THE Annual States Viability Index (ASVI) released last weekend by Economic Confidential shows that 17 of Nigeria’s 36 states are insolvent. This is not a bolt from the blues. It is rather a wake-up call to take on the issue of economy and development headlong before the bubble bursts soon.
GIVING the total Internally Generated Revenues (IGR) of the 36 states as N1.1 trillion in 2018, up from N931 billion in 2017, the report disclosed that the 17 poor states did not shore-up their IGR index to 10 percent of their total accruement from Federation Account Allocations (FAA) in 2018, thereby rendering them economically unviable since they cannot stay afloat outside federal government’s handouts from the federation’s oil wealth.
UNSURPRISINGLY, the report commended the IGR matrix of Anambra, Lagos, Ogun and Rivers states, as well as Federal Capital, Abuja, for going about revenue collection with result-oriented templates.
OF COURSE, hardly had the report come to town than it predictably generated furore from quarters where heed should have been the word. While some states rashly flayed the released viability index on account of ‘inaccuracy,’ others alleged witch-hunt. But this does nothing apart from deferring the bubble till another day that must surely come very soon, unless public scale of preference is allowed to be driven by 21st Century business models.
AT THE risk of repetition, a distress call of this nature is coming on the heels of similar warnings that had passed without being taken serious. For instance, in its Fiscal Sustainability Index 201, a civic advocacy group called, BudgIT, released its sordid report on national fiscal health and blamed some governors for failing to harness resources and drive poverty reduction development. It projected continued ostentation, high consumption and debts in most of the fingered states that ipso facto render public finances messy, deepens poverty and cause general unemployment, among others.
IT IS regrettable that where shock therapy is urgently needed to force responsible and realistic fiscal behaviour by state governments, it seems that no leaf was borrowed from the recent recession provoked by a sharp drop in oil prices from 2014 to 2018.
BY A stroke of coincidence, most of the states indicted in the Economic Confidential Index did not fare any better in the earlier BudgIT’s report, reducing their cases to fiscal baskets that are unable to hold or fulfill their basic roles of driving and sustaining healthy development in their domain. Most of the states were found to be bizarrely engaged in high recurrent spending, high debts and perpetual mismatch between revenue and expenditure plans.
UNTIL some state governments behave like self-sustaining units and primary drivers of Nigeria economy, most of them would continue to come unstuck on self-sustenance radars even as the nation retains its unenviable seat among the most poverty endemic countries or those given the sobriquet of capitals of global poverty. Need we wait until the bubble bursts?
LIKE in other federal entities, states must compete for investments and markets not going cap in hand to the federal government which everyone erroneously expects to solely create enabling environment for investments, job creation and export diversification.
IF BIHAR, the 13th largest of India’s 33 states, had the fastest growing economy by Gross Domestic Product 2014-2015 in the country achieved it by investing in agriculture and services, using its five-year development plan just like Maharashtra, the third largest, there is proof then that what drives a thriving economy is productivity and encouragement of enterprise. Mfacturing, international trade, mass media and promoting tourism competitively are among the strengths of those Indian states. This is farfetched, the Anambra business model of Gov Willie Obiano-led administration has brought such message nearer home in Nigeria.
WE COMMEND Governor Obiano for making the state a model through introduction of doing more with less policy and ease of doing business, among other business-friendly policies. We urge states wishing to escape the looming apocalypse to feel free to come to Anambra for mentoring through peer review strategies.
THE federal government should help by going beyond its recent decision to demand accountability before releasing more refunds and bailouts to the states that got N1.9 trillion since 2016, from this source. It should no longer guarantee foreign loans to the states unless they are tied to infrastructure projects that can generate their repayments.
IN THE United States, California, the biggest and richest state economy with GDP of $2.74 trillion, relies on international trade and tourism; Nevada, largely desert and arid, relies on mining, tourism and gambling while New York is an industrial and financial hub.
NATIONAL Light believes that wasting funds to build unviable airports and funding religious activities as many states do will take Nigeria nowhere. As another election period has just ended with another season beckoning,, voters should identify and elect candidates who can best mobilise economic forces for the development of their states. The task before governors is to make their states investment-friendly and safe. They should benchmark performance to the number of companies established; jobs created and target 100 per cent literacy and the provision of social services.
THERE is need to reform the tax system, reduce the cost of governance by having a lean cabinet, fewer aides and political appointees and slashing the number of ministries and agencies.
TIME has run out for rhetoric; unless prudence and sensible policies to diversify revenue reduce debt and overheads, take root without further delay, the next recession might trigger an unpalatable implosion.