Non-implementable budgets in the states and the fears of a nation

I begin with this fact.

Aggregate projected expenditure, as contained in the various budgets for the 36 states in the country for the year 2016, both recurrent and capital, is N5.85 trillion. This is a mere 1.22 percent decline from N5.922 trillion that was the total budgets in 2015, though revenue during the period has falling by more than 40 percent. For instance, in March 2016, the federally allocated revenue shared by all the three tiers of government was N345 billion. Out of this, the states actually got N88.94 billion. There is no further evidence that the budgets of these states are only worth the paper they were printed. Except for Lagos, they are not implementable and they are unworkable.

These facts have serious implications for the states, their stability and growth. Across these states, including oil producing ones, salaries, including those of teachers, are being owed. Add to that the different levels and burdens of debts and you can begin to imagine the level of their predicament. And if salaries are being owed, it is only logical to imagine that no public investment is taking place. It thus mean that we are certain to have two years in a row for which there is no significant public investments in the states, considering the only “capital expenditure” that took place in 2015 was election expenditure. Therefore, after oil prices fell dramatically in the last two years, and oil production starts to drop when the price started to rise, the situations in the states are precarious, and much worse than that of the federal government. While the federal government can easily and readily access the capital market and issue bonds, the states cannot.

 

This is one of the fiscal policy patterns that have emerged in Nigeria when oil price fall. It emerged in the 1980s and 1990s. And they emerge because of the unworkable and unproductive fiscal structure of the economy. It only appears when oil prices fall because prosperity has a way of papering over cracks, while poverty has a way of exposing them. In the end, and this year is classic, both at the federal and in all the states, we have budgets that have been signed and passed into law, in some instances, in great funfair and expectations, but are in actual fact, non implementable.

However, if we discard our fears and embrace a new way of thinking, our country can rise above this mediocrity.

It is mediocre to exhaust the resources in the Niger Delta before we explore the resources in other regions. It is like that of a family or group of friends with a rich man amongst them, and they all subconsciously agree that we will survive and prosper by exhausting each other’s wealth one after the other. But why not grow rich together by each exploring its own resources? It is also like 6 children of the same father, but with only one rich one, and he has to give all the money he earns to the dad every month for him to share amongst his siblings. Haba! Meanwhile, the economy benefitted immensely from true federalism in the past when in the 1960s, Chief Obafemi Awolowo built the infrastructures that include the Liberty Stadium, Cocoa House, the magnificent Secretariat structures, and many more from the revenues from Cocoa. This is the example I remember, but I am sure there are other great examples from other regions from that period.

So, people that argue that an increase in derivation for the Niger Delta states will not bring further developments because past increases in derivation has not done much misses the point. It is not about increases in derivation, it is about who owns, control and manages it. The South West owned, controlled and managed its own resources, and because of that ownership, it advanced ways to grow richer and develop. Same happened in the East and in the North. If you fail to develop, it is up to you, and even in circumstances like we have faced in the last two years, the impact will be minimal on the country because perhaps only one region is affected at any point in time.

Meanwhile, the greatest casualty of this dependency fiscal structure is the collapse of big ideas. Unlike then – and the 1980s was probably the last time we saw large spots of big ideas – we rarely see governments, across all tiers, of big ideas anymore. You may fault the operational modalities, but you cannot fault the ambitions that underlined the establishment of 400 schools in a single day by Governor Bola Ige in 1980. The big ideas you see now are the sizes of their convoys, the sizes of their cabinet, and the sizes of their advisers.

 

In conclusion, the resource curse we suffer from is not the discovery and exploration of oil and the revenues that accrue from it but the folly unitary system of government that we pursued afterwards. Ironically, this system was motivated by the pursuit of unity, after the civil war of 1967 – 1970. So, it is not the discovery of oil in Bayelsa state that prevented Kogi state, a beautiful state so rich in minerals that South Africa should envy, from developing its minerals, but because it collects federally allocated oil revenues, and does not have the control over its resources. Therefore, in 2016, it has budgeted a mere N100 billion, compared to N110.2 billion in 2015. Put in context, that is just $500 million dollars, equivalent of what local governments in less populated countries spend on health alone. This is what happens when we live in a world of dependency and not of ideas, a world of cronyism and not of thinkers, and it is what happens when you wait for handouts rather than think and grow rich. I thank you.

 

Ogho Okiti