It was therefore greatly comforting when the new Buhari administration announced a package of N713 billion disbursements to settle the mounting salary debts to public sector workers. In addition, the CBN is set to release N250 billion in loans to the states of the federation. All well and good. I have three main worries about the recent initiative, welcome as it is.
First, we are yet to address what economists term the problem of “moral hazard”. If states indulge in financial profligacy and realise they could easily be bailed out without any pains or costs whatsoever, there is nothing stopping history from repeating itself. The rescue package should have been structured in such a manner as would make financial recklessness uninviting, if not painfully costly. There were no conditionalities involved in the recent rescue package, which to me goes against the dictates of financial prudence.
Going forward, we must ensure that those who come to financial equity must come with disciplined hands. It is vital that the Federal Government works with the states to put in place an adequate framework that will ensure long-term financial rectitude. Payment of salaries must be accorded ultimate priority. Public sector workers number over 3 million. They are a significant segment of the wage labour force. We ignore them at our peril. States that fail to pay civil servants are, ipso facto, failed states. Extraordinary measures will have to be put in place, including revocation of the governors’ security votes, to ensure that civil servants are paid.
Secondly, and proceeding from the foregoing, the financial rescue package was not accompanied by a detailed restructuring plan to ensure that the avenues for financial haemorrhage in the states and in the public sector in general are effectively plugged to prevent reoccurrence.
Thirdly, there is the question of ghost workers. Even the Bible recognises that the labourer deserves his just wages. Civil servants have families; they have children to feed and to educate and a whole host of hangers-on and relations in the villages to look after. They must be paid their salaries as and when due. But we are talking only for bona fide civil servants. I suspect there are thousands of ghost public sector workers – of people who came into the system from the backdoor and whose salaries are being collected for work not done. Such ghost workers must be identified and flushed out of the system. As a matter of fact, I would go ahead and insist that they and/or those who are collecting their salaries should be compelled to pay back all the emoluments they have illegally collected. This will serve as a disincentive to those who in future might be tempted to go down that criminal route.
There are important lessons for the future. It is fascinating that the states that were heavily indebted also happened to be among those that draw the largest contributions from federal coffers. For example, ordinarily, Akwa Ibom and Rivers had no excuse whatsoever to be in such arrears in salary payments to their civil servants, when states such as Nasarawa, Jigawa and Kebbi, who receive considerably less from the federation account, are able to swim above the waters. It is a shame. In the case of Benue and Plateau, their governors had transferred humongous amounts to the PDP coffers for electioneering purposes even as civil servants had not been paid for the better part of a year. In Benue State, schools and tertiary institutions have been closed for a whole year due to the backlog of salary arrears for civil servants. It is a sin both in the sight of God and in the sight of man. I would go so far as to say that all states should enact laws that make any mounting backlog of salaries exceeding three months an impeachable offence.
What are the lessons for the future? We as a country must acknowledge that the rentier-state political economy model that has subsisted for decades is unsustainable. A situation whereby the Federal Government routinely collects rent from transnational companies and sharing same with states and local governments cannot endure over the long future. Oil is a depleting asset. If it doesn’t deplete in the next half-century, there will emerge substitute technologies that may render it irrelevant as a source for capital accumulation. Wise leaderships in countries such as UAE, Trinidad and Tobago, Mexico, Indonesia and Malaysia took steps long ago to diversify their economies away from dependence on oil.
I believe Nigeria has the wherewithal to become an advanced industrial-technological state even without oil. That is the most crucial task for our economic managers in the coming decade.
We also need to evolve a cooperative model of federalism in which the Federal Government takes a closer interest in how states manage the financial resources coming from the centre. The CBN and the Debt Management Office (DMO) should also take more seriously the business of advising states on the imperatives of fiscal responsibility. The role of Commissioners of Finance should be more than that of collecting money from Abuja and sharing it among politicians and contractors.
They need to put in place a robust treasury function in which excess funds are saved in high-return investment vehicles instead of the shenanigans they are into with the commercial banks. Internally generated revenue sources should be developed. Efforts should be made to grow local economies that can serve as future sources of tax revenue. Governors should govern with restraint and fiscal discipline should be the foundation of states’ public finances.
Obadiah Mailafia
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