STATES AND FISCAL LAXITY
The states must cut down on public expenditures
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 remains tragic is that public officials continue to live in denial while wallowing in profligacy. A recent newspaper report revealed that 29 state governors collectively spent ₦1.994 trillion on various recurrent expenditures in the first nine months of 2024. Travel expenses for government officials, jumbo allowances for meetings and refreshments, etc., consume substantial portions of these budgetary expenses.
As a result of the removal of fuel subsidy and the floating of the naira, virtually all the 36 states have got at least 40 per cent boost in federal allocations in the past one year. Unfortunately, many of these states still struggle to pick up
their routine bills. Yet, they expend huge sums of money on frivolities. In most of the states, there are no significant allocations to capital and impactful projects, triggering concerns over fiscal discipline amid calls to reduce the cost of governance. The situation is worsened by the high rate of debt servicing by the states in the face of poor internally generated revenue.
What is most disturbing is that increased statutory allocations from the centre, and increased borrowing have not translated into better living conditions for the people. Everywhere, there is misery at the doorstep. The cost of governance, as it has been over the years, is high and alarming. Most of the debts being incurred for future generations of Nigerians are expended on projects that bring little or no returns on investment. While some of the states are spending fortunes on facilities like new airports that have little relevance to the people, many roads infrastructure are crying for attention.
Pipe borne water is a scarce commodity, and hundreds of thousands die every year because of poor sanitation, and ill-equipped health centres. Many educational institutions are decrepit and without teachers. Perhaps even more depressing, despite the stagflation that pushed the cost of food, goods and services beyond the reach of majority of Nigerians, some few states are not only owing backlog of workers’ salaries and pensions, but they are also yet to implement the National Minimum Wage of N70,000 signed into law in May this year.
The lack of accountability at the state level contributes to wasteful spending. State assemblies, tasked with oversight responsibilities, are compromised, and have over the years failed to hold governors accountable. Regrettably, many of the governors are yet to adjust to the prevailing realities as they continue to indulge in ostentatious lifestyles while investing scarce public funds on frivolities. They still funnel public funds to political activities while the burial and wedding ceremonies of family members of top public officers are turned into state carnivals.
Ironically, while humongous debts hang precariously on the neck of these states, some of them are still borrowing more. We believe that the current challenge does not call for more borrowing, but rather creative resource management and potent revenue generation drive. Indeed, what the situation calls for is a serious re-think of the fundamental assumption of our fiscal arrangements. The states need to develop cost-effective strategies to increase internal revenue, cut down on overhead costs, and enthrone fiscal discipline and transparency. The desired economic growth in the states, and indeed in the country, can only be achieved if the recurrent expenditure component is optimised while the spending component on capital infrastructure is prioritised.
The indices of poverty across the country make it difficult for us to understand the recklessness in many of the states. We are worried that while government revenue continues to dwindle, there is no conscious effort to cut down expenditure on the recurrent side. A state that spends more than it generates to sustain public officials is surely on a journey to perdition.
