At the 22nd teleconference meeting of the Nigerian Governors Forum, the 36 states governor took a decision to borrow N2 trillion out of the total N11.34 trillion cumulative balance in the account of the National Pension Fund (NPF). This represents a whopping 17.6 per cent of what workers in public and private sectors of the Nigerian economy have saved for more than a decade to sustain themselves after retirement. The stated purpose for this and N15 trillion additional borrowing from other sources is for “infrastructural development” in states.
There isn’t any doubt that all the states in Nigeria have huge infrastructure deficits. Very few roads are passable everywhere in Nigeria, except in Abuja metropolis. Pipe-borne water reaches less than 5 per cent of the people in the best of the 36 states. Health facilities are as few as they are poor. The vast majority of Nigerians are outside of the national electricity grid, with those served living more in darkness than in the light of the staccato of power supply. Given this huge infrastructure gap, any talk of looking for funds to bridge it is more like saying the obvious.
But the reality of poor and decayed infrastructure in the states is mostly due to the corruption and incompetence of political authorities administering the states than lack of funds. Not only do the governors, down the line to the least political office holders and the bureaucrats steal the money, but they have also proven grossly incompetent in managing and maintaining infrastructural projects inherited or even executed by themselves. Governor Seyi Makinde of Oyo state on September 5, 2019, via his verified Twitter handle, in an obvious reference to the administration that preceded his, stated as follows: “What we met on ground is a situation where a project for which money is allocated, gets only about 10% of the total funds for execution. Because as we were told, 50 per cent goes back to the Governor, 30 per cent to the appointee who allocated the project out of which 10% goes to the Governor’s wife.”
The grave allegation above by a sitting governor merely echoed what everyone knows about the pillage that is going on in Nigeria. Where government projects get value at all, they rarely get more than 10 per cent of real market value. This general practice in present-day Nigeria is an inversion of First Republic corruption of pocketing 10 per cent of the project cost while 90 per cent went on the actual project, according to the allegations levied against politicians of that era by the military putschists. Now it is 90 per cent in the politicians’ pockets, 10 per cent on the project. This is the reality against which we must see the plan by governors to borrow from the Pension Fund and other sources. This issue of corruption is perhaps the most compelling reason why the filthy fingers of the governors must not be allowed in the workers’ pension savings.
Second, the competence level among state governors is so low that none of them has demonstrated even a modest capacity to invest in infrastructural projects that can pay for themselves, self-sustain and pay long term dividends to their states. Just to increase their internally generated revenues in any substantial manner has proven to be rocket science to these state CEOs who are satiated with the handouts from Abuja.
Third, the Pension Act of 2004 and the Pension Reformation Act of 2014 prohibit borrowing from the pension funds. Besides the illegality of it, it is absolutely immoral for the governors who fail to remit pension deductions of their workers to seek to borrow from the funds contributed by others, mostly by the private sector and federal government workers. In some states, the pension deficit is as much as 12 years backlog.
Fourth, not less than 30 out of the 36 states have found it burdensome to pay back the loan given by the federal government between 2016 and 2018 to support them in paying backlog of workers salaries in their different states. This is so even after the facility was rescheduled for repayment for over a period of 30 years. Several representations have been made to the federal government by the governors requesting suspension of the monthly loan deductions. Those who can’t repay a combined facility of less than N700billion are the very ones requesting for a loan of N17 trillion!
Fifth, and related to the fourth above, is the question of what happens to the pension benefits of workers if the states become bankrupt and unable to pay back the loan. Except for three or four states, about 80 per cent of states’ revenue comes from statutory monthly allocations from Abuja, much of which comes from oil revenue. We all know what is happening to oil internationally and how it has become less reliable as a guaranteed income. Even in jurisdictions like the United States where sub-national governments get most of their revenues from taxes, public entities have been known to go bust. According to one report, “In 2016, more than 60 cities in the US did not have enough money to pay all of their bills, racking up a grand total of $335.4 billion in unfunded municipal debt …” (See link: https://www.lovemoney.com/galleries/91578/us-cities-that-went-bankrupt). If gold rusts, what will happen to iron, as the saying goes? It gives little comfort to say that the loan will be secured by the federal government of even the Central Bank of Nigeria. Signing Irrevocable Standing Payment Order with the Federal Ministry of Finance by which loan liabilities are deducted at source from federal allocations answers none of the queries raised herein.
It is our belief that much can be done by way of bridging the infrastructure deficits in states if the governors and other political authorities would drastically lessen corruption, improve transparency in the financial processes of their states, be more creative in the drive for IGR, and look more in the direction of projects that are both socially beneficial and economically viable. There’s a lot of potentials in the creative use of Public-Private Partnership. Borrowing and increasing the debt burden is the line of least resistance. In the instance to borrow from the hard savings of poor workers in Nigeria, the plan should not be supported by the federal government and the workers who own the money should vehemently resist the illegal and immoral move.
* Laoshe, is former Member and Deputy Whip (AD) of the House of Representatives, National Assembly; while Kawonise, former Commissioner for Information, Ogun State, is publisher/Editor-in-Chief, NewsScroll Newspaper.
Comments are closed.