by Irene Nwaukwa

 A bailout from FG will punish the entire country for the excesses of these states. It will greatly affect our economy and is unfair to states that have performed better. It’s equivalent to taking a state problem and making it a national problem.

So… let’s talk about this bailout since this subject has been all over the Nigerian cyberspace. I see some governors have already begun to commit the FG to bail them out due to their inability to pay salaries.

It’s no secret that a lot of our states cannot afford to pay their workforce and are on the verge of insolvency. At last publication, 18 out of 36 states were owing workers, I hear that between 9 and 12 states today are unable to meet up to their financial obligations to their workers and retirees.

Recently, our very own “Patron Saint of Onigbese” (coined by @manmustwack, LOL!!!), Gov. Engr. Ogbeni Rauf Aregbesola has come under a lot of fire and bashing for being the longest owing governor to ALL his staff. He has reportedly paid NO ONE, salaries, pensions, contractors for SEVEN MONTHS!!! It’s so bad now in Osun that state civil servants are now relief aid recipients as a result of the disaster of a governor that they elected. And he has the effrontery to tell us that the situation is beyond him. He has blamed everyone but himself for this failure in governance. Personally, my opinion is simple. He should just resign.

Sadly other states are in the same situation (Abia, Benue, Kogi, etc…) and many more are on the road to this sorry state.

So as a result of what I would term utter fiscal and economic irresponsibility of governors and gross failure of our system, we are saddled with states that are claiming “not economically viable” and even the viable ones are asking the federal government for bailout.

Let’s start from the basics. What is a bailout? A bailout is a colloquial term for giving financial support to a company or country which faces serious financial difficulty or bankruptcy (source: Wikipedia). Today our state governors have started to cry out for help as some of them have approached this stage.

This is a very bad idea in my opinion and I would like to use this medium to appeal that this option will not be adopted. It is no equivalent to putting a band aid on a fracture and will not solve the underlying problems that brought us to this point in the first place. We need to start implementing more sustainable long term approaches to our problems. That is true progress.

The federal government’s finances aren’t good right now. If we had these funds, FAAC (Federal allocation to the states) would be high enough to fund these states and their excesses. The primary source of FAAC funds is our crude oil income. As you know, there’s a global oil crisis, prices dropped and we also have problems selling our crude.

This means that to fund this bailout, FG will have to borrow or print money (as I have been told). Borrowing to fund recurrent expenditure is always a bad idea. I liken it to living above your means. Printing more money will simply increase inflation. The workers will be paid their dime, but it won’t be worth squat. Inflation has already risen by 9%; food prices are already high. It will worsen an already bad economic situation.

A bailout from FG will punish the entire country for the excesses of these states. It will greatly affect our economy and is unfair to states that have performed better. It’s equivalent to taking a state problem and making it a national problem.

Here is what we can do instead:
1. PRIORITIZE:
This is simple opportunity cost. Capital projects can be put on hold as we wade out of this situation. According to my friend Chuk’udi Nwanze: “Even Okonkwo in Things fall Apart knew that opportunity cost was simpler than the economics gurus tell you”.

2. PATCH THE LEAKING POCKETS:
We keep talking of austerity measures but have really done nothing tangible to tighten our belt. Everything must come under the microscope. Security votes and other unaccounted expenditure have to go. We have to prioritize projects now. It makes entirely no sense to me that Kebbi state has poor basic healthcare but they want to build a world class airport. Or Bauchi state with the high primary school dropout rate and poor/negligible basic education infrastructure wants to renovate hotels and build golf courses, projects that can be funded and run by the private sector! The white elephant projects must go. Osun state spent billions on “Opon Imo”, feeding kids and all and can’t pay salaries today. Where is our prudence?

3. AUDIT, AUDIT, AUDIT!!!:
If we are really going to make progress, fight corruption and create more transparent and effective processes, this would be a good start. We need to know what these governors have been spending our money on. This will expose wasteful processes and ventures and also allow us to punish irresponsible behavior of our public office holders. I wish we can make these audits a regular event and part of our culture. Misappropriation of state funds should be an impeachable offence.

4. RESTRUCTURE AND DEVOLVE:
Our structure of governance is quite outdated and is part of the reason we are in dire straits. Things like our exclusive list need to be reviewed. Let states generate their income with their own resources. It’s quite ridiculous that Rivers, CrossRiver and Akwa Ibom can’t develop their ports to drive revenue for their states without the nod of FG. Osun has minerals that can be mined, but cannot without FG. States cannot even fix or build federal roads!

I’m an undying advocate of fiscal federalism. Let the states generate their income with their resources and pay royalties to FG. This, by the way would help us move away from oil income, which is apparently our albatross.
The Niger Delta has been “bailing out” this country since independence at great cost to their environment. Time has come for this to end.

5. OPTIMIZE EFFICIENCY:
We must review our civil service. This is not the same recommendation as those calling to lay off a large portion of our civil service. I do not support this in entirety.

I believe each MDA and government office should generate VALUE to run itself. It is not about just sacking staff; it is more effective to ensure that everyone delivers on clearly set and value adding objectives. We can’t keep paying for incompetence.

Optimization also includes weeding out ghost workers. I commend the IPPIS system of the GEJ administration for this at federal level. The states should incorporate it as well. Technology still remains the most effective way to fight corruption, and improve efficiency. Kudos NOI!

6. I have read many recommendations requesting that the loans and bonds be renegotiated so that deductions can be smaller. My basic knowledge of finance and economics tells me that it will be more expensive in the long term. I don’t know much about it, but it seems an effective short term situation.

I think this approach, rather than a bailout from FG will solve the problem. It might not make all the necessary funds available at once as some of the recommendations are mid-long term yield. However, recommendations 1, 2 & 6 are short term approaches that should ensure that at least salaries can be paid monthly while we work out the arrears.

In the event that the government of the day chooses to go ahead and bail out these troubled states, it must come with strict terms and conditions. The carrot stick approach must be enforced. This will be a great opportunity to “sneak in” LAWS that enforce fiscal responsibility on the state governments. I made emphasis on LAWS because, things like enforcing saving and strategies to increase state IGR beyond PAYE, should not be a onetime affair. We need to enshrine that competence culture in our constitution.

Also just as we witnessed when CBN bailed out banks, their MDs were fired and some jailed. Some of their assets were sold and banks merged. Same rule should apply. The governor must resign because this is a clear indication of failure. State assets may be sold where applicable. No use owning helicopters and private jets when you are broke.

Can I also suggest that state public officials do not get paid before their constituents? Let the governors, commissioners, aides and heads of public offices not get paid till everyone else is paid? For goodness sake, let’s try a different approach to making governance work in Nigeria, and let it be one that enforces competence.

Honestly, we can’t keep throwing money at our problems. That is neither sustainable nor progressive. A bailout today doesn’t prevent the need for a bailout tomorrow.

We must also add sustainable, long term solutions.

WE. JUST. MUST.
#NoBailOuts

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 Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.