BY TIMOTHY AGBOR, OSOGBO
A leading economist, Tunji Ogunyemi, has disclosed that most states in Nigeria may soon go bankrupt should they continue to depend on the monthly stipends from the Federation Account Allocation Committee.
Analysing the financial situations of the 36 states of the federation in Osogbo, Osun State, recently, Ogunyemi said that most state governors failed to demonstrate their commitment to development by boosting the Internally Generated Revenue of their states.
This, he said, portends economic doom for such states.
According to him, only four states: Lagos, Kaduna, Ogun and Rivers, can escape the looming financial distress if the federal government fails to share the allocations.
The four states, he noted, had been managing their revenue streams effectively, by blocking leakages and improving on their IGR.
He urged the weaker states to be proactive and realistic in the management of their resources as being done by the four states, stressing that “states need to find a reasonable balance between the recurrent and capital expenditures.”
The analyst canvassed the need for the country to be restructured in order for states to fully manage their resources, saying that “until this country is restructured, there won’t be economic justice. No state in Nigeria, except the four earlier mentioned, can ever free themselves from poverty.”
He added that distractions from the opposition political parties, as well as political instability, contribute greatly to the poor financial conditions of states.
“Cumulatively, the 36 states saw a 3 per cent decline in the Internally Generated Revenue from N1.26 trillion in 2019 to N1.21 trillion in 2020.
Perhaps, COVID-19 played a role there. But within that same period, Ebonyi State grew its IGR by 82.3 per cent from N7.5billion in 2019 to N13.6billion in 2020. Kebbi State also had a very good improvement in IGR from N7.4billion in 2019 to N13.8billion in 2020.
“These states were able to achieve these because they were able to device a means to block leakages. It is not that revenues are not being collected in other states, but there are too many sources of leakages or wastages. It is not that Ebonyi became so productive industrially or in terms of manufacturing. Ebonyi’s strength is essentially commerce, not like Anambra that her strength is in manufacturing. No state in Nigeria, apart from Lagos, manufactures more than Anambra State.
“Nothing distracts a governor than an opposition trying to tear it apart. The political stability in Ebonyi is due to the fact that the state has been in the trajectory of almost one political party since 1999. You cannot remove political stability from the capacity of a state to develop its economy. In fact, politics is economy in other language. A political party thinks of its capacity to benefit its constituents economically such that it will be so strong as to be able to sustain and retain power,” he said.
Reacting to the financial condition of Osun State, Ogunyemi said, “The financial history of Osun in the last 15 years has changed significantly.
The state was generating about N300, 000 million internally. Even during Aregbesola’s time, the first two years, Osun’s income was just about N500, 000 million. But today, it has grown to about N19 billion. There is no amount of politicking that can prevent someone from saluting the Osun Inland Revenue Service for the good efforts.
“It’s just sad that Osun spends about N7billion out of every N10billion it makes and only about N3billion on creating wealth. No country grows like that. No state can ever grow like that. A state needs to find a reasonable balance between recurrent expenditure on its resources and capital expenditure which grows the economy and conserves resources. That should be the economic vision of any governor wanting to rule Osun for the next 30 years. Otherwise, a time will come when there will be bankruptcy across. No amount of loan can bridge the gap between revenue available and the needs for expenditure.
“So, it’s high time that Osun began to plan on fiscal prudence and cutting significantly on overhead cost and seeing a way of balancing expenditure, both recurrent and capital,” he said.
