That bail-out was a great move
Many of us thought President Buhari would fall for the trap of using Federal funds, the little that he could squeeze out of the various sources available, or order the CBN to print money, so as to bail out these fiscally irresponsible states who filed up billions in unpaid wages, salaries, allowances, gratuities and pensions. […]
Many of us thought President Buhari would fall for the trap of using Federal funds, the little that he could squeeze out of the various sources available, or order the CBN to print money, so as to bail out these fiscally irresponsible states who filed up billions in unpaid wages, salaries, allowances, gratuities and pensions. Some governors had not only squandered all the money that accrued to their states, they also prioritised payments to contractors (and the attendant kick-backs) against recurrent over-heads. Others even borrowed heavily from the commercial banks leaving their successors the task of finding their way out. If Buhari had refused to assist, as he was legally not bound to anyway, the states would have found it almost impossible to take off. However, to attempt that without appropriation would have been illegal, and would have opened him to possible impeachment moves, only weeks after assuming office. Actually, the PDP was waiting for just such a wrong step. Though they cheekily kept on reminding us that government is a continuous enterprise, yet they deliberately emptied the treasury before they left, without giving a hoot about what happens after them.
Throughout his campaign, Buhari kept assuring us that he would check corruption and stop the haemorrhage from public treasury, and ensure that all fees, taxes, dividends and sundry revenues collectable are duly collected and properly utilised. So while some of us thought he was being rather too slow, he, rightly it now appears, kept his focus on establishing just how bad is the situation and what could be done immediately to address the simple issue of empty coffers. He is succeeding spectacularly. He apparently started by questioning whether all that is due to the Federation Account is even remitted in full, in the first place. He started with the oil and gas sector, the main cash-cow.
Suddenly, $ 1.6 billion (income and education taxes) appeared to have been unremitted by the Nigerian Liquefied Natural Gas (NLNG) Limited, along with another $500 paid through NLNG by Shell, all of which should have gone to the Federation Account. The Central Bank itself is making money from the rise of the Dollar against the Naira. So why bother to appropriate more funds. The President rightly treated the first as funds that belong to all the tiers of government to be shared (covered by revenue allocation law) and asked the CBN to offer a temporary window for about N250-N300 billion to the states to get them out of their N700 billion plus liquidity crisis. The Debt Management Office will then assist to restructure the loans and, in one simple move, he found a way to buy them a new lease of life. What a great move is was; impressive, really.
What is not clear however is what measures, if any, are being put in place to enhance fiscal responsibility at the by these states. Clearly, this must be a “one-off” operation, and the impression must not be given that fiscal rascality would continue to go unpunished, and that those governors, who crippled their states and yet paid themselves hundreds of billions in advance, as pensions and retirement benefits, would get to keep their loot.
More intriguing is the issue of the revenue that never gets to the Federation Account. Do all the agencies of government that collect revenue fully and timely remit such funds? Even if the NLNG is the only one currently found guilty, it is still a very frightening matter. The amount recently approved for sharing was only from taxes. But since we are shareholders of that company we are also entitled to dividends. With 49 percent share, Nigeria should have been paid billions of Dollars as dividends. The Managing Director of the company, Babs Omotowa, admitted that the NLNG had paid over US$30 billion as dividends to shareholders over the last 10 years. So what happened to our share of aboutUS$15 billion? Under Jonathan’s and Ngozi’s watch, NLNG is said to have paid the country $4.73 billion as dividends, but only $128 million made it to the Federal Government’s Independent Account with JP Morgan, so what happened to over $4 billion? Recent revelations about NNPC, and even its own belated admissions of illegalities, are also quite revealing. So also are Ngozi Okonjo-Iweala’s inconsistencies and funny tales. Shouldn’t we also be worried about all the other companies that our Government, and even the state governments, have shares in?
The present cash-crunch would not go away anytime soon. Oil prices are likely to remain low. Experts at the International Energy Agency are warning that the rebalancing of the oil market has yet to run its course and a bottom in prices “may still be ahead”. The situation may extend well into the coming year. In addition, if John Kerry manages to strike a deal with Iran over its nuclear programme, despite the Israelis, we are likely going to see that country boosting its petroleum production to its pre-sanctions (2011) level of 3.6 billion barrels per day, up from its current 2.8 billion barrels per day. With global demand sluggish, and OPEC members generally exceeding their quota all the time, oil prices are likely to be pushed even lower. Nigeria is also not keeping up with the required investments in oil and gas due to uncertainties regarding the yet to be passed PIB. So stormy days are still ahead.
Fiscal prudence and accountability, the fight against corruption, and a return to planning are all very critically intertwined, and we must pursue them seriously. Buhari’s recent moves some of on these are commendable. The steps may seem slow but they clearly are the right ones.
…And about time too
As I was writing this, the news of the sacking of the service chiefs came in. Don’t know who the new ones are but they must be better than the sacked politicised bunch that could not differentiate between a nation, a political party, and a president, and thus could serve none of the three effectively. However, I have heard so much about the new NSA, Ret. General Munguno. Great choice really; now the President can focus on other areas as the battle against BH is truly in competent hands. Viva PMB.