Report… Wanted: States without federal allocations

By Olumide Olaoluwa . . .
The bubble has finally burst. At last, the centre can no longer hold. The almighty Federal Government that has been doling out monthly allocations to states for years has gone bankrupt. Dwindling oil prices and global recession have conspired to expose the financial insolvency of the federation.

The implication is that states that have become accustomed to receiving monthly allocations are far more broke. According to Oyo State governor, Abiola Ajimobi, as much as 28 States in the federation are technically bankrupt. Ajimobi should know. He is not just a governor but also a chartered accountant.

The bailout fund offered by the federal government has done nothing to ameliorate the dire conditions of states. As many as 25 states owe workers’ salaries. Much more owe pensions, allowances and other entitlements of workers.
The Nigerian Governors Forum (NGF) last week declared that workers must receive lower minimum wage or face mass retrenchment. Things are as bad as choosing between the devil and the deep blue sea. Nigerian workers, once reputed for frequent industrial actions, have become temperate. Many of them believe that a bird at hand is worth more than two in the bush.

The development has stalled infrastructural investment in many states. Osun State governor, Rauf Aregbesola, who embarked on massive infrastructural upgrade four years ago when he assumed office, has become incapacitated.
Last week, he declared that the state is left with a meager N50million monthly after deduction of debt servicing and other commitments from the federal allocation. The leftover, he lamented, cannot even pay the electricity bill of government, let alone cater for workers or anything of worth.

Planning without federal allocations
Yet, governors are condemned to perform. Should they keep excusing the lean allocations to them, voters will patiently wait for another four years and boot them out through the ballot papers. The implication, according to Chima Okonkwo, an economic expert, is “they have to look inwards to source for money.”
He explained: “We didn’t elect them to lament or tell us how bad the economy is. Their responsibility is to fix the challenges through creative financial engineering. They are not supposed to be whiners but fixers.”
Okonkwo said the governors have to learn to live and operate without federal allocations. “This is the time for us to separate distributors from governors. For decades, all they do is get allocations and sit over the distribution. That is the easiest thing to do.

“Now, they must pretend the allocations do not exist and raise revenues within their territories. They have to really see what they can get from their states and stop rushing to Abuja every month to get windfalls from one ever-ready Father Christmas.”

Innovative tax regime
Rasheed Abdul of the Centre for Good Governance said governors must improve Internally Generated Revenues (IGRs) through appropriate tax regime and provision of subsided social services.
“I disagree Nigerians are not good tax payers. Many stopped paying when there was no evidence for their investment. If we see what government is doing with tax, I assure many Nigerians will willingly pay without much ado.”
Apart from innovative tax regime, Abdul said states must return to the era of doing business at reduced profit margin. “It is a mixture of capitalism and socialism. We used to have industries run by states that have become moribund. This is the time to revive them.

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Creating wealth through values
“This is the time to create values. The reason states are broke is because they have not created values or services for people to pay for. You don’t make money without creating values. If Lagos State, for example, runs a car parking scheme in highbrow areas, can you imagine how much value chains will be created? “
Barrister Bob James said there must be appropriate constitutional amendments to enable states venture into key commercial ventures that are under exclusive list. Some of them, according to him, include mining, security and railway.

Return to true federalism
James said: “I don’t see why states cannot operate rails. In advanced economies, they make so much money from it. But only the federal government own the way of passage here. If you split the monopoly, northern states will make a hell of money transporting goods to the South.”

He said legal implications must be removed from such ventures as mining. According to him, appropriate federalism only requires states to pay tax to the federal government from their earnings. “If we diffuse the wealth to states, the federal government will make more money too. It will address corruption at that level.

“At the state level, there will be more wealth too and accountability. That was how Awolowo was able to build the Western region with just Cocoa in the 50s and 60s. That is how to make true federalism work. The federal government has to hand over from too many pies it has hands in, including oil.”

Exploring solid minerals
Professor Gbenga Okunlola is President of Nigerian Mining and Geosciences Society (NMGS). He believes the country can earn more from solid minerals than oil. Mining states, he said, have no business with poverty.
According to him, Nigeria has over 44 types of commercial solid minerals across several states that have not been explored. Each of them, if developed, he said can fetch the nation millions of dollars that will make oil money inconsequential.

Okunlola said: “In terms of naira and kobo, I will say as an expert who has been in the mineral exploration for more than 32 years in public, industry and academic sectors, our endowment in the solid mineral sector is much more than what we have in oil and gas.

“In terms of the economic values, in terms of the value-chain opportunities, I will say the oil and gas will only employ just one percent of what the solid mineral sector can engage.”

On how President Muhammadu Buhari can strengthen the sector, he said: “I will tell him to showcase just about eight of the minerals we have such as the iron ore, limestone, gold, coal and lignite. Bring them up to pilot stages of exploitation. Show the world what is possible, they will come.

We don’t need to pilot the 44 types but just eight of them. There is not yet serious corruption in the industry because it has not fully taken off. Once there is a synergy with the financial sector, the mining sector will literally soar. We have experts here who discovered the 44 minerals we have so far. Once we have credible data, we are good to go.”

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