Government must henceforth become more businesslike and prudent. Public projects must be backed up by proper feasibility studies and funding plans.
The finances of nearly all the states of the federation are in dire straits. This underscores the generally pathetic attitude to internal revenue generation and high level of profligacy and recklessness that have characterised the management of the tax payers’ money. It has gotten so critical that many of them have, for some time, been unable to meet even the most basic of their obligations, including payment of salaries of their work force. Out of the nation’s 36 states, 23 have salary arrears ranging between three and eight months.
The financial problem in the states goes beyond unpaid salaries. Their indebtedness to contractors and the huge sums of foreign loans taken for projects that were mostly not executed are the most crippling. In fact, 18 of the 38 states, according to recently published reports, are technically bankrupt. Most of the states do not generate reasonable amount of money from internal sources.
And worse still, their expected revenue allocations from the Federation Account, their major and most dependable source of revenue earnings, have been mortgaged to contractors through irrevocable standing orders they signed with their banks for what they owe contractors to be deducted at source.
The cry from the states for federal government’s financial intervention initially received the attention of President Muhammadu Buhari who after a meeting with governors of the states in the country authorised the release and allocation of N413.7bn to them. But given the acute nature of the financial situation in the states, the bailout fund is only but a drop in the ocean. Many of them could not even pay more than one out of the several months of salary arrears they owe their workers.
Yet the bailout, though a mere scratch on the surface of the problems of indebtedness in the states, has provided the needed succour for the workers especially who received something, though little, out of what they are being owed. It was also for the debtor state governments that had come under acute pressure mounted by workers who were already on strike and or threatening to go on strike a source of immense relief.
For the state governments, the times call for sober reflection and strategic thinking. And this naturally leads to the question: after the bailout, what next? What is the realistic way forward for the states in their desire to generate funds to finance their activities? This question must now agitate the minds of those who run the affairs of the states more than it ever did before now.
The basic problem is that most states do not generate enough money internally and do not really bother about doing so either. This is a common malady that each one of them must first cure. It has been said times without number that it is precarious for the states to depend solely, as most of them currently do, on revenues accruing from the Federation Account to finance their activities.
The recent volatility in the international oil market resulting in sharp declines in the country’s revenue earnings is an eye opener for most of them. The very important issue of internal revenue generation must now receive more than just a passing attention. The states should set for themselves internal revenue generation targets that are reasonable and realisable. They should be able to generate from their internal sources up to 80 percent of their financial needs.
What this will take, however, is the discipline of revenue collection officers and a proper monitoring mechanism to ensure that revenues collected are remitted to government coffers promptly and accurately. The problem with the machinery of internal revenue generation in the states is more of leakages than poor level of response by those who pay.
These channels of leakages must be properly and permanently blocked. In addition, tax evasion must be made a much more serious offence under state laws and conspiracy by tax officials with big time tax payers to evade payment must attract serious penalty. It is also important that all revenues coming into government coffers are applied judiciously.
This is a critical area of failure for most states. State governors and other officials who manage government finances lack the required discipline and honesty. The result is the high level of corruption that has crippled the development in the states. Governors, in particular, treat public funds as their personal money and apply them in a manner that is meant to satisfy personal rather than the overall interests of the public. This attitude must stop.
One other very unhealthy trend is non-adherence to budgetary provisions. Although budgeting is an annual ritual in the states, the provisions of these budgets do not really guide government expenditures. Cases are numerous whereby governors and other highly placed government functionaries just introduce projects that are not provided for in the budgets but only for the purpose of political expediency. This also must not be allowed to continue.
Government must henceforth become more businesslike and prudent. Public projects must be backed up by proper feasibility studies and funding plans. Wastes must be contained while every kobo of public funds must be accounted for. Public officials must not tamper with public funds illegally as they presently do and those caught doing so must receive the punishment they deserve.
The Constitutional provisions which makes assets declaration by public office holders a secret affair fuels corruption. It is the reason those serve in public offices cannot to accountable. Unless and until the public are in a position to hold those who manage their finances accountable, bankruptcy will remain an incurable malady for most of the states of the federation.