Cross-Rivers states. About 16 states generate less than 10% of their total revenue from internal sources, meaning 90% or more of their funds come from federal allocations. As at 2015, only 8 out of 36 states generate at least 20% or more of its total revenue from internal sources.

Something that is puzzling is that even states with an appreciable internal revenue base are now struggling to pay salaries. For instance, Kwara State which came 6^th among the states with the highest IGR in 2014 with more than 21% of its total revenue coming from within is reported to be badly struggling to pay salaries. Some Niger-delta States that in addition to statutory allocations, internally generated revenue also enjoy 13% from the derivation formula are not left out as only Rivers and Akwa-Ibom appears to be safe.

Apart from the inability to pay salaries, many states are unable to carry out the basic functions of government.  A report by the daily trust newspaper published on Monday, April 25, 2016 revealed that states with one salary issue or the other are Kaduna, Kwara, Plateau, Benue, Borno, Yobe, Imo, Taraba, Kogi, Bauchi, Delta, Oyo, Nassarawa, Osun, Kano and Ogun. The report stated that some states that are managing to pay salaries have slashed between 30 to 50% while others have stopped paying leave grants, pensions and other workers’ entitlements. On top of all this, there is virtually no state without debts and liabilities that run into billions of nairas and millions of dollars. 

Many reasons are responsible for states in Nigeria finding themselves in this situation of unprecedented financial mess when salary has become luxury. Here are some few of them.

Firstly, one of our major problems is that most of our national actions are short sighted. We seldom do things with foresight taking into cognizance our long-term future. In the 1990’s and 1980’s, the Federal Military Governments kept on creating more and more states until we had 36. Most of these states even then were heavily financially dependent and never looked to have any stable financial future. In fact most of them were never created based on merit. In some cases, states were weakened by creating other states out of them. Today half of these states cannot pay their own workers and almost all cannot do so without Federal Government allocations. Any state that cannot generate enough IGR to meet 75% of its salary obligations is not fit to be a state and the option of merging it with another state, even if highly controversial, should be considered.  Ironically, Nigerians still ‘want’ more states. One need to check out how many states-creation proposals mostly motivated by ethnic and regional agendas did the 7^th National Assembly received.

Secondly, most of the states have been incompetently and corruptibly managed, especially during this democratic dispensation. Siphoning and embezzlement of public funds have been widely reported in many states over the last few years. Many of the funds stolen would be enough to pay workers’ salaries for many years. For example, former Delta State Governor James Ibori was reportedly convicted of stealing 250 million US Dollars, an equivalent of more than 50 billion Naira at official exchange rate. How much impact would this money make on Delta State’s present and future? Many other state governors may have gotten away with billions of public funds that could turn around the financial future of their states. In many states, governors have introduced ridiculous and selfish pension packages for themselves and ironically, the poor current financial status of the states doesn’t seem to affect its implementation; it only affects salaries of workers.

Thirdly, our states have been consuming without investing over the last 16 years. The major objective of the states was to exhaust all what accrues to them and wait for the next month, we never hear of any reserve being kept for the future. Many of the states consume their resources and expend them on political projects that yield no financial dividend for the future. We hardly hear states investing in agriculture, industrialization and tourism. Between 1999 and 2007, cross rivers state heavily invested in tourism and it appeared to have paid off as the state was ranked 5^th among those with high IGR in 2014. With about 20 small and large dams and reservoirs in Kano State, the state could have invested in irrigation agriculture and curbed unemployment, produced more food as well as generated revenue if it had not focused on political and white elephant projects in the last 15 years.

Fourthly, the absence of a national development plan has given way to the politicization of government activities at the federal and state levels. Government projects are not initiated along any short or long-term development plan but rather based on political sentiments. At the states, hardly, can you find a state with any long term development plan which is continuous and consistent; even states that have been governed by one party since 1999 experience planning inconsistencies and policy summersaults. Many state governors lack any initiative; they just come and go without adding any value to what they met. Right from 1999, if the states have made it an objective to become economically self-sufficient, many would’ve achieved significant progress by now and the issue of salaries would not be our problem. In addition, the states have gradually succeeded in killing the local government system through the joint account structure. The Local Governments if strengthened can complement the development efforts of the federal and state governments. However, with the system now deliberately killed, the states which have failed to carry out their own functions properly, have also failed woefully to bridge the gap created by the ‘dead’ Local Governments.

We agitated for states without any reliable and sustainable long term plan to run them, the military governments granted our wishes and we are now heavily paying the price. While it would be very complicated if not impossible to scrap or merge some states, we must forget about any further creation of states for whatever reason if we want ourselves out of this mess. When this oil price crisis is over, we must learn and implement the lessons we might have learnt from it.

While we must acknowledge the fact that these states came with mainly short-term benefits, the current salary crises is their consequence and indication of their unsustainability in the long run.