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Our Governors & fiscal sustainability of states: Absence of strategic thinking and innovation

With a whooping N3trillion Naira set aside in the 2021 National budget for servicing our ever-increasing national debt currently above N31 trillion, even the deaf can hear and the blind can see that we are heading or already in a serious fiscal crisis. But are we behaving like we are facing a fiscal crisis, not really! Our government officials particularly the governors seem unperturbed and have continued to exhibit lifestyles that suggest the problem is how to spend or waste money and not how to generate more revenue or to be prudent. Imagine a state governor attending a naming ceremony with a convoy of about 15 expensive jeeps in a country said to be facing a fiscal crisis! A friend asked if our Governors are from Nigeria or Saudi Arabia? We are really a specially breed of people!

As almost all states rely on Abuja allocations for over 80% of their revenues and budgets, the question for our Excellencies is the strategy they have put in place to ensure fiscal sustainability of their states. Asked in another way, do our states have fiscal sustainability plans and if they do, how robust are they? Unfortunately, just as the Federal Government has not demonstrated convincing strategic thinking and innovation in the diversification and management of the economy, so are the governors. This is evident with the poor Internally Generated Revenue (IGR) of most states even with the abundant resources that each state in Nigeria is endowed with.

With the abundant resources in every state in Nigeria, there is no justification for our governors to be thinking of our pension assets except laziness and absence of strategic thinking

As they say, birds of the same feather, flock together, so it is with the disposition of our three levels of government- the Federal, the States and the Local governments. Just as the Federal Government is mainly interested in continuous borrowing, so are our state governors. With the decline in oil revenue and consequent reduction in the amount available to share by the Federation Accounts Allocation Committee (FAAC), our governors through the Nigerian Governor’s Forum (NGF) are strategizing to possibly have access to our pension assets. Imagine the impudence and short-sightedness! These are CEOs without deep thinking and vision, another friend fumed! Is my friend right to be upset? I think so!

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With the abundant resources in every state in Nigeria, there is no justification for our governors to be thinking of our pension assets except laziness and absence of strategic thinking. This is the reason why the poverty rate in Sokoto, Taraba, Jigawa, Ebonyi, Adamawa, Zamfara and Yobe is over 70%. This means that over 70% of the population of each of these states are classified as poor, unable to achieve a real per capita expenditure of N137, 430 a year or N11,452 a month. Given the pervasive poverty across our states, it is important that we remind our Governors that they are like CEOs of companies. But they are even a different set of CEOs. They are CEOs who are so blessed that whether they go to work or not, they are assured of a very reasonable amount every month from FAAC in addition to their respective IGRs. All that is therefore required of our governors is to wear their thinking caps and innovate ways through which they can use what they currently have to further explore, exploit and achieve better outcomes for their respective states.

Interestingly, while the average performance of our governors can be described as very poor, there are few outliers that can be described as encouraging. Governors Godwin Obaseki of Edo state and Nasir El’ Rufai of Kaduna state are such examples. Engaging with them clearly indicate that they have a very good idea and vision of what they are trying to achieve and strategies to pursue them. A good example is the recent allocation of 40,000 hectares of land that will be used to plant palm trees in Edo state. In Kaduna state also, Governor El’ Rufai is pursuing a programme that will see to the planting of about 5 million economic trees before end of 2023.

With about 150 palm trees in a hectare of land, it means that Edo state would have enabled the planting of about 6million palm trees in the state. As the improved palm trees have potentials to generate a revenue of about N25,000 per tree, Edo with this initiative would have created additional N150 billion revenue every year. Assuming that the plantations are even privately owned, and the state decides to charge a tax of 10%, that will be additional IGR of about N15billion to Edo state. Using the same analysis for Kaduna, it means that with 5 million economic trees, the revenue of the state will increase by N125billion every year.

The essence of the above examples is to show that where there is a will, there are so many opportunities to be pursued. All that is needed is the appropriate and innovative leadership to lead and guide the states to sustainable growth and development. With such leadership, what a group like the Nigerian Governors Forum should do is to strategically pursue agendas that will enhance the competitiveness of our states. A good example is the need to rethink the items in the exclusive list controlled by the Federal Government to see which items should be transferred to the concurrent list controlled by the states. With majority of over 100 million poor Nigerians residing in our respective states, a very important item that should be transferred to the concurrent list is mineral deposit. Allowing the states to control the minerals in their states will not only increase the revenue of both the States and the Federal Government but also lead to massive employment, improved security and poverty reduction across Nigeria. Our leaders especially the Governors should appreciate that Nigeria is in a crisis and governance should be handled with the seriousness and innovation it deserves. Continuing to treat governance of Nigeria and particularly that of our states with limited commitment and seriousness as currently is the case is a clear invitation of protests such as or worse than ENDSARS!

Dr. Ngwu, is an Economist/Associate Professor of Strategy, Risk Management & Corporate Governance, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs.edu.ng

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