THE significant increase in the amount shared by the three tiers of government from the Federation Account Allocation Committee for June 2023 puts pressure on the 36 states to deliver good governance to a beleaguered populace. The federal, state, and local governments shared N907.05 billion, an increase of N120.89 billion over the May figure of N786.16 billion, and the highest since January when N1.14 trillion was distributed. As Nigerians groan, the state governors should put the money to good use, roll out visionary economic plans and stop the dependence on the monthly dole.
Urgently, the governors should be accountable, and prudent. More importantly, they should start running the states as autonomous, self-sufficient productive economic units.
For decades, state governments have collected the monthly largesse without commensurate service delivery. Unlike other federations, they have become beggarly appendages of the central government, over-reliant on revenues (mainly) from the crude oil, lacking independent economic plans, and unable to generate enough revenues of their own.
Current realities make this template ever more unsustainable. The FAAC inflow was reportedly boosted by the remittance of N123 billion interim dividends from the Nigerian National Petroleum Company Limited, after eight months of zero remittance. Officials also link it with more revenue available arising from the stoppage of the petrol subsidy in May.
Plainly, Nigeria is broke: over 96 per cent of federal revenue is spent on servicing debts; 63.6 per cent or 133 million are poor. Unemployment is estimated at 40.6 per cent by KPMG, a consultancy, and 53 per cent in the youth segment, according to Spectator Index, the world’s second highest after South Africa. The national infrastructure deficit amounts to 30 per cent of GDP, notes the US Commerce Department.
Human development indices are terrible, marked by high maternal deaths, 20 million out-of-school children, life expectancy of 52.7 years, poor health facilities, 92 million persons without access to electricity, 60 million starved of clean water supply, and estimates a national housing deficit estimated at between 17 million and 30 million.
With the inflation rate on steroids following the subsidy removal, and the surrender of the naira exchange rate to parallel market forces, business closures, more job losses, hunger, and privation are already underway.
States must act. Save for Lagos and Rivers, their internally generated revenue is wretched. Of the N1.89 trillion generated in 2021, Lagos alone accounted for 40 per cent. All fell short of their IGR targets.
States have no excuse. The Federal Government has since eased regulations on mining, allowing states to seek foreign and local investors and exploit their natural resources. Also, states can now generate, transmit and distribute their own power, and develop rail transport.
They should attract foreign and domestic investment in agriculture, ranching, manufacturing, and exports. The recourse to arbitrary taxation is self-defeating.
Bereft of competitiveness, governors have failed to leverage their states’ unique human and natural resources. They have failed to stem mass urban migration, or retain their valuable young workforce through investments, or develop rural infrastructure and economic hubs.
The PUNCH recently reported how 28 states did not attract any Foreign Direct Investment in the first quarter of 2023. The eight others that did receive paltry sums far below their potential.
Also, the Infrastructure Concession Regulatory Commission says a sizeable portion of the 31,000 kilometres of road infrastructure belonging to the states are decrepit. Roads are critical for economic development, yet, inexcusably, about 87 per cent of Nigeria’s 130,000km rural road network is deplorable.
Unlike the defunct four regions of the First Republic, Nigeria’s states do not develop sustainable, autonomous economic plans. They rely on the funds from the FA. In a federation, this is a recipe for poverty.
Federalism is anchored on “dual sovereignty,” by which the federating units are primarily autonomous entities that willingly surrender some of their powers to a central government, but at the same time retain considerable responsibility for their own well-being.
A vibrant federation is ultimately the sum of all its constituent parts. In the world’s 24 other federations, the units are primary drivers of the local and national economy. A report filed for Australia’s federal government noted that India operates “both a national economy and a series of sub-national economies each with distinct growth trajectories and regulatory regimes.” Its 28 states independently develop growth drivers and investment climates, each requiring its own strategy.
Competing with each other, eight of the states accounted for over 60 per cent of the country’s economic activity, five for 70 per cent of all the exports, and five attracted 71 per cent of FDI inflows 2000-2017, the Indian government reported. India’s $3.75 trillion GDP, the world’s fifth largest, is driven by the exertions of its central and sub-national units.
Nigeria’s states should similarly have economic plans, each setting out targets for growth in agriculture, mining, SMEs, manufacturing, exports, ICT, tax revenues, investment, and job creation. They should align sector-specific programmes with national and regional ones.
Many governors, past and present, are corrupt, wasteful, incompetent, and lack vision. The 36 states and the FCT, by March end, owed N49.85 trillion of the total outstanding national debt of N108.29 trillion, according to the Debt Management Office. There is little to show for it and the huge sums drawn over the years from the FA, except for the stupendous personal fortunes of most of them.
The current governors should change the narrative, assemble teams of seasoned, incorruptible technocrats, map out comprehensive economic and social programmes, and exploit all resources, material, and human, in their states to reverse Nigeria’s poverty trajectory.
Like Australia’s, Germany’s and India’s states, Canada’s provinces, and Switzerland’s cantons, they should devise business-friendly policies, invest heavily in rural infrastructure, education, health, and water supply/sanitation to attract domestic and foreign investment in agriculture, mining, manufacturing, ICT, services, and transportation.
They should drastically cut down the size and cost of governance, beginning with the cabinet, and the public service.
The times call for sacrifice by leadership, vision, and a culture of selfless service. The governors should rise to the challenge.
