FAAC and delayed salaries – The Nation

  • It is urgent for President Buhari to bring the stalemate to an end

The deadlock between the Federation Accounts and Allocation Committee (FAAC) and Nigerian National Petroleum Corporation (NNPC) over deposits by NNPC into the federation account has brought delayed or non-payment of salaries back to 14 states. Since 2017, the two agencies have been having disagreements over NNPC’s payments to states from the Federation Account. The most recent is the claim by NNPC that the agreed payment due to states in June is N112billion while the states insist that there is a shortfall of at least N40billion due to them, if all petroleum-related revenue for May had been dropped in the Federation Account, as required by law. And governors have insisted that they would rather wait for NNPC to follow the law, even if this insistence is at the risk of not paying workers’ June salaries.

There are two issues that require response from the government. One is immediate and concerns the Federal Government; and the other is long-term and concerns federal and state governments. With respect to the face-off between states and NNPC, we are happy that President Muhammadu Buhari has now agreed to intervene. But the president’s intervention should come with the speed that is required to ensure that public servants and their families do not suffer more than they have already done on account of non-payment of salaries.

Solution to the face-off should not have gone to the apex of government if the laws and regulations guiding collection and deposit of revenue in the Federation Account had been adequately enforced. It is puzzling that NNPC had the audacity to announce that its agreement with the states for June payment from the Federation Account is N112billion. Since when has it become the function of NNPC or any other federal agency to negotiate what accrues to states in the Federation Account?  The face-off has dragged for too long over what ought to have been a simple and straightforward matter: how much funds came to NNPC for transfer to the Federation Account and how much of it does the law say should be passed to the states? Innocent citizens are suffering unnecessarily because of non-payment of what should have been due to states; it is urgent that the president brings the current stalemate to an end.

On the long-term side, states need to do the needful: work on how to generate revenue to pay their workers—with or without allocation from Abuja. Ideally, in properly structured federations, funds from crude oil should have been used for specific projects, not for paying civil servants. Over-reliance on revenue from crude for decades should not continue to deaden the spirit of creative governance on the part of governors. At present, most states are subordinates rather than coordinates to the central government. Most states seem complacent with the country’s anomalous federalism in which many governors call for true federalism and at the same time rely on funds from crude oil to pay civil servants.

States need to be creative in how to grow internally generated revenue (IGR) and where they find structural obstacles to such efforts, they ought to be outspoken about removing such obstacles. Furthermore, states ought to be more mindful that there are many countries—unitary and federal—that are doing well economically without having crude oil. Nigeria used to be one of such countries, long before crude oil became the sole determinant of the character of the polity and the economy.

It is important that states take advantage of the Federal Government’s adoption of economic diversification in response to uncertainty of revenue from crude oil, which for decades has served as the country’s main source of revenue. A rational way to do this is for states to create structures, policies, and programmes that generate additional revenue that can make them act like partners rather than vassals in a federation. In the same vein, states ought to be worried about insecurity, as many investors would be wary to bring their investments to an insecure country. Depending on monthly allocations from the Federation Account is a sure way to keep states underdeveloped and subservient. Generally, self-reliance of federating units is an abiding element of federalism.

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