Skip to main content

STATE GOVERNMENTS AND ECONOMIC RECESSION IN NIGERIA

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.

Comments

  1. 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.
    Come 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.

    ReplyDelete

Post a Comment

Popular posts from this blog

EDO GUBER ELECTION: Omo-Agege, Faith Majemite, Others Appointed Into APC National Campaign Council

Ahead of the September 21 governorship election in Edo State, the National Working Committee of the All Progressives Congress (APC) unveiled a 197-member council on Wednesday to lead its campaign. According to the list released by APC National Organising Secretary, Sulaiman Argungu, Cross River State Governor Bassey Otu has been appointed as the chairman of the campaign council. Governor Otu will be supported by Katsina State Governor Dikko Radda as co-chairman and former Edo State Governor Adams Oshiomhole as deputy chairman. Other members of the 197-member team include Senator Ovie Omo-Agege, who will serve as Assistant Secretary; Senate President Godswill Akpabio; Speaker of the House of Representatives, Tajudeen Abbas; Minister of Aviation, Festus Keyamo; Ogun State Governor, Dapo Abiodun; Lagos State Governor, Babajide Sanwo-Olu; Hon. Faith Majemite; and other governors elected on the APC platform. The recently reinstated Deputy Governor of Edo, Philip Shaibu, who recently defecte...

IBORI PARDON IN SIGHT? FG Inaugurates Presidential Committee On Prerogative of Mercy

Abuja, Nigeria — The Federal Government of Nigeria has inaugurated a 12-member Presidential Advisory Committee on the Prerogative of Mercy (PACPM), tasked with recommending individuals eligible for presidential pardons from criminal convictions. The committee, chaired by the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi, was inaugurated on Wednesday. It has a four-year tenure and includes members drawn from various ministries, departments, and agencies (MDAs), as well as representatives from religious bodies and four eminent Nigerians. Among the notable appointees are Justice Augustine Utsaha, Prof. Alkasum Abba, Chief Akinlolu Olujinmi (SAN), and Prof. Nike Sidikat Ijaiya. The Permanent Secretary for Special Duties and Governmental Affairs will also serve as a key member, while the director for special duties and intergovernmental affairs will act as the committee’s secretary. During the inauguration, the Secretary to the Government of the Federation (SGF)...

GOVERNOR OBOREVWORI APPOINTS OSEJI AS DELTA HEAD OF SERVICE

Governor Sheriff Oborevwori of Delta State has approved the appointment of Dr. (Mrs.) Minimim Oseji as the new Head of Service. Her appointment follows the retirement of Mr. Reginald Bayoko, who served in the position for nearly nine years. Dr. Oseji, a medical doctor, was previously the Permanent Secretary in the Ministry of Environment and had also served as the Permanent Secretary in the Ministry of Health. In 2020, she was elected as the 22nd National President of the Medical Women's Association of Nigeria (MWAN). The newly appointed Head of Service is scheduled to be sworn in on Monday, March 31, 2025. Mr. Charles Aniagwu, MNIPR Hon. Commissioner for Works (Rural Roads) and Public Information