The Nation Newspaper

Tag: bailout

  • Banks: Osun spent bailout well

    Banks: Osun spent bailout well

    Recipient banks of the bailout fund given to Osun State government yesterday said the fund was strictly used to pay salary arrears, allowances and pensions, in line with the Central Bank of Nigeria’s (CBN’s) guidelines.

    Representatives of First Bank of Nigeria (FBN), Wema Bank and Zenith Bank, spoke during a presentation to the House of Assembly in Osogbo, on how the concessionary loan was disbursed.

    The Assembly directed the banks, some government officials and organisations, to appear before it over how the N34.9 billion bailout fund was spent.

    In their presentation, the banks said: “We ensured that due diligence was followed. We can confirm that we followed the CBN guidelines in the way and manner the loan was disbursed.

    “It was used for the purpose it was meant – payment of salary arrears, allowances and pensions.

    “Also, the figures shown in a slide by the Accountant General and Permanent Secretary, Local Government Affairs, were correct, so also are the balance figures in the banks.”

    The Accountant General said the bailout was judiciously administered by the government without any underhand dealings.

    According to him, the amount requested, which covered salary arrears, allowances and pensions, was N64, 327, 492, 947.01.

    He stated that the state was however given, N25, 887, 975, 810.26, an amount, which did not include the pension arrears.

    Kolawole said the pensioners were thus not captured in the bailout fund, saying Governor Rauf Aregbesoa mandated that pension should be included in the disbursement.

    He said: “On July 15, 2015 we requested for N64.3 billion to take care of all salary arrears, allowances and pension. But we were given N25, 887, 975, 810.26.

    “No fund was released for pension and gratuity despite the fact that we included it in our letter to the CBN.

    “And we explained this to the pensioners repeatedly but they did not believe us.

    “If you look at the letter we wrote for N64 billion, it covered every category of staff. They (pensioners) won’t have been paid but for the magnanimity of the governor, who said we must include them because they had served the state diligently.

    “It will also interest you to note that what I presented here on the floor of the House is the same document I sent to the ICPC and the EFCC.

    “ICPC called me to a meeting where I gave them all the documents containing the transactions. When ICPC did not return, I believe it was satisfied with the information. The  EFCC did not invite me.”

    The Permanent Secretary, Local Government Affairs, Mr. Muftau Oluwadare, in his presentation, said N23, 887, 975, 810.26 was requested from the CBN but N9, 117, 070, 000 was given to them.

    According to him, it was this and that of the state that totaled N34 billion released to both state and local government.

    He said the fund was also used as it was directed by the CBN to pay salaries of local government workers, primary school teachers and pension arrears.

    Speaker Najeem Salam lauded the finance team for the clear presentation and the banks for their due diligence in the disbursement process.

    Salam said it was not true the insinuations that the House was gingered to investigate the bailout fund based on the letter written by the Senate to investigate how the bailout fund was spent.

    “We have been monitoring the activities of the executive on how the bailout and other loans are being spent.

    “If the Senate wants to come for its oversight function, we will not stop them. But proper procedures must be followed. It has to come through relevant state authority, which is the state legislative arm,” Salam said.

  • Publisher advocates bailout for print media

    Mr Emeka Ejide, publisher of ‘Market Voices’ newspaper, Awka has called on the Federal Government to give bailout to print media to save it from extinction.

    The publisher, who made the call while speaking with journalists in Awka on Wednesday, said this would reduce the rate at which papers fizzle out of existence.

    He said that many of the print media houses could no longer pay salary of their workers due to the prevailing economic recession in the country, adding that organisations had played significant roles in the match to the Nation’s Independence.

    “Since Nigeria attained independence, the print journalism sub sector has suffered heavy harassment and intimidation from the hands of those that benefited from the struggles it helped to achieve,’’ he said.

    The publisher added that many journalists could no longer meet the expectations of shaping the society and setting agenda due to harassment and harsh environment.

    “Because of the hazardous operational environment, particularly during the military regimes and emergence of capitalist owners, newspapers lost their mission of giving voice to the voiceless and became propaganda machines.

    “It is unfortunate that due to this lack of focus, journalists are now next to beggars because the capitalists refused or cannot pay their salaries,” he said.

    Ejide said his newspaper, an open market based publication, was conceived to connect the government and people with the goings on in various markets.

    The publisher said that Nigerian market had been under-reported in spite its crucial role in the economy.

    He, however, expressed hope that buyers and sellers would become more aware as the paper hoped to inform them on events in Onitsha, Lagos, Kano, Aba, Ibadan and markets across the country.

    “We recognised that the people in our markets have been contributing their quota towards the building and development of the Nation.

    “The Market Voices hopes to put this issues in front burner and help shape our market structure. We believe that by grace of God, we shall not go the way of others,’’ he said.

  • Reps seek bailout for automotive industry

    Reps seek bailout for automotive industry

    In a bid to avert total collapse of the automotive industry, the House of Representatives Thursday called for measures that will provide financial and bailout assistance for the sector.

    To this end the Green Chamber has set up an ad-hoc committee to interact with relevant stakeholders in the sector with a view to address the problems faced by the industry.

    The committee is also to investigate the inability of the industry to access foreign exchange from the Central Bank of Nigeria.

    The resolution was sequel to the passage of a motion sponsored by Hon. Saheed Akinade-Fijabi (APC, Oyo) on the need for financial and bailout assistance for automobile industry in Nigeria,

    The lawmaker while arguing the motion noted that industrial growth contributes to a nation’s development in terms of increased foreign earnings, job creation and achieving other macro-economic objectives.

    According to him, most developed countries “depend on industrial development to revolutionize their economic powers through manufacturing of goods for local consumption and exportation of same to other countries as a booster to their foreign trade for earnings”.

    He said economic recession is not peculiar to Nigeria, adding developed countries at one time or the other witnessed economic recession but helped their indigenous automobile to survive the recession.

    His words: “The US government considering the importance of this sector came to the rescue of their indigenous automobile industries like GM and Chrysler through provision of bailout and other incentive, including government patronage.

    “Nigeria had a breakthrough into automobile manufacturing industries with the commissioning of Innoson motors, being her first indigenous vehicle manufacturing company in year 2010 to cut down the country’s dependence on importation of vehicle.”

    The lawmaker further said: “Investigation revealed that Innoson motors, known for importation of basic motor components, including engines, from abroad and assemble them locally, is shutting down business due to foreign exchange issues borne out of economic recession.

    “If this company is allowed to shut down, while government folds its arms, it will have negative effect on our economy in the area of job loss, loss of local and foreign revenue.”

    While supporting the motion, a member, Hon. Hassan Sale this is need to support local industries.

    “Even if we cannot give the bailout, we should support and encourage them. We must make effort to support indigenous companies”.

    When the Deputy Speaker, Yussuff Lasun called for a vote on the motion it was supported by many members.

  • NASS requests for detailed report on bailout from CBN

    NASS requests for detailed report on bailout from CBN

    The National Assembly has demanded for the detailed hard copy report of the federal government bailout to states from the Central Bank of Nigeria (CBN).

    Addressing journalists at the end of a “routine friendly oversight visit to the CBN” the Chairman, Senate Committee on Banking and Other Financial Institutions, Senator, Rafiu Adebayo Ibrahim, disclosed that members of the committee were happy with the presentation of the apex bank on all issues raised but giving the importance of the bailout to state governments, the senate, he said, needed further clarification which required that the CBN forward the hard copy of the report to the committee for further perusal.

    According to Senator Rafiu Ibrahim, “we requested for a detailed hard copy of a report of the bailout and loans, we are satisfied with their (CBN) presentation, they have told us what they have done so far.”

    The senator also stated that members of the committee did not see any major problem between fiscal and monetary authorities. The alleged differences between both policy authorities the senator said “is only a matter of perception, they are working together in the interest of the country.”

    He assured that “the role of the National Assembly is to help the CBN perform its duties very well.”

    On his part, the CBN governor, Mr. Godwin Emefiele, assured the members of the senate committee on banking and other financial institutions that the current economic challenges are easily surmountable.

    Emefiele appealed to the senators “to work together with the apex bank to make Nigeria a habitable place for all.”

  • N700b bailout: Reps to probe states

    The House of Representatives has expressed disappointment over the utilisation of over the N700 billion bailout fund given to 28 states to offset arrears of salaries owed workers.

    Consequently, a yet-to-be constituted ad hoc Committee is to investigate the terms and conditions for the disbursement and utilisation of the bailout funds, the level of compliance and ascertain the necessity for further disbursement as being mooted by the Federal Government.

    The decision of the lawmakers followed the adoption of a motion of urgent public importance by Sunday Karimi (PDP, Kogi,) who recalled that a report by a private sector data company revealed that 27 states that were unable to meet their salary obligations to their workers were given N689billion bailout funds by the government in July last year.

    Also that four months ago, Kogi State was given N20billion as bailout fund to solve the problems of its salary arrears.

    Despite that, several states including Abia, Benue, Ekiti, Kwara, Osun, Delta, Niger, Ogun, Nasarawa and Plateau  are reported to be owing  their workers between one and seven months salary, he noted.

    According to him, states  such as Adamawa, Akwa Ibom, Anambra, Bauchi,  Borno and Cross Rivers were however up-to-date with their salary obligations.

    Karimi said the reasons the bailout funds failed to serve it’s purpose should be of concern to the House.

    “Many states were reported to have stocked the bailout funds meant for staff salaries in interest-bearing accounts while their employees continue to wallow in hunger, poverty and lack.

    “Some of these workers had even lost their lives because of their inability to meet their daily needs.

    “It is equally burdensome that the Public Enlightenment Department of Independent Corrupt Practices Commission  (ICPC), in its recent report, indicted several states governments on the utilisation of the released funds.

    “There has been criticisms and counter-criticism on the usefulness of bailout funds as critics opined that the genuine intention of the Federal Government is being frustrated by the state governments since the bailout fund is not being utilised for the desired purpose by the beneficiary States.

    “Cognisance should also be taken of the fact that the National Assembly is the representative of the people and is empowered by the constitution to oversee the administration and disbursement of public finance.”

  • Kano workers jubilate as LGAs get bailout to pay salary

    Kano workers jubilate as LGAs get bailout to pay salary

    There was wide jubilation on Friday in many parts of Kano State, as news spread that the state government has released N1.2 billion from the wallet of its Internally Generated Revenue to local government councils in the state for the payment of salaries. Coming a few days to the celebration of the Eid-Fitri, many local government employees received the news with much joy.

    There has been anxiety in the state following speculations that most of the Local Government Areas (LGAs) in the state wouldn’t be able to pay salary for the month of June because of further dwindling of their finances. The councils had on many occasions appealed to the state government to help them out with bailout funds.

    Sources told The Nation that in many of the LGA secretariats across the state, workers were seen celebrating and praying for Governor Abdullahi Umar Ganduje, after receiving assurances that salaries would be paid before the Sallah holiday. Our sources added that most of the council workers had lost faith of getting paid before now.

    It would be recalled that administrators of the local councils in Kano State had told the workers a few weeks back that they were relying on the much-expected bail out from the state government to be able to pay June salary. The situation was so bad that many LGA bosses pleaded with their workers not to look forward to being paid before the holiday.

    According to one of the Council bosses, the bail out they are seeking for is to enable them meet their salary obligations to workers, most of whom are being owed salary arrears. The Nation also learnt that though the state government did not reject the request of the LGAs, the dwindling financial fortunes of the state were also a source of worry to many.

    “While we were happy that the governor sympathised with our plights and was willing to help us out, we were also not oblivious of the fact that the state government was also struggling with its finances. So, nobody could say how soon the bailout would come. That got our workers too worried as we all had to wait and hope for the best,” our source added.

    But in an unexpectedly swift response to the prevailing situation in the Councils, Kano State government during the week released N1.2 billion from the wallet of its Internally Generated Revenue to the affected 44 local government councils in the state. The government said the move is to enable them augment their federal allocations, so that they can meet their salary obligation for the month of June to staff of the Council.

    The state governor, Abdullahi Umar Ganduje, said that the move became imperative as the monthly allocation to the councils from the Federation Account is no longer sufficient for the Councils to pay salaries, not to talk of carrying out developmental obligations. The governor added that the only option left for states is for them to find out ways of boosting their Internally Generated Revenue, in order to withstand the current economic realities.

    He recalled that during the immediate past administration, the state government used to have a balance of N4 – N5 billion after paying salaries monthly, pointing out that with the dwindling capital receipts from the federal government now, his government is compelled to look inwards in order to remain afloat.

    The Nation learnt that many of the workers found the early release of the bailout a good development. According to our sources, many who were being owed salary arrears had been wondering how they would get money to celebrate the Eid-Fitri festival.

    “Many Council workers found the early release of the bailout a good development. Many who were being owed salary arrears were before now wondering how they would get money to celebrate the Eid-Fitri festival. But as we speak, they are happy with the situation because with the release of the bailout fund, they are hopeful.

    “Many of them trooped to their various offices happily on Friday. They were then assured by the authorities that June salary would be paid before the holiday next week. We have two days to sort that out now that we have money. The mood amongst the LGA workers in Kano as we speak is that of jubilation,” our source added.

    The Nation also learnt that the Council administrators themselves are happy with the respite they got from Governor Ganduje. According to a reliable source, the LGA bosses are glad to be able to meet the need of their workers, especially considering that it coincides with the end of the Ramadan season.

    “To tell you we are relieved is to tell you the obvious. Some of these workers were being owed salary arrears before now. Failure to pay them their salary at the end of June would have been terrible. We were worried the bailout wouldn’t come soon enough. But it did and that gave all of us something to be happy about.

    “Workers across the state would be paid June salary before they go on holiday next week. It is a good thing that everybody will have some money to use in celebrating the end of the fasting season,” he said.

  • PDP accuses opposition of attempt to stop bailout

    •Investigate banks over secret IGR accounts, Ekiti APC tells EFCC

    The Peoples Democratic Party (PDP) faction loyal to Fayose, in a statement by its Publicity Secretary, Jackson Adebayo, described the alleged petition “as wickedness manufactured in the name of politics without minding the consequences on the civil servants who are mostly the breadwinners in their families.”

    Adebayo described the APC petition as horrible and an open expression of hatred for the people of Ekiti state especially the workforce in the civil and teaching service, adding that those who proposed the idea should be stoned.

    PDP stressed that the reason adduced for the writing of the petition against allowing the fresh bailout for the state after all the conditions have been met by the government is not only pedestrian but outrageously callous.

    Adebayo however said that there is no amount of dangerous tantrum being thrown by the opposition in the state that can set back the developmental agenda of the PDP government led by an experienced Fayose.

    He said: “As a party we can only advise the leadership of the APC to desist from their evil plans against the people and government of the state all the time as no amount of dangerous tantrum being thrown by the opposition in the state can set back the developmental agenda of the PDP government led by an experienced Governor Ayo Fayose.”

    The All Progressives Congress (APC) in Ekiti State has called on the Economic and Financial Crimes Commission (EFCC) to beam its searchlight on some banks operating “secret accounts” where huge sums of Internally Generated Revenue (IGR) are kept.

    The party also denied forwarding a petition to the Presidency to block a fresh application for bailout funds by the state government as alleged by the People’s Democratic Party (PDP) faction loyal to Governor Ayo Fayose.

    In a statement on Sunday by its spokesman Taiwo Olatunbosun, the APC also dismissed Fayose’s allegation that it was behind last Friday’s anti-corruption rally by some Civil Society Organizations.

    Describing the allegation of working against a fresh bailout as blackmail and an attempt to set civil servants against the party, the APC said Fayose was confused on how to react to “a clearly criminal expose by the anti-graft agency on how he fraudulently diverted arms cash to win his election.”

    Olatunbosun said Fayose has discovered that he cannot meet the fresh conditions set by the Central Bank of Nigeria (CBN) to access the bailout but now blaming the opposition in a “mischievous” manner.

    “We will continue to fight for the welfare and well-being of Ekiti workers who the governor has turned to paupers, beggars and petty thieves due to non-payment of salaries.

    “We never wrote any letter to stop bailout to Ekiti government. However, we are of the opinion that a fresh bailout should be paid directly to Ekiti workers from Abuja so that it will not end up in Fayose’s private account just like the N9.6 billion he is yet to account for.

    “We believe that N4.7b poll fund fraud will be a child’s play by the time the EFCC hits some banks that Fayose has his cronies who help in keeping funds realised from IGR in secret accounts.

    “We call on EFCC to beam its searchlights on other banks and his so-called secret South Africa-made safe kept in his Afao home and Lagos where the governor allegedly keeps Ekiti money.

    “We have cried over time for the governor to declare IGR figures officially and disclose the accounts IGR cash is being kept, but he railed at us, telling all sorts of lies, the same way he bullied the civil servants when they demanded for the details of IGR kept in secret accounts being coordinated by his cronies through official conspiracy.

    “Fayose has no audited account for the past 18 months. His IGR has no records. He refuses to implement TSA. The debt profile of the state he sent to the CBN is inconsistent with official records in the Debt Management Office (DMO) while fake workers’ BVN numbers were discovered in records Fayose sent to CBN.”

  • Bailout again!

    •Stringent as the conditions may be, interested states must comply to benefit

    Two bailouts after and some 27 states still in arrears of salaries and pensions running into several months, and with indications that many more will suffer the same fate barring a rescue plan – the Federal Government last week rolled out another financial package – the third – for the states. This is a N90 billion bond with nine percent interest tied to the states’ being able to meet the 22 conditions contained in the fiscal sustainability plans of the Federal Government.

    Among others, such a state must implement a centralised Treasury Single Account (TSA); ensure that it starts publishing its audited annual financial statements by December each year; set realistic and achievable targets to improve independently generated revenue and favourable ratio of capital to recurrent expenditure; review all revenue-related laws and update of obsolete rates/tariffs;  ensure biometric capture of all their civil servants to eliminate payroll fraud; adopt the International Public Sector Accounting Standards (IPSAS) compliant software to be put to use in their respective states and local governments; establish a Capital Development Fund to ring-fence capital receipts and adopt accounting policies to ensure that capital receipts are strictly applied to capital projects and prohibition of commercial bank loans.

    Other conditions are – that total liabilities do not exceed 250% of total revenue for the preceding year while monthly debt service deduction is not to exceed 40% of the average Federation Account Allocation Committee (FAAC) allocation for the preceding 12 months; they are also expected to publish, quarterly, the budget implementation performance report online.

    While the nation may have gone past the phase of doing nothing – which we noted in an earlier editorial – is not only unrealistic but carries the grave risk of social upheaval, we certainly understand where these measures are coming from, and why they have become inevitable. From the two previous bailouts, we have heard such grave charges about some states treating the lifeline as a freebie to be used as they pleased; others reportedly couldn’t care if a sizeable chunk went into the sink hole to pay ghost workers and pensioners, just as many have not shown inclination to change their profligate ways.

    But even if these were not the case, we would still have found nothing extraordinary in the Federal Government asking the states to clean up their books, overhaul the machinery for revenue collection and generally improve their accounting processes to qualify for the bailout package. If anything, the measures, particularly the strict conditions spelt out in them, substantially align with our expectations of making the cost of fiscal irresponsibility very steep.

    The point is, the Federal Government cannot afford an interminable cycle of bailouts in the event that oil prices have shown very modest signs of recovery. The states in the circumstance must see themselves as part of the solution to the current financial crisis. Theirs is to ensure that every kobo of government is not only made to count but made to deliver maximum value; to ensure that every revenue due to the government is collected and accounted for; to eliminate corruption and waste to the barest minimum and to re-align the current grotesque relationship between recurrent and capital expenditures.

    While measures underlying the latest bailout may not have necessarily addressed the whole gamut of issues such as the poor choice of priorities, fiscal recklessness, weak governance structures and corruption, which are at the heart of the current fiscal crisis facing the states, they would seem inescapable and sure in the quest for improved governance.

  • On more bailout funds for the insolvent states

    The federal government has announced that it is giving the financially insolvent states fresh bailout loans of N90 billion. It will be the third time in less than a year that the Buhari APC federal government has been constrained, against its better judgment, to come to the rescue of these 27 insolvent states with huge bail- out funds. As expected, the two previous financial bailouts did not solve the deep-seated financial problems of the states. The funds were merely used by the insolvent states to clear up part of their outstanding salary arrears. After that, new arrears of salary piled up with the affected states not being able to do anything about it. What they currently receive monthly from the federation accounts is not enough to meet their current basic monthly wage bill. And, predictably, they have not been able to generate new funds internally to fill this gap in their revenue.

    But after receiving billions of naira in previous bailouts, the report of a federal financial investigation team into the disbursement of the federal bailout funds showed that many of the governors of the insolvent states simply diverted the bailout funds to personal and other non productive purposes. The question now arises whether these federal financial bailouts provide a final solution to the worsening financial plight of the insolvent states. In other words should the federal government continue to bail out these insolvent states? Is this financially sustainable?

    I do not think so. Even if these bailouts are sustainable, it is a negation of the federal system of government for the federal government to continue to hand the state governments financial bailouts. It is tantamount to rewarding incompetent and corrupt state governments. Except in emergency situations the federal government is not under any constitutional obligation to give the states financial handouts. It derogates from the financial autonomy of the states which demands that, in a truly federal system of government, the states should generate the financial resources required by them to run their respective governments. If they are not able to do so, then they are obviously not financially viable and should be scrapped. Handing them bailouts, which have to be repaid, is an intolerable financial burden on our country and tax payers.

    These insolvent states were created during the long period of military rule in Nigeria without any thought being given to their financial viability. After independence in 1960, only the then Mid-West region was created constitutionally from the then Western Region during the Balewa civilian federal government. And this was made possible only by the 1962 internal crisis in the AG, the ruling party in the Western Region. The creation later of so many new states was a major political blunder of military rule in our country. It made military rule popular, but it did not fully consider the economic implications involved in the creation of such a large number of new states. The creation of these states was certainly politically motivated. In May, 1967, General Gowon first divided the country into 12 states. This was after Ironsi’s Unification Decree 34 of May 24, 1966, that purportedly dissolved the existing four regions into provincial administrations. The decree was unpopular in the country and led to the military ouster of Ironsi from power.  Gowon’s purpose in creating the 12 new states was to undermine Ojukwu’s bid for the secession of the so-called Biafra from Nigeria, and to legitimise his military government. The decision was popular with the ethnic minorities in the old Eastern Region that had been agitating for years for a separate state of their own; in much the same way as the minorities in the old Western Region had also been demanding the creation of a separate Mid-West state from the old Western Region. Since then, under military rule, the number of new states has increased to 36 now. The surge in oil revenues masked the fact that, without the oil revenues, most of these new states were not financially viable. With so many unviable states the centre became stronger and more financially dominant. What now pass as states were, in fact, administrative provinces inherited during colonial rule. This was why our federal system of government at independence was based on only three regions, not the multiplicity of states that we now have. The departing colonial power had refused to create new states.

    In their defence of financial bail outs, the states argue that it is the fall in their share of revenue from the federation account that is responsible for the financial mess in which they now find themselves. But the source of their financial plight goes beyond that. The truth of the matter is that they have just been as financially profligate and reckless as the federal governments we have had to put up with for a long time. Many of the state governors are under investigation by the EFCC for massive corruption. Examples of these corrupt and convicted state governors include Ibori of Delta and Alam of Bayelsa. If the state governors are thoroughly investigated as they should be, I have absolutely no doubt that the findings of such investigations will be just as shocking as the current revelations regarding the vast scale of corruption under the Jonathan PDP federal government.

    My second reason for objecting to the indefinite bail out of the states is that the federal government itself is, as we have seen, in an equally deplorable and shocking financial situation. It is desperately short of funds too and is having to put on hold many critical infrastructure capital projects. It is currently running a huge deficit budget of roughly 50 per cent and is hoping to borrow half of this year’s budget from external sources. But external lenders generally refrain from lending for budgetary support, as is the case now in our country. So, from where will the federal government get the bailout funds for the financially ailing states? The answer is that it will have to resort to more borrowing from the CBN. In other words, new money will be created to fund these insolvent states. This will have the predictable effect of crowding out borrowing by the private sector, and of undermining stability in our macro economy. Our domestic debt, already bigger than our external debt, will increase further.

    The media reported further that the federal government intends to impose some stringent financial conditions on the states being bailed out. But these conditions will not work and will not deter the governors of the states concerned from continuing with their financial profligacy in the belief that they will be bailed out again by the federal government. At that point it will be difficult for the federal government to cut them off from the bailout funds on which they will have become utterly dependent. One of the arguments advanced by the military in support of the creation of new states was that it would spread economic development in the new states to the grass roots. But that has not proved to be the case. Apart from such symbolic projects as flyovers in the states capitals, new official residence for the governors, new states assemblies, a few model colleges, and sub-standard state universities, the poor in the states cannot be said to have really benefitted from the creation of states, where the political elite continue, with unabated vigour, to cream off revenues accruing to the states. The real beneficiaries of the financial bailouts are the rich, not the poor. In fact, the poor are worse off now than ever before. We are a poor country and we cannot expect to build a prosperous economy on handouts to insurgents and militants, or on subsidies and bailouts to insolvent states. A few years ago hefty financial bailouts were given to the commercial banks. Are they healthier or more efficient now? Many of them are already in distress.

    The long term solution to this lingering financial mess in the states is to device the constitutional means of reducing the number of states to not more than 12. It is even better to collapse them into six regions. This is what the call for the restructuring of Nigeria’s federalism should be about. It is far easier and more economical to manage six or twelve states than the existing 36 with all the paraphernalia of pseudo governments that cannot inherently carry out their basic financial obligations. Obviously, this will be politically difficult. The only alternative is for the federal government’s share of the national revenue to be reduced and distributed among the states. But while the existing 50 per cent share of the federal government in the national revenue is too large, due care should be taken in this regard. We cannot afford to have a weak federal government that is placed in such an invidious financial situation that it cannot carry out its basic responsibilities to the nation in defence, national security, and external affairs, Already the corporate existence of our country is being threatened by several centrifugal forces. We need a strong federal government and institutions to hold our fragile country together.

  • FG to give fresh bailout to states

    FG to give fresh bailout to states

    A fresh financial support facility is on the way for the states from the Federal Government to cushion the effect of the current economic crisis, although with stringent conditions.

    The scheme is designed to provide relief to the states, many of which are finding it difficult to pay their workers’ salaries.

    The Federal Government recently gave the states a bailout to enable them clear the arrear of salaries owed their workers.

    The problem has refused to go.

    However, the Federal Ministry of Finance said yesterday that further relief would come their way soon provided they met a 22-point reform agenda tagged  the Fiscal Sustainability Plan (FSP).

    The FSP is said to have been endorsed by the states themselves at a meeting of the National Economic Council recently.

    The conditions require the states to publish their audited financial statements and budgets, biometric and Bank Verification Number (BVN) payroll review exercises for the workers, and restricting recurrent expenditure.

    Besides, the states are expected to set and meet targets to enhance their Internally Generated Revenue (IGR), establish Efficiency Units to reduce overhead costs, privatize State Owned Enterprises, domesticate Fiscal Responsibility Act, and put a limitation on further bank loans.

    The Ministry said the Federal Government has agreed to develop International Public Sector Accounting Standards (IPSAS) compliant software for the states’ use.

    It is also developing new bond issuance guidelines to ease access to the capital market for states wishing to fund developmental projects.

    Finance Minister Kemi Adeosun said the FSP “represents an important programme of reforms that will develop best practice financial management across all tiers of Government and will improve transparency and accountability.”

    She spoke of government’s determination to attain financial discipline across government.

    “Overall we believe that the survival of State Governments is essential to the economic recovery of Nigeria, specifically their ability to meet salary obligations,” she added.