A NATIONAL ECONOMY IN TROUBLE
The authorities should steer the ship of state out of the present perilous trajectory
As the debate on the sustainability of the humongous subsidy in the downstream sector of the petroleum sector continues, there is no doubt that this year will usher in a lot of challenges. And there are no easy options. No matter the spin from government officials, emerging facts suggest that the nation’s finances and the economy are already in dire straits. While there is nothing wrong for a country to face temporary economic setback so long as the managers are capable and indeed able to fix it, what is tragic is that we continue to live in denial with public officials still wallowing in profligacy.
Meanwhile, the current administration has in the past four years been on a borrowing spree. Ordinarily, every nation borrows. But borrowing must be done with a well-thought-out investment initiative conceived to yield maximum benefits. Given that the projects on which the loans are being expended are not income generating with some of them, like the railways, being subsidised, how shall we pay back?
Unfortunately, whenever the government is confronted with the question of the danger inherent in continuous borrowing, the federal government always claims that Nigeria’s debt-to-GDP ratio is one of the lowest in the world without bearing in mind that debt in comparison to GDP is only sustainable when the revenue generation is high. In the case of Nigeria, while the debt profile is rising and with it our population, government revenue continues to dwindle, with no conscious effort to cut down on recurrent expenditure either by the federal government or the 36 states. To compound the challenge, transparency and accountability in ministries, departments, and agencies (MDAs) are at the nadir as official corruption is still high. The annual audit report from the Office of the Auditor General for the Federation is very instructive. The number of government agencies that fails to subject themselves to audit scrutiny under the present administration continues to increase.
However, the critical challenge is in lack of prudence at practically all levels of government. Meanwhile, many of the 36 states are in a fix over mounting salaries and pensions. Since most of them are perilously dependent on handouts from Abuja, their inability to pay salaries is becoming a national security challenge. Faced with a declining national economy worsened by the Covid-19 pandemic and subsequent low oil prices, many states across the country are wildering. Their battered financial state was worsened by the huge amount of money used to service unjustifiable debts accumulated over the years. States like Kogi, Adamawa, Plateau, Benue, Taraba, and Osun are suffocating under debts and inability to live up to their responsibilities.
Given the foregoing, the nation is at a crossroads. By focusing only on payment of salaries to workers in the public sector that is largely unproductive at the expense of much needed social infrastructure like power, schools, hospitals and reliable institutions, poverty is being reinforced across the country. This catastrophe is enhanced by lack of transparency, accountability, and creativity in governance. The states have the latitude to create their own revenue survival kits through taxes, sensible investments, and prudent management. They have the power to slash their recurrent expenditure and drastically right-size their workforce and spend less on frivolities. It is unacceptable that amid a debilitating revenue squeeze, governments at all levels have continued to revel in criminal profligacy. Yet, a nation that spends more than it generates to sustain civil servants and public officials is surely on a journey to perdition.
We hope the authorities at all levels will move quickly to steer the ship of state out of this rather dangerous trajectory.
