Before The Next Bailout

With disbursement from the Federation Account to the three tiers of government having sunk to its lowest level in five years this month, it will not be long before state governments return cap in hand to Abuja and seek another round of bailout funds. The Federation Account Allocation Committee disbursed a miserly N299 billion to […]

With disbursement from the Federation Account to the three tiers of government having sunk to its lowest level in five years this month, it will not be long before state governments return cap in hand to Abuja and seek another round of bailout funds. The Federation Account Allocation Committee disbursed a miserly N299 billion to all tiers of government for the month of March. President Buhari had to waive deductions from the states’ allocations for the month in order not to worsen their plight. Just before state governments begin another agitation for more bailout funds, it turned out that they were far from transparent with the bailout funds they collected last year.
The Independent Corrupt Practices and Other Related Offences Commission [ICPC] released on Friday the report of a study that it conducted jointly with the Nigeria Labour Congress [NLC]. The report said some state governments lied that they owed arrears of workers’ salaries in order to qualify for the funds. Other states, it said, collected the funds but failed to apply them for the stated purpose. The report said 27 states applied for the bailout funds. As at December 2015, 23 had received them from the Central Bank of Nigeria, CBN. These are Adamawa, Bauchi, Bayelsa, Benue, Cross River, Delta, Ekiti, Enugu, Gombe, Imo, Katsina, Kebbi, Kogi, Kwara, Nasarawa, Niger, Ondo, Osun, Ogun, Oyo, Plateau, Sokoto and Zamfara. Of these, two states, namely Niger and Ogun, were found by ICPC/NLC to have completely disbursed their bailout funds of N4.39 billion and N18.8 billion respectively. The remaining 21 states had not disbursed some of the funds. The undisbursed funds ranged from N27 million in Plateau [out of N5.3 billion collected] to N7.2 billion in Adamawa, out of N9.6 billion it collected. Katsina State had not disbursed N8.6 billion out of the N11 billion bailout funds it collected from CBN.
States that disbursed all their bailout funds did not necessarily do so for the approved purpose. For example, out of the N12.5 billion it collected, Benue State made a double payment of N37.7 million to the Deputy Governor’s office account. Imo State’s case is even more perplexing. Of its N26.8billion bailout funds, ICPC discovered that N2billion was lodged into a Government House Account; another N2 billion paid into Imo State Project Account while another N2 billion was lodged in a micro-finance bank. A ‘management fee’ of N21 million was also paid into an unspecified account out of the funds. 
Zamfara State’s case was equally perplexing. ICPC’s report said it applied for N32.5billion bailout funds but that at the time it collected N10billion from CBN, the state did not owe its workers any pay arrears. When it got the money, the governor got the State House of Assembly to approve diverting the money to settle debts owed to contractors. The money was then disbursed as follows: payment to 14 Local Government councils, N4.3 billion; payment of fertilizer for 2014 farming season, N3billion; payment for construction of Bungudu-Nahuche-Kyabarawa road, N265million; payment for hostel block at Abdu Gusau Polytechnic, Talata Mafara, N55million; payment for vehicles purchased, N319million; payment for construction of Kaura Namoda Juma’at Mosque, N20million; and construction work at Emir of Gusau’s Palace, N6million.
Equally puzzling was the fact that Adamawa State government collected N9.6billion in bailout funds but disbursed only N2.4billion, with N7.2billion still lying around in its coffers. The report said ADSG “could not adduce any reason” for this. The apparent reason, gleaned from the fact that Adamawa State did not owe any pay arrears from September last year, and that it applied for and collected funds meant for a purpose when it did not meet the criteria for it. Katsina State too said it had cleared all salary arrears by February this year, yet it had N8.6billion in bailout funds lying in its kitty, out of the N11billion it collected.
The ICPC/NLC report also contained pointers that some states could soon be begging for more bailout funds despite the less than transparent manner in which the previous funds were disbursed. For example, Oyo State collected N26.6billion and disbursed most of it but as at April this year, it still owes its workers four months’ salary arrears. The champion debtor is Osun State, which collected the Lion’s share of N35billion bailout funds. Of this, it disbursed N18.6billion, leaving a balance of N16.3billion to account for. Yet, the report said ICPC is trying to verify the allegation that State of Osun paid workers’ salaries only up to July last year. Don’t forget, this massive bailout fund made Osun State to collect only N50million from the Federation Account last month.
There are many other puzzling details in the report but these will suffice to show that many state governments were less than transparent and had collected bailout funds under false pretences. Since these funds were loans and not a Father Christmas gift, why did some states claim that they needed bailout funds when in reality they did not owe any workers’ salaries? This is a classic case of crying wolf where there was none. Why should the president take them seriously the next time they come crying for help, even if genuinely?
President Buhari made it very clear that the funds were meant to clear workers’ salary arrears, accumulation of which had serious security implications for the country. Those state governments that diverted theirs’ to pay contractors, those that turned theirs into bazaars as well as those that applied and took the funds when they had no need for them should all be sanctioned. Next time they are in trouble, they should be left to their own devices.