Editorial Top Stories

Cash squeeze and states

On a frequent basis, the country’s 36 states borrow from the Federal Government through the Central Bank of Nigeria (CBN) in order to attend to the developmental priorities of their people. Also, time and again the states approach the nation’s commercial banks and even foreign financial institutions for loans so as to be able to discharge their statutory obligations to their people.

The borrowing spree by the state governments is a clear illustration of their logistics incapacitation. The credit facilities extended to the states, like those granted the Federal Government, have helped inflict a huge debt profile on the country requiring the deployment of a significant amount of money in the annual federal and states’ budget for debt servicing.

The development perpetuates a cycle of disempowerment and financial dependence as the debtor states grapple with depleted resources to carry out the project outlined in their annual budgets only for them to go back to their benefactors with begging bowls.

Granted that the state governments, like the Federal Government, have in some instances not been transparent and prudent in the allocation, disbursement and spending of the earned resources, coming from internally generated revenues, and from the Federation Account, which have helped deepen their state of material and financial disempowerment, the warped federal system of government practised by Nigeria is at the root of the recurring cash crunch of the states. We, however, note with pleasure that all the 36 states are endowed with material or solid mineral deposits.

This therefore puts every state on an unshakeable pedestal to earn substantial revenue from the exploration and exploitation of either mineral or solid mineral items domiciled within her jurisdiction to pursue its development objectives, as dictated by the socio-cultural peculiarities of her people.

But regrettably the scenario painted has remained at best a mere pipe dream that has been given sustenance by the contradictions in the branches of government especially the Executive and the National Assembly. The major sources of revenues such as the mineral items are on the Exclusive Legislative List which allows the Federal Government to embark on exploratory and exploitative activities regarding the national endowment within the jurisdictions of the states.

No doubt, the earnings from the mineral and solid mineral items and the other income generated by the different Federal Government agencies are remitted into the federation’s account and are later shared among the different tiers of government as nationally collected revenue.

But whatever merits that are associated with the concept of sharing the federally collected revenue among the three tiers of administration are eclipsed by the inequitable allocation formula. One tier of administration which is made to part with between 48 and 52 per cent of the federally collected revenue leaving the 36 states and 774 local government areas to share the balance. This is anomalously bequeathed with the meagre resources the states like the local government councils are saddled with the statutory obligations of meeting the ever growing yearnings of their people.

The state governments have the latitude of earning internally generated revenue to supplement the paltry sum of money made available to them as the shared federally collected revenue but it has turned out that some sectors that the states may be willing to explore for internally generated revenue are either on the Exclusive Legislative List or on the Concurrent Legislative List with the Federal Government as a dominant stakeholder or influencer.

One sector is the rail transportation which to a reasonable extent has the Federal Government as a dominant entity apart from the few lines being constructed within Lagos metropolis by the state government; the recent Kaduna-Kano standard gauge like and that of between Lagos and Ibadan, are projects that were undertaken or are still being carried out by the Federal Government and some other sectors to explore in order to earn internally generated revenue are electricity, inland waterway tourism and agriculture.

Security, which has continued to shape the fortune of the agricultural and tourism sector, is on the Exclusive Legislative List with only the Federal Government as the only sole player. We condemn the present unitary system of government which is disguised as a federal system of government that is in all sincerity manifest allowed dysfunctional even if the present arrangement whereby the Federal Government has abrogated tremendous resources to herself, including the mineral and solid mineral items domiciled within the jurisdiction of communities and states, which came into being through a recent act of parliament should be objected for a review but this is simply not the case.

The concept of the Federal Government having tremendous resources to the extent of suffocating the state and the local government council’s dates back to the military intervention in 1966 which retained in the 1979 and 1999 constitutions of the Federal Republic of Nigeria. It is disheartening that Bayelsa and Cross River states despite the profound financial contribution to the Federation Account on account of being major oil producing states have ended up among the financially weak and educationally disadvantaged states.

Since those who seem to be benefiting from the present structure may pose an obstacle to the actualization of what is being proposed, it is imperative for consensus building among interested professional and non-governmental organisations.

They include the Historical Society of Nigeria (HSN), Academic Staff Union of Universities (ASUU), Nigeria Union of Journalists (NUJ), Nigeria Labour Congress (NLC) and National Council of Women’s Societies (NCWS) among others. The consensus building by the referred organisations will help turn the heat on the political class, especially the National Assembly and the executive arm of government, to give a listening ear to the concept of granting the states the power to explore and exploit their mineral and solid mineral items. New telegraph is certain that the granting of this proposal will help make the states drive their destinies and end the recurring cash crunch and begging bowl which is decisively inimical to economic growth in Nigerian.

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