The over-dependence of State governments on federal allocation is not the only major problem, the dependence of the allocation itself on one single commodity that has continued to lose its popularity, relevance, and value (that is, our oil), has been the root cause of most of our fiscal troubles in the country.
At the conference where our reports were presented in March 2014, I could not withhold my worries by calling the attention of the audience, the key financial decision-makers across the States, to the worrisome statistics we presented to them. Unfortunately, whatever we are seeing today was accurately predicted in the past. In my presentation, I made it clear that only Lagos State scored above the Economic Independence Index, which prescribes a minimum condition for the viability of a State by being able to generate enough IGR that meets its recurrent expenditure.
I have continued to monitor these figures since then and apart from Ogun State, no other State has succeeded in generating enough revenue from the aggregate economic activities in their states to meet their running cost not to talk of having any surplus that could be channeled towards capital projects.
Ekiti situation presents a more daunting task in the light of its weak ability to meet its obligations without resulting to procuring additional loans or finding painful ways of reducing cost. If for any reason the allocation coming from Abuja ceases today, Ekiti will be needing its THREE or FOUR months’ IGR before it can meet the salary component of its ONE month recurrent expenditure. This is excluding other very important expenses required to keep the engine of governance running, such as MDA’s expenditure, subventions, loan servicing obligations, and others.
Sadly, with all that comes from Abuja and the monthly IGR, the government’s inability to find an additional N750million naira to meet these monthly obligations has led to the inevitable decision the government has taken. A decision that leaves the workers with pains. Real pains. Deep pains. Now that the cost of living has soared to high heavens, workers have to contend with a pay cut. ‘Subvented’ institutions have had their monthly subventions reduced by half, though they had been previously agitating for additions. These are hard times indeed. Without a doubt, the situation will create additional liability for the succeeding government.
In finding solution, government should not have a near blanket cut on all segments. Those institutions which clearly can not meet up with payment of their staff salaries should not have been inflicted with more woes. This may demoralize the affected individuals.
But, an inquisitive mind will want to ask why the situation is this bad? Why didn’t government actions and policies anticipate this kind of ugly development? Loans were taken, what are the impacts of those loans today? How about the investment decisions?
As long as IGR in a state is determined by the level of economic activities in that state and the adequacy of the legal and regulatory framework for revenue collection and administration, we will need to inject NEW THINKING into the way we conduct government affairs in Ekiti. Unemployed people do not pay tax! Levies, fees, road tax, or direct assessments are not easy to collect from people who are hungry. So, what do we do?
I believe it is not too late for Ekiti to start looking inwards to exploit its previously abandoned opportunities and resources without losing focus on the emerging ones. Therefore, we must not only aggressively exploit our GOD-given natural and human resources, but we must also embark deliberately on the creation of income-yielding ventures.
We should start baking our own “local cake” and stop struggling for the “national cake” that is rapidly depleting in Abuja.
News source: Odundun Media