It is clear for all to see except the federal and state governments who have often seen the Nigerian federal system as a system designed for inter-elite settlement and fiefdoms of control – that Nigeria’s expensive but broke federal structure is buckling and things are gradually falling apart.
After several bailouts and our estimation that such ad-hoc measures were not going to solve the problem but only postponing the ‘evil day’, the financial situations in the states of the federation are yet to improve. In fact, after several tranche of Paris Club refunds to states, the situation is yet to improve. About 27 of Nigeria’s 36 fractured and unproductive states cannot even pay workers – who constitute less than 1 percent population of their states – not to talk about the rest 99 percent of the population or even fulfilling any of the grandiose promises they made to their people during the elections. The situation in the states and local governments has gotten worse such that governments now pay half-salaries or even quarter salaries. That is even for those who can afford to pay the fraction of workers’ salaries at all. Some have ordered civil servants to come to work only on particular days of the week and use the rest days to farm to supplement their income. Others have outrightly refused to pay on the explanation that their entire federal allocations are unable to pay staff salaries not to talk of running the government and catering for the needs of the rest of the people in the states. Those have explicitly said they will have to either massively reduce the workforce or reduce salaries. Sadly, even the federal government is not immune to the cash-crunch as it also owes salaries and allowances of workers and pensions of retired workers. In fact, it had had to go borrow of late to meet its salary obligations.
However, instead of thinking of a more sustainable solution, the President – and indeed most of the state governors have continued to think in an ad-hoc manner – offering palliatives while waiting for the price of oil to pick up. They have flatly refused to countenance any argument for restructuring of our very expensive but unproductive federal system to bigger and more productive units.
In a way, this is precisely the problem with the Nigerian federation. It was structured and designed – especially after the Civil War – to depend exclusively on revenues from the sale of crude oil for its survival not minding that crude oil prices, like those of most commodities, are volatile and fluctuate regularly. The country is bound to be badly exposed to the shocks and volatility that always comes with trade in commodities. It is a shame and a disservice to the people of the country that its leaders set it up to be officially a ‘rentier’ state that lacks a productive outlook and always preoccupied with ‘allocation’ and ‘distribution’ of rents rather than with wealth creation.
One consequence of the ‘distributive’ character of the Nigerian state is the proliferation of states and agitations for more states by groups in Nigeria since it appears the raison d’être for states creation is for them to be used as instruments of extraction of resources/rents from the Nigerian state by ethnic formations. Any wonder then that states in Nigeria have elaborate governance structures – over bloated executive councils, parliaments, judiciaries and civil services just like the federal government – whereas they, bar Lagos, produce very little or next to nothing and have no way of justifying their existence as semi-autonomous entities within the Nigerian federation? With the current arrangement, the major preoccupation of political authorities in Nigeria will continue to be ‘allocation’ and ‘distribution’ of rents rather than with ‘wealth creation’.
Like we have argued before, the issue of bankruptcies of state governments go beyond just transparency and judicious use of resources. It has everything to do with the dysfunctional and unproductive nature of our federal system, which ensures that despites states having constitutionally guaranteed avenues of raising revenues, virtually all of them, except one, still hopelessly depend on allocations from oil receipts to function.
A concrete solution will necessarily involve a radical restructuring of the Nigerian federation which will lead to a collapsing of the current state structure into more manageable, productive and economically viable units that will be governments not only in name, but also in functions and capacities. Of course, this can only be achieved by way of a constitutional amendment. Until this is done, the country will sadly, continue to exist only to share rents and our fortunes will continue to raise and fall with the prices of crude oil in the international market. But as the states and local governments continue to fail in the most basic duties, they are gradually setting the condition for a revolt by the masses. The government can seize the initiative and restructure the federation now rather than wait until it is forced on it by circumstances.