Subsequent Bailouts: Need for better design

A look at the three bailouts designed by the federal government (or any of her organs) for states-in-need reveals that those whose responsibility it is to fashion the bailouts are either not aware of the kind of Nigeria, President Muhammadu Buhari is expected to create for us or they are living in their past realities. […]

A look at the three bailouts designed by the federal government (or any of her organs) for states-in-need reveals that those whose responsibility it is to fashion the bailouts are either not aware of the kind of Nigeria, President Muhammadu Buhari is expected to create for us or they are living in their past realities. This is because the architecture of all the three bailouts looks similar to that of designing a Pandora’s Box; very beautiful on the surface but empty in content, promise and future realizations. More explicitly, the bailouts lacked strengths-in-design that will ensure the development of bailed states so that bailout collection is not recurrent in time. Take for instance, the architecture of the ninety (90) billion Naira bailout in terms of strength and ability to carrying out salary obligations it is presumed to solve. What is evident is an imperial design that continuously will weaken the states and in the long term makes them bailout-dependent. The consequence of a bailout equipped with such designs is the spread of poverty in and across states and by extension; across the country.
We wish to clearly specify the weaknesses in the design of the three bailouts and how such poorly designed bailouts will impact negatively on the drive to solve poverty problems in the country. The underlying motive is that when the next bailout comes (evidently, in a matter of months), it should have a functional design that can achieve multiple objectives for the benefit of the people and the country at large.
Initially, the designed ninety (90) billion Naira chunk for salary-payment-failed-states is grossly inadequate. It lacks the required magnitude to bailout about 27 states that do not pay salaries to date. A simple analysis proves this point. If a state with a monthly salary weight of one billion and a salary unpaid bill of seven months collects a fifteen (15) billion bailout from this chunk, trivially, it implies that the same state will be back for another bailout in a returning time not exceeding ten (10) months. The analysis of the returning time above takes account of the aggregate federal revenue accrued when the residue of the bailout pays upcoming salaries. Now, within this false bailout region, the size of the bailout can only accommodate less than ten salary-payment-failed-states. The consequence of this inadequacy is the creation of a homage paying, lip servicing, crony elites and a lobby group that will determine who gets the bailout and who does not in accordance with another set of  hidden conditions distinct from the norm at the detriment of the people and the president’s quest to eradicate poverty in the country.
Secondly, the nine (9) percent interest rate accompanying the current bailout is the worst element embedded in the bailout. For, it depicts clearly that the architects are still living in their past realities of serving a corporate financial institution whose aim is to seek profit at the expense of impoverished customers fighting hard to make both ends meet. The architects of the bailouts should prove to the country the role of the nine (9) percent interest rate attached to the recent bailout and how the rate will strengthen the bailed states and the people. Most importantly, how the rate will aid support to eradicate poverty in line with the government’s change agenda.
Thirdly, the architects could not take into account the damaging effect such bailouts for states will have on the existence and autonomy of local governments in the country. This tier of government is the most affected in the structure of our democracy. For, her share of revenues is continuously wasted, misused and stolen by state governors via dubious joint allocation procedures that end up putting the tier at the mercy of another tier of government. If one studies the salary problem in Nigerian states, it is trivial to see that those who states could not pay salaries are staff of local governments in most cases. Unfortunately, here is a bailout designed to further still support such evil channels that deny local government staff their wages and now threatening her autonomy because of the medium it is delivered. The underlying consequence such poorly designed bailouts could have on the structure of the local government is the legalization by action and the complete handing-over of the economic faith of the tier to reckless state governors who collect funds on their behalf, pay some bits of it and misuse the rest leaving the tier and her workers in abject poverty.
There is the urgent need to re-design upcoming bailouts for maximum utilizations and benefits. For instance, it will be interesting to see the next bailouts open to local governments in the country independent of states. This is going by the fact that most salary-payment-problem-states are only and essentially taking cover in the salary problems of local governments so that they continue their cycle of recklessness and political domination.
Moreover, if we do not have a ‘‘federal ministry for states’’ that coordinates the affairs of states’ income and expenditures, then there is also no logical reason apart from reasons to do with corruption to have and support the existence of state ministries for local governments by policy such as the bailout policy. This way the dominating effect of corrupt state officials feeding fat on local government funds will be exposed and nullified. Besides, the local government is less complex in structure, thus it is easier to condition, supervise, manage and control the real bailout process that takes development to the grass root from that end.  In this sense, the next bailout must be re-strategized to ensure less dependence on future bailouts. This could be achieved by evaluating quick and short term successes and bailout-free adopted strategies for future considerations.
Dr. Sulaiman Sani is of the Dept. of Mathematics & Computer Science, Umaru Musa Yar’Adua University Katsina, 09037834473; [email protected]