“Washing a donkey’s head is a waste of water.”Italian Proverb. (ATOM BOOK OF QUOTATIONS, VBQ, p 270).
In July 2014, the Federal Government allocated N630.32bn to all the three tiers of government – Federal, States and Local Governments. In August 2014, N601.65bn was allocated to the states. For September 2015 the figures just released indicate that a total of N389.936 was shared by all the tiers of government; representing drops of 35% and 38% from the August and July 2014 allocations.
Yet, N601bn in August represented a sharp decline from the previous months in 2014. At the moment governments are sharing less than half of what was available in January 2014. There are more horrors to come. In 2016, states will be extremely lucky to collect half of what they now receive. Most states are on the verge of bankruptcy. The consequences for all of us are difficult to imagine.
If you think this is a false alarm, remember in 2013, we published on this pages that Nigerian states will not be able to pay salaries by 2015. In 2014, we published another warning on drop in aggregate revenue and its consequences. Then we predicted that the Nigerian economy will no longer grow at six per cent or more. Finally we told investors to get out of the NSE. Check our track record for accuracy.
Nigerian states are on the verge of bankruptcy.
The governors of most states want to re-negotiate the Minimum Wage agreement with Labour. That is only the symptom of the dire financial straits in which the states find themselves. Even the inevitable mass retrenchment of workers will not totally get them out of the woods. Debt and contractual obligations, which will gulp an increasing percentage of their revenue will finish them first. For some, the calamity will set in by the end of the first quarter of 2016.
Unfortunately, most of the states are APC-controlled states. They will damage Buhari’s political position – if care is not taken. Today, we should focus our attention on two issues which will determine that fate of our states. The first is deduction from source, that is, Abuja. Most governors, since 1999 have been reckless and fraudulent with public funds since 1999. Even those who have proved to be clever in shielding their crimes from detection were/are as unpatriotic as those too careless to be caught.
Below is table derived from the Distribution of Revenue Allocation To State Governments For September 2015. Instead of listing them in alphabetical order, they have been grouped into three based on gross revenue expected to be collected from Abuja. Also listed are the gross deductions from each state’s revenue allocations.
Those deductions are expected to continue indefinitely. Readers must understand that instead of the lies some governors have been telling their people the deductions represent the decisions made by them or their predecessors in the past. When states took on huge debt burdens, sometimes spent on unsustainable programmes, they little realized that a sharp decline in revenue will doom their states economically.