State
governments have faced a myriad of fiscal challenges in the economic recession that
befell the country since 2016. You may have heard in the news, or experienced
first-hand, cuts in services and jobs in your State or community – or perhaps
even tax increases.
Recent
reports show that 17 States faced budget shortfalls and can no longer pay salaries.
As at today, Delta is not owing, likewise Anambra,
Borno, Edo, Ebonyi, Cross River, Rivers, Gombe, Jigawa, Kaduna, Kano, Katsina,
Kebbi, Lagos, Niger, Plateau, Taraba, Zamfara and Sokoto.
Most
people don’t understand the deep cut, which recession brings to revenue. That is the whole idea of budget shortfall, which is the
difference between a State’s annual revenue expectations and the cost of
ongoing services and existing obligations for the year. Whenever a budget
shortfall occurs, the people usually feel the pangs of economic hardship. Despite the revenue shortfall, the ability
to build new infrastructure and maintain existing ones, including the regular payment of salaries is indicative of Governor Okowa’s superior economic management skills.
State
governments are a sizeable component of the national economy. State governments
provide important services to the economy. State governments provide important
services, such as transportation and infrastructure, education, health and
pensions for public employees, among many others.
The inability of State
governments to respond: In
the face of record revenue declines, States have been unable to cut spending at
a similar pace. Over time, though States made a noticeable effort to reduce
spending but that effort has not been enough to make up for the unprecedented
drop in revenue.
Second,
States have limited abilities to reduce certain types of spending during a
recession. One major reason for this is that demand for services provided by State
governments, particularly social programmes like health and education among
others are difficult to cut.
The outlook for State
governments: By all accounts, the State governments fiscal crises are likely to remain bad before they get better
for two primary reasons. First, State budget recoveries tend to lag recoveries of
national GDP growth. Since the economic recovery is expected to be modest and
gradual it could be some time until State finances are again on solid ground.
Secondly, revenue from federation account to States will continue to be inadequate,
because of the dull international oil market, with shale oil coming from USA
and Canada, recovery by OPEC will remain sluggish. State governments must therefore
take diversification of their economy seriously.
To succeed, they need to put in place policies to encourage
manufacturing in their domain and prioritize initiatives that would boost
economic activities within their states. Increased economic activities would
mean the creation of direct and indirect jobs, and that would result in
increased revenues in form of taxes.
The hope of majority of citizens, especially in the States is that
governance would work in a manner, which would evolve self-reliant revenue
sources. This would mean taking steps towards implementing the right policies,
which would in turn end the hopeless dependence by the States on the Federal
Government for revenue. They must be ready to think of and imagine a future
without oil. That invariably points the way to agriculture, and overall steps
to diversify the economy.
Good enough, a few States,
including Delta are already showing the way to go in terms of diversifying
their revenue base, and ending the monthly trips to Abuja.
Deduction: All sectors in the Nigerian
economy have been battered by one of the worst recession and State governments
are no exception. The economic downturn has depleted oil revenues at precisely
the time when demand for government services have gone up. The institutional
arrangements of State governments have made it difficult for authorities to
respond to the record decline in revenues, while the likelihood of a rapid
turnaround looks bleak.
Yes, there is recession, and whose responsibility is it to turn it around? Of course, it is those who are at the helm of governance. What Nigerians look out for is the way out, and it is the responsibility of those voted for to do just that. In Nigeria for instance, all monies go into government coffers. It governments don't release money into the system people, including businesses are doomed. Unfortunately, our governors have not stood up to the issue, all that most of them have been doing is to weep up sentiments about dire financial straights that they are in. So much fuss is being made of this that they are doing little to think outside the box to get out of the woods. They are just weeping up sentiments to seek for notice so as to get sympathy from the people. No, it is wrong and unfair to the people. Recession is part of the bargain in voting them into office. The responsibility to ease is squarely on their shoulders. Enough of the excuses and the pointing of accusing fingers to recession. They should get down to the brass tags, and ease the economy out of the woods; this is the minimum they owe Nigerians if only to justify their place as governors.
ReplyDeleteCome to think of it, what is being said with the repeated reference to recession is that they don't have what it takes to ease the situation. If this is their mindset, let me ask: Will any of them on the basis of not knowing what to do to ease their states out of recession allow those who think they can to be given the opportunity to prove themselves? Any governor that will continue to give that excuse rather get their people out of recession don't have the moral right to continue to subject the people to torture. It is an indication that they cannot do the work, and this in itself is a betrayal of the confidence of the people in voting them in as chief executives of their states. If this is the case, they should please step aside and allow those who can to come in. Life is too short for the destinies of millions of people to be put in the hands of those who can't find the way out of the wilderness.