It was one of those under-reported stories that fly under the radar as the country confronts Boko Haram and corrupt government agencies, but facts emerged this week that many states in the country are insolvent and are currently operating on fiscal deficits of immense proportions.
Many, perhaps anyone who pays even passing attention to the way our federating units are managed, are not surprised at this fact, most recently declared by Elias Mbam, who is chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), while he answered questions from the National Assembly. Late last year, the Central Bank Governor, the bare-knuckled Sanusi Lamido Sanusi had raised the same alarm.
It doesn’t mean that the alarm is any less urgent however. The latest revelations reveal crippling levels of debt borne by the state governments and serviced primarily with the monthly allocations from the Federal Government. According to the Debt Management Office (DMO), as at December 2011, the total external debts stock of all the states stood at $2.165 billion while that of the federal government stood at $3.501 billion. This would be ridiculous if it weren’t also frightful.
Have we been looking in the wrong direction all this while as we all focus, justifiably we might add, at waste at the central government level? Shouldn’t we looking even more closely at the workings of the state governments – what the governors and commissioners are doing with the diminished public trust they retain?
The figures show that Lagos state has an external debt profile of $491.847 million, the largest in the country. This might be due to heavy investments in infrastructure projects; the Eko Atlantic, the Badagry expressway amongst others – but then two questions are pertinent.
For one, we must interrogate what the cost of development is. Ambitious projects cannot lead to a lack of responsibility and perhaps if citizens were more aware of these huge debts, our appreciation for ‘development’ would be tempered. In addition, we have to wonder what parts of these projects are funded by the state’s aggressive internally generated revenue drive. Is this amount of debt truly inevitable?
The other extreme is held up by Borno, Delta and Taraba states with external debts of $12.957 million, $15.404 million and $20.396 million respectively. The responsible reaction to these figures is alarm. All of these states score low in infrastructure, education and associated indices for development – what are these debts being invested in then?
We need to begin to question our system of revenue allocation – with fat cheques certain to come in the mail at the end of the month, it begins to appear that few are the administrations that will go out of their way to beef their revenue streams and diversify their earnings.
Added to this is the imperative of active citizenship. Accountability and governance groups in civil society need to pay greater attention to the states.
Beyond legislative controls on borrowing and debt ceilings being put in place, it is vital that government expenditure at the state level be checked. Over-bloated state secretariats and ministries add no value to the economy guzzle the largest share of state income are one – but an in-active transparency system means that governors can simply do as they like.
The times a call for a lean, mean government. They call for states that are profitable and productive – as those units are lethally central to national growth.
The consequences of inaction are dire. Yes, it may well be an over-generalisation that the states will soon be unable to run themselves, but do we really want to find out?