Home Editorials Redefining economic role of state governments

Redefining economic role of state governments

state governments

MOST state government treasuries are empty, and governors of states where leadership transition took place after the last general election have been complaining loudly. The new governors have been put on the spot. One of them, Dapo Abiodun of Ogun State, revealed that he had to source a N7 billion credit facility from some banks on his first day in office, to pay the workers’ May salaries.

Justifying the action, the governor argued that having promised during the electioneering to pay salaries as and when due, he could not have done otherwise. He said, “So, I picked my phone and called my friends who are MDs in different banks. I told them I needed to pay salaries and this is the little I have; almost nothing in the state account. I requested a credit facility to allow me to pay over N7bn, which is the state wage bill.”

This is not surprising. Other governors might have had a similar experience. In Imo State, Emeka Ihedioha, the Governor, has decried the thin treasury and opaque internal revenue generation system he inherited. In Oyo State, Seyi Makinde, the Governor, disclosed on Tuesday that the state was “technically bankrupt,” just as he had earlier stated that he uncovered a N150 billion debt.

Apparently, most states have a mismatch between their financial capacities and responsibilities. Without bringing creativity or prudence to bear on governance, governors will, more than ever before, find their tenure as turbulent as those of their predecessors. There are redundant workers and over-lapping ministries, agencies and departments in virtually all the states. Thus, with bloated bureaucracies and payroll fraud, monthly wage bills are perennially in arrears in about 27 states. This crisis will undoubtedly worsen with the implementation of the N30,000 new minimum wage and the demand of between 25 and 30 per cent increase in the salaries of senior civil servants in line with the imperatives of the new wage structure.

However, states should not exist just to pay salaries. There are yawning gaps in public infrastructure such as good roads, functional schools and effective public healthcare delivery that should be tackled head-on. As a result, governors should realise that states are economic units and should be run accordingly. Waiting for Abuja to share oil revenue each month has killed resourcefulness in states. This need not continue.

Except Lagos State, which made N382.1 billion in IGR in 2018, and Rivers State’s N112.7 billion, other states had dismal performances, indicative of their non-viability.  The N84.5 billion, which Ogun State generated within the same period, cannot take care of its annual wage bill. The state has lost a lot by failing to exploit the advantage of its proximity to Lagos State to open up its contiguous towns and villages with good roads to attract investors, new estate developments and, by implication, new residents. Other states have not fared better.

State governments should take on new or larger roles in developing innovative policy priorities. Governors should also find more common grounds to work regionally for unprecedented economic development, poverty alleviation and jobs creation. In order to create a conducive business climate, governors should invest more in infrastructure, especially rural roads, identify local strengths and promote public private partnership to drive economic growth in their respective states.

The plagues of ghost workers and dual employment are still challenges in the public sector, despite the introduction of the Integrated Payroll and Personnel Information System. The Federal Government that initiated the idea substantially saved its treasury from looters. With states in dire financial straits, the rigorous enforcement of IPPIS can no more be avoided. Besides, the syndicates behind payroll fraud should be smashed and made to face the law.

There are abundant resources in solid minerals and agriculture, which states can exploit or foster the enabling environment for foreign investors to come in, for wealth and jobs creation. Minerals such as gold, limestone, silicon sand, zinc, lead, granite, columbite, gemstone and many more are in large quantities in most states, especially in the North. The recent Federal Government liberalisation policy in the sector should be exploited. Agriculture, with its value chain, is also a goldmine that has not received due attention.

In the South, cocoa and palm oil, as well as solid minerals, are money-spinners waiting to be fully tapped. Ironically, Nigeria’s palm oil import bill for 11 months in 2017 was $323.1 million, because production no longer meets local demand. While being screened in the Senate recently for his second term, the Governor of the Central Bank of Nigeria, Godwin Emefiele, advised that palm oil production should be revamped because its price is higher than that of crude oil in the global market. The World Economic Forum says the product’s market value will reach $88 billion by 2022.  This means that the country has lost a lot of revenue from a commodity it used to be the global leader in the 1960s and early 1970s.

States should stop relying on oil revenue to run their affairs as emerging global realities suggest that tougher times await oil-dependent economies, especially Nigeria and others that have failed to use their petro-dollars for economic diversification. With the United States shale oil boom, more countries discovering oil and timelines by nine countries, including Norway, France and the United Kingdom, to ban the use of diesel-driven cars, between 2025 and 2050, it is time for states to make hay while the sun shines, by developing their full economic potential.

Governance requires taking hard decisions. Therefore, governors that borrow for wages need to drastically cut costs, maintain only a productive workforce, a few aides, and shun flamboyant lifestyle. Above all, they should implement economic programmes that can attract investments and create jobs.

Previous articleSteering Nigerian banks to strength, renewal
Next articleFIFA Increases Punishment For Racism To 10 Games


Please enter your comment!
Please enter your name here