ABUJA, MAY 3, 2017 – The Federal Government has in the last two years supported states financially to the tune of N1.75 trillion. The funds were, however, “extra-statutory,” as they were not captured in the budget.
The revelation contained in a recent survey by a fiscal research agency, BudgIT, comes in the wake of the approval being sought by the government for its $30 billion three-year debt plan, which also includes states’ deals in addition to other obligations and service charges.
There is the fear that the non-functional budget systems at the states coupled with misappropriation, non-implementation of development plans as well as persistent debt deals may thwart the nation’s ambitious global economic blueprint, Vision 20:2020. It is even being held that these anomalies would increase poverty in all the sub-national territories before the time.
The roadmap actually seeks to make the country one of the top 20 leading economies of the world by that timeline besides the other desirables like the overall well-being of the citizens through reduction in hunger and poverty.
It also aims to upscale healthcare, housing and human capital. Not also left out are gender imbalance, low productivity and poor basic amenities.
The poverty transmission line, which would trickle down to the already impoverished citizens, is gathering momentum, just as the states recently got a nod for a fresh disbursement of $4.5 billion loan from China to fund agriculture.
Meanwhile, the nation’s external and domestic debts may soon hit a N20 trillion mark. It sat atop a N17 trillion liability at December 2016, according to the latest data released by the National Bureau of Statistics (NBS) yesterday.
This is just as the nation has brokered several deals to finance its N2.2 trillion budget deficit in the face of dwindling revenue owing to the fallen crude oil price. A request of $5.6 billion is currently awaiting legislative approval.
The N17 trillion quoted by the bureau is the equivalent of a cumulative national fiscal appropriation for 2017 at N7.2 trillion; 2016 at N6.6 trillion; and 2015 at N4.6 trillion, plus the supplementary budget.
But there is, however, no corresponding increase in the wellbeing of Nigerians or concrete development projects to show for the huge sums received in the two years of this administration.
A dispassionate review of the monthly allocations from the Federal Accounts Allocation Committee (FAAC) shows an average deduction of more than N700 million covering external debts, contractual obligations, among others.
The co-founder of BudgIT, Oluseun Onigbinde, who expressed concerns that very little was known about how the funds were spent, alleged lack of will to encourage the states to embrace transparency. This, he noted, is being buoyed by the inability of the Federal Government to enforce conditions that mandate them to articulate their policies and submit to global performance indicators.
The development, he further observed, makes the governors merely sit back and routinely await the discovery or refund of money into the treasury, and immediately seek their share to waste on frivolities to the detriment of the masses.
His words: “To discontinue this tradition and ensure funds are used efficiently, the allocation, utilisation and spending of public funds should be transparent, coordinated and discreet. BudgIT calls for a holistic and comprehensive audit of the funds disbursed so far.”
A close government source, who pleaded anonymity, admitted that most states have no viable projects, yet burdened by debt and salary crises. According to him, a state from the North East; South East; four from the South West; two in North Central and another three in South-South each had more than N1 billion deductions in March, with some hitting N2 billion due to huge debt overhang.
It is even more worrisome against the background that many of the states lack the capacity to regenerate economically to service their debts. And so the states are locked in the viciousness of digging a hole to fill another which is largely why many of them are still not up to speed in payments of workers’ salaries in spite of the ceaseless bailouts they enjoy from the central government.
An Abuja-based development consultant, Jide Ojo, told The Guardian that notwithstanding the series of rules associated with the bailouts, reports have shown that some states diverted or misapplied the funds.
To salvage the situation, Ojo noted: “Genuine fiscal federalism is needful and should be part of the ongoing constitutional amendment exercise. It is heart-warming that the Federal Ministry of Finance, in January 2017, contracted eight reputable audit firms to monitor and evaluate the implementation of the Fiscal Sustainability Plan (FSP).”
Contacted, the financial ministry could not confirm the N1.75 trillion figure but reiterated its commitment to the monitoring of disbursed funds.
According to the Director of Information, Salisu Na’inna Dambatta,”it is a standard practice in the ministry to undertake independent monitoring of compliance with the terms and conditions of funds released.”
But on the debt refund, he noted that any further releases would partly depend on the level of compliance with the conditions attached to previous disbursements.
He confirmed the commencement of an independent review of states’ financial management by appointing eight reputable accounting firms – including KPMG, EY and PWC – to monitor and evaluate the implementation of the 22-point FSP agenda. This specifies the conditions under which the 35 state governments started accessing the N510 billion Budget Support Facility (BSF) in June 2016.
A lawyer and fiscal governance expert, Eze Onyekpere, submitted that since the funds were allegedly not captured in the budget, the beneficiaries do not take them seriously.
“There are so many sources of income and even provisions by the government that are not clear. These funds can be used at any time to do whatever pleases it. There is no standard measurement for the recipients, because the funds, ab initio, are like windfall,” he added.
According to another report by the same agency in 2015, a salary loan of about N338 billion was disbursed to states with a 20-year tenor, at nine per cent for the purpose of meeting outstanding salary obligations, yet almost all the states still owe more than six months till date
This was swiftly followed by the N575 billion restructuring programme bond, a debt package negotiated by the Federal Government through the Debt Management Office (DMO), by converting high-interest bank debt into 20-year tenor with 14.83 per cent interest rates. Except for Ogun State, 23 others were immediate beneficiaries, but the actual sum disbursed was not made public.
Similarly, in July 2015, government remitted approximately N92.2 billion to states from dividends worth $2.1 billion paid by the Nigerian LNG Limited (NLNG).
Barely a year later, N7.85 billion was also approved to assist states with revenue shortfalls in January 2016, from the dividend remitted by NLNG.
In July 2016, it also endorsed the allocation of N3.6 billion from solid minerals savings to states, as part of the routine monthly disbursements.
Furthermore, about N117.3 billion was disbursed to states from excess revenue generated from Petroleum Profit Tax. But experts argued that the amount should have been part of the Excess Crude Account, but it was speedily distributed between the federal and state governments.
The most recent disbursement was the N522.74 billion refund to states for surplus deductions of external debt servicing fees between 1995 and 2002, another gesture whose application has been shrouded in secrecy.