As the face-off between the Federal Government and Nigerian Governors’ Forum intensify over N614 billion bailout fund repayment, it is clear there is serious disagreement tilting towards no amicable resolution any time soon.
The Federal Government had in 2017 given out the loans to 35 states as conditional budget support facility provided by the Central Bank of Nigeria, (CBN), to help them pay owed salaries, gratuities and pensions in their various states.
The loans were provided by the CBN at nine percent interest rate, with a grace period of two years, while the federal ministry of finance disbursed the funds, with documented approval by the Presidency. It was only Lagos State that did not access the loan.
Prior to the loan, the states were enmeshed in serious financial crisis because they were unable to pay workers and settle pensioners.
The people of the states were facing untold hardship. They were working without receiving their wages. Some pensioners died due to non-payment of their pension allowances.
To salvage the situation, the Federal Government, out of concern, brought the bailout. The governors were very happy as the bailout saved their sinking administrations.
Before the governors subscribed to the loan, there was a financial agreement, and they both agreed to the terms and conditions of repayment that applied.
However, trouble started when the governors failed to comply on the repayment. They seems to have neglected the agreement, demanding that the Federal Government is owing states on infrastructure and unless the accounts are reconciled there should be no deductions.
Peeved by the situation, the Federal Government, through the minister of finance, Zainab Ahmed announced the resolve to deduct the bailout funds from states’ monthly allocation.
She said that the funds would be deducted from source and remitted to the Central Bank of Nigeria (CBN). She however, explained that the refund would not form part of the revenue for funding the 2020 Budget.
It was a loan which was advanced by the CBN and the repayment will be made to the same CBN.
“So the recovery process for us is to deduct from the FAAC allocation to the states and remit same to the CBN.
“We are going to start these remittances by the next FAAC (September). So, there will be no requirement for us to consider the Fiscal Sustainability Plan (FSP) implementation.
“We want the states to stay on the path of fiscal sustainability, but it will not be a condition for the deduction. We will deduct direct from source and remit to the CBN,” the minister said.
However, the Nigerian governors recently converged on Abuja and resolved that before they repay the loan, there must be an audit to reconcile accounts on some monies owed to states by the Federal Government, especially on roads rehabilitation.
This, they insisted, is a necessary condition for repayment of the N614 bailout fund which, hitherto was not negotiated.
The governors are also asking for financial refund incurred on behalf of Federal Government for infrastructure project developments.
The governors consistently say they are not averse to repaying the budget support facility advanced to their states.
However, investigations by BDSUNDAY revealed that about 20 states are being owed by Federal Government for infrastructure project developments, especially federal road repairs.
Sources in the federal ministry of works averred that as at 2018, about 20 states, whose claims were verified gulped the sum of N791.2 billion. The debt has lingered for almost three years despite various verification exercises.
Information obtained showed that Akwa Ibom is being owed N140 billion; Ogun – N124 billion; Lagos – N51 billion; Oyo –N33 billion; Enugu – N35 billion; Osun – N19.8 billion; Plateau – N22 billion; Adamawa – N5.1 billion; and Ebonyi–N32 billion.
Others are Delta State is being owed the sum of N15 billion; Zamfara – N57 billion; Ekiti – N12.2 billion; Anambra – N25 billion; Ondo – N11.4 billion; Rivers – N105 billion; Jigawa – N17 billion; Kwara – N18 billion; Abia – N10 billion; Cross River – N50 billion and Bayelsa – N8.7 billion.
Meanwhile, the Chairman of Nigerian Governors’ Forum, NGF and Ekiti State governor, Kayode Fayemi, while reacting to the bailout refund, stated explicitly that if proper reconciliation of accounts is done, governors were willing and ready to repay the loan.
His words: “If you borrow, you pay. Governors have never been averse to payment of loans that we took under legal environment and we don’t want a situation that our banking system and financial system will be in any jeopardy.
“However, governors believe that just as we are ready to pay, we also have a duty to ensure reconciliation of account as far as money owed to states may be concerned. That is the process that is ongoing,” Fayemi insisted.
But the minister of works, Babatunde Fashola frowned that governors across the country carry out intervention on federal roads and other Federal Government projects within their states without seeking proper approval from the federal government.
Particularly on federal roads, Fashola during one of his inspection tour across the states told journalists that by law, the federal government supervise all federal highways. He further informed that the debts were from the previous governments.
“Anybody who wants to intervene on federal road must ask us for intervention. If you don’t do this, you have broken the law because you cannot break the law in order to do good.
“Yes, we understand that citizens need roads, but you can’t do evil in order to do good, it is just unacceptable. You must apply to us and we must see the standard and we must notify the president and council,” Fashola had said.
Presently, the face-off between the governors and federal government is signaling a politics of inconsistency. Both had all agreed to terms, before the loan was issued. Monies owed states on roads rehabilitation was not what the governors initially had agreed would be used to repay the bailout.
Of course, it is not acceptable for the federal government to owe states and be very unable to pay. But also, for the fact that the bailout helped the governors to clear backlog of salaries in the states calls for rethink. They should not foot-drag or play politics. Rather, they should bury their heads in shame. This is because some of the governors never used the bailout for the purpose it was meant for. Till now, some states have not cleared arrears of salaries and pension allowances.
Some analysts were of the view that the federal government should verify and pay states that genuinely sought its approval before rehabilitating the roads. They opined that deducting the bailout at source would have negative effect.
Commenting on the matter, an Abuja-based public affairs analyst, an economist, Jimoh Nifemi said playing politics with financial issues is not developmental.
He said even though the federal government is owing the states, such was not the loan agreement condition entered into by both parties. He however, admonished the federal government to also clear debts being owed states on infrastructural development.
“Politics is played with every issue in Nigeria. The federal government has no right to owe states on road rehabilitation. If anything, such roads are supposed to be maintained by the federal and not by states. I think the federal government should appreciate the governors for the intervention instead of owing them. Everywhere you go in Nigeria, the roads are bad and whether the states seek approval to repair them or not, that should not be an issue.
“One thing that is also critical is that the governors must also be reasonable. Till now, many of them failed to pay salaries and pensions with the bailout funds. That is wickedness because some of them diverted the loans and now they are foot-dragging over repayment. So many workers who were being owed died due to non-payment of their wages. I think we need to move forward and make sure development thrives, and not to politicise every issue,” Nifemi said.
SOLOMON AYADO, Abuja
