Unpaid salaries: What governors should do?

Despite the bailout fund from the federal government, many states in Nigeria still struggle to pay their workers’ salaries; some do not even pay. The dwindling federal allocation; poor innovation on internally generated revenue (IGR); bloated workforce and fraud-riddled workers’ payroll are the main reasons behind the inability of many states to promptly settle their […]

Despite the bailout fund from the federal government, many states in Nigeria still struggle to pay their workers’ salaries; some do not even pay. The dwindling federal allocation; poor innovation on internally generated revenue (IGR); bloated workforce and fraud-riddled workers’ payroll are the main reasons behind the inability of many states to promptly settle their workers’ salaries.
This is a critical situation that requires critical measures. Governors have to look at ways to generate revenue other than over-depending on the declining federal allocation. We must admit that many states do not have flourishing economic activities that are profitable and easy to tax without upsetting common people.
One trend in most states is, once IGR is mentioned, most states cast their mind to their old method of taxation – but our tax system in Nigeria has history of corruption and inefficiency, thus most Nigerians are sceptical of their states’ taxes and levies administration.  States can generate new revenues and wealth through levies and taxations, but states need to move away from the ‘rocket-science’ approach to tax collection.
States should introduce a modified system of awarding ‘tax collection rights’ to investment firms. This should be modeled according to each state’s economy, culture, needs and environment – a state can enter into agreement with a firm to give government monies in advance for taxes from a certain sector, while the firm will collect the money by operating as a tax agent- the famous tax auction. For example, if it is projected that revenues from taxis, buses and lorry services in a certain local council can generate one million naira a month. An innovative investment firm will agree to give a state government, let say 800,000 naira in advance. Then the firm will collect taxes for taxis, buses and lorry services in the local council for that particular month. This type of arrangement can be implemented in many sectors of the economy of a state using what operations researchers call reductionist approach – monthly, quarterly on yearly basis. A good investment firm will make the tax collection efficient and fair – by reaching agreement with tax payers on how to pay and enjoy incentives too.
Apart from innovation in taxes, states and even the federal government can look into leveraging from the assets they have. In many states, there are thousands of unserviceable vehicles, farm implements and many types of electrical equipment.
Governments can make money by auctioning such items. Furthermore, many states have abandoned building – completed and uncompleted, fenced and unfenced plots of land. These assets are commercially viable. They can be leased or sold. Funds can be generated from the arrangement. In addition, the Nigerian Governors Forum (NGF) should discuss with regulatory agencies, CBN, quoted companies and pension fund administrators on how government can utilize unclaimed dividends, pension fund and CBN’s many intervention funds.
Zayyad I. Muhammad, Jimeta, Adamawa State