STATES AND FISCAL SUSTAINABILITY PLAN

MONDAY EDITORIAL

The states must devise measures to run on their own steam

Despite the recent euphoria that greeted the announcement that Nigeria had come out of recession, the most fervent optimist would concede that the economy is still in the doldrums. This is more obvious in several of the 36 states. That perhaps explains why the federal government has decided to put in place a regulatory and monitoring mechanism to track developments, aside reiterating that consideration for support to these states would be contingent on certain parameters.

At a workshop organised by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) on alternative sources of revenue generation for sustainable development in states and local government councils, the federal government said only states with sound financial discipline would now access further assistance from it.  Fiscal discipline, improved revenue generation, rational allocation and efficient use of resources, said Vice-President Yemi Osinbajo “must be strategies adhered to by every tier of government if we must return to a path of sustainable growth.”

In as much as we subscribe to that idea, we wait to see the implementation. In 2016, the federal government introduced some 22-point fiscal sustainability plan for states and local governments with a view to enhancing fiscal prudence and transparency in public expenditure. All state governments were expected to abide by the FSP’s strategic objectives around the five key elements of accountability and transparency, increase in public revenue, rationalisation of public expenditure, public financial management reforms, and sustainable debt management. The ultimate objective of the FSP was to ensure that states were on the path of fiscal sustainability.

 However, after more than a year of the existence of the FSP, many of these states are still the biggest source of corruption, waste and mismanagement. Unemployment has remained stubbornly high even as many of the states are unable to perform routine duties of picking up the bills at the end of the month. Only recently, President Muhammadu Buhari pleaded with the states to pay the salaries of workers at least with some of the refunds from the Paris Club.

The inability of the states to pay salaries had a year ago attracted the attention of the federal government and the Central Bank of Nigeria (CBN) in a special intervention package. The Debt Management Office (DMO) also helped them to restructure their commercial loans to the tune of N660 billion. There is no sign that all this had any salutary effect.

Besides, the failure of the states has also become a pressing concern in terms of generating internal revenues. Outside Lagos and perhaps Rivers States with impressive IGR, the remaining states rely more on the dwindling allocations from Federation Account to fund their services. This has led their economies to wither and decay. In addition, there are many leakages that needed blocking. This is rife more in the payroll and procurement policies.

 It is also insensitive to continue with the generous pensions for ex-governors, many of whom are still drawing hefty salaries from government. Moreover, a situation where a governor appoints 500 personal aides is nothing but sheer irresponsibility. Top officials in some of these poor states are still ferried around in private jets and helicopters mostly to attend unnecessary social events, including marriage ceremonies and birthdays.

However, the chicken is finally coming home to roost with the outright economic bankruptcy of many of these states that now find it increasingly difficult even to pay salaries. Given the foregoing, we endorse the new resolve of the federal government that the states must put their house in order to further access help. They must clean up their financial system and go all out to collect tax from the citizenry as Lagos State is doing so admirably well. The states must be made to run on their own steam.