Stakeholders proffer basis for utilisation of N714bn bailout funds

Only adherence to the principles of the Fiscal Responsibility Act (FRA), blocking leakages and reprioritisation of activities at all levels of governance, particularly at the state level, among others, can guarantee effective utilisation and execution of the N713.7billion bailout funds by the Federal Governemt to states, stakeholders say.

The bail out package includes N413.7billion  special intervention funds and the balance of about N250billion to N300billion, which is soft loan to states by the Central Bank of Nigeria (CBN).

The stakeholders who see several months of salaries owed by some states to their workers and the N660 billion loan indebtedness to banks, as consequences of  failures of governance and financial irresponsibility on the part of some governors, challenged them to be responsible enough to scrap the security votes and do away with reckless lifestyles and wastage.

The FRA of 2007, for instance, specified among others,a maximum of three percent deficit to DGP ratio for the Federal Government, pegging of loans by both the states and Federal Government, and itemisation of what the loans should be spent on, and need to maintain budget and procurement integrity.

But the governors were believed to have abandoned the provisions for reckless borrowing and keeping of multiple aides at the expense of tax payers.

They wonder why governors who plundered the resources of their states should either be reappoinbted, or elected to the Senate, when they were in the forefront of the campaign for draining the nation’s savings through monthly sharing of national resources.

“Though the Act is a federal Act, certain aspects apply to all the tiers of government and it was expected that all the states would adopt or domesticate the laws.

“But recent revelations that up to 23 out of the 36 states of the federation are unable to to pay workers’ salaries as at when due, with some owing up to eight months, shows poor management of  state resources.

“ If states cannot pay salaries, what else can they do,?” asks Sam Ohuabunwa, chairman, African Centre for Business Development, Srategy and Innovation, in a published article, “Fiscal RTresp[onsibility Act: Curbing the irresponsibility in manay states.

In its recently released report on poverty findings, ActionAid alleged that “state governments, Ministries, Departments and Agencies (MDAs) and local governments have mismanaged public funds, while money laundering has become a major means by which the country’s wealth is siphoned and stashed abroad.”

Consequently, some analysts say the states must however, not see the bailout as a free meal. It is a loan, no matter how soft, they have to repay. The analysts likewise admonish the states to be prudent in the application of resources at their disposal.

Bismarck Rewane, chief executive, Financial Derivatives Company limited, who sees the development as consequence of governance failure and financial irresponsibility on the part of the governors, calls for the restructuring of the economy and scrapping of security votes being enjoyed by the governors, unaccounted for.

Rewane, who spoke on Channels Television, accused the governors of inefficiency and leakages in their administration and also failing to prepare for the rainy day.

Chidi Odinkalu, chairman, National Human Rights Commisssion, (NHRC) did not see the disbursement as a bailout, as it would have been shared among the three tiers as statutorily required. Odinkalu however said that the states should have been left to suffer the consequences of their failures.

Odinkalu, who sees the development as a structural problem, as the states borrow for consumption, also regards the security vote as ‘nonsense’. He advised the governors to ‘square up’ with Nigerian people, wondering ‘why ‘a governor owing his people should be elected to the Senate.”

Tilewa Adebajo, an economist, fears that the development would lead to erosion of the nation’s savings, while at the same time, bourgeoning the nation’s domestic debt by at least N5billion this year.

Friday Ameh, an energy analyst, said Buhari, who appears determined to shake off the dust of lethargy, which has earned him the image of ‘Baba go slow’ through the appointment of new service chiefs yesterday, said the campaign for change would only be meaningful only if the governors buy into it.

Ameh faulted the ‘holier than though’ attitude and posture of some of the governors who are, even, when they are owing their workers are casting aspersion on others as either being corrupt or having compromised.

According to him, there have been claims and counter claims over the management and eventual sharing of proceeds of the ECA by the former administration of Dr. Goodluck Jonathan administration. In its recently released report on poverty findings, ActionAid alleged that “state governments, Ministries, Departments and Agencies (MDAs) and local governments have mismanaged public funds, while money laundering has become a major means by which the country’s wealth is siphoned and stashed abroad.”

The states, he further advised, must, however, not see the bailout as a free meal. It is a loan, no matter how soft, they have to repay. They must also learn from the pitfalls of the past by being prudent in the application of Besides, CBN has expressed willingness to assist indebted states in restructuring the loans owed the commercial banks and directed them to submit details to it.

Central Bank of Nigeria, (CBN) is expected to offer assistance in the form of concessionary rates to interested states and is part of the comprehensive N713.7billion bail out package by the President Buhari government to help most of the states pay workers salaries owed for months.The bail out package includes N413.7billion  special intervention funds and the balance of about N250billion to N300billion, which is soft loan to states.

The third and final leg of the bailout as directed by President Buhari is a debt relief programme to be “proposed by the Debt Management Office (DMO) which will help states restructure their commercial loans currently put at over N660 billion and extend the life span of such loans while reducing their debt-servicing expenditures.”

But, one important question on the lips of many Nigerians is how benefiting states will pay back the soft loans if such facilities will be used to pay salary arrears.

John Omachonu