*Lagos state government refuses to seek bailout
Kunle Aderinokun
Six months after the Federal Government bailed out 19 of the 27 states that were enmeshed in financial crisis, states are seeking another bailout. They have been hit by another cash crunch as a result of the prevailing economic realities, THISDAY has learnt.

THISDAY checks revealed that most of the states that benefitted from the N400 billion intervention fund, in the form of loans offered by the Federal Government through the Central Bank of Nigeria (CBN), have approached the presidency and the CBN for another bailout.

However, investigation reveals that the Lagos State government has refused to join the states seeking bailout. This is an obvious indication of the buoyant finances of the state, which generates about N23 billion monthly.


Apart from the CBN intervention, there were other reliefs endorsed by President Muhammadu Buhari and shared to the states, which included the $2.1 billion Liquefied Natural Gas (LNG) proceeds that accrued to the Federation Account.


Following the CBN intervention fund the distressed states received in July 2015, which attracted repayment with interest, deductions are being made in earnest. However, given the dwindled revenue accruing to states from the federation account occasioned by the crash in the prices of crude oil at the international market coupled with the fact most of them are already neck deep in debt to commercial banks, what remains, after all deductions, amount to almost nothing. States are now seeking more concessions.

Apart from the ripple effect of the plummeting oil prices, which only last Thursday fell to a 12-year low and made a rebound by 12 per cent after suggestions of renewed talks on OPEC cut at the weekend, what compounded their problem is that most of the states are also fulfilling their obligations to the Irrevocable Standing Payment Order (ISPO) they have taken.

Osun State, which is said to be the worst hit of all the states, THISDAY learnt, is left monthly with a paltry N40 million after deductions have been made. This amount could hardly be used to run the basic day-to-day operation of state government let alone pay the workers’ salaries. The other states, THISDAY checks, are also in sorry state as they could not meet obligations.
They are now groaning in pains and are at a loss of to do in order to get out of the quagmire.


The Federal Government, in accordance to the decision of National Economic Council (NEC) in July last year offered of 19 out of the 27 states affected by cash crunch a relief package to pay backlog of their workers’ salaries.
The states included Ekiti, Nassarawa, Kwara, Kebbi, Zamfara, Osun, Niger, Bauchi, Gombe, Abia, Adamawa, Ondo. Others that enjoyed the facility were Imo, Ebonyi, Ogun, Plateau, , Sokoto, Edo and Oyo


Following the approval of the intervention fund, the CBN spokesman, Ibrahim Mu’azu, had clarified that the facility was made available with 20-year tenure except Ogun which had its own on a 10-year tenure.

Essentially, President Buhari endorsed a three-pronged relief for the distressed states. One of it was the intervention from the CBN in form of soft loans to the states for the purposes of paying backlog of salaries and the second one being the NLNG proceeds
The third part of the bailout is a debt relief programme to be proposed by the Debt Management Office (DMO) which will help states restructure their commercial loans currently put at over N660 billion and extend the life span of such loans while reducing their debt-servicing expenditures.”

Already, workers have down tools in some states over unpaid salaries while several other states are currently contending with brewing labour crisis as the states are consistently unable to meet their obligations to their workforce. Projects initiated by states prior to the dip in revenue allocation have stagnated while governors are unable to fulfil their campaign promises.

However, analysts at Dunn Loren Merrifield, an investment banking outfit, has advised states to stop depending on allocations from the federation and look inward by having in place a strong internally generated revenue (IGR) mechanism. By so doing, the analysts pointed out, their finances won’t be subjected to the vagaries of crude oil prices and they will effectively meet expenditure and cater for the needs of people of their states.

“Most states in Nigeria are largely funded by allocations from the federation account as internally generated revenues (IGR) remain weak to meet expenditure needs. The impact of the global headwinds on Federal Government revenues began trickling down to the states evidenced by the inability to meet salary and pension obligations.

“From the foregoing, the urgent need for state governments to look inwards through an improvement in internally generated revenue can’t be overemphasised,” they said.

The DLM analysts believed, this could be achieved “through improved fiscal prudence, eliminations of revenue leakages and a reduction in the cost of governance.”

They posited that “the silver lining with this prevailing economic weakness presents an opportunity for states to seek other revenue generating options to improve their respective IGRs which in our opinion had not considered a priority due to Nigeria’s current revenue distribution mechanism.”

Recalling that, “an initiative was formulated by the National Planning Commission and the National Bureau of Statistics in 2013 which was aimed at producing a report which shows States’ Gross Domestic Product (SGDP) in a bid to encourage states to further improve on revenue generating mechanisms and aid healthy competition”, they said: “We are optimistic that this initiative if successfully implemented will increase the drive for states to boost income generating capacity which would further impact on overall national output. The country therefore needs to develop a structure that incentivises and supports states to generate revenues.”

baralatie:

Knowledge9000:
Remove Non yorubas and Multi-Nationals from Lagos, it would be like any other yoruba states.

4Play:
This is kicking the can down the road and was inevitable. States cannot survive with their over-bloated public sector wages.

The more than tripling of public sector wages by GEJ and Yar'Adua was unsustainable and this was effectively imposed on states with minimum wage going from 5000 Naira to 18,000 Naira. This is fine if oil prices remained at record highs but that was unlikely.

Added to that, many states borrowed with reckless abandon. This is why a state like Anambra is coping but Osun is reeling financially. Bail them out today without addressing the underlying problems - unsustainable public sector wages and debt - and you are merely papering over the cracks.

petersje8:
Thank God for Lagos. If not, SW and Mogadishu go dey compete. Have u wondered why the most patriot and "one Nigeria" singers are the yorubas? They are fighting with their last blood to blast anything concerning Biafra and Nnamdi Kanu. Imagine with the much noise about Lagos loosing investments to Ogun, still yet, nothing to show for it. Am an advocate of one Nigeria but I always wonder why the yorubas carry the matter for head. Also I thought that there Coacoa and Gold deposits in Osun? Nonsense.

CCsurplus007:
so these governors cannot come up with some ingenious ways to make money from their states? like a baby they keep waiting for the fg to breastfeed them montly smh . 21st century leaders with paleozoic mentality

Knowledge9000:
Remove Non yorubas and Multi-Nationals from Lagos, it would be like any other yoruba states.

PedroJP:

Dem go soon dey trans come East come beg.

Mckennedy:
Sophisticated only on pages of News papers covered by brown envelope journalists, that's why they're willing to die countering anything Biafra in other to keep covering their failures & shame.

Adesiji77:

http://www.thisdaylive.com/articles/again-states-seek-another-bailout-osun-worst-hit/231895/ lalasticlala, dominique, Mynd44

MCMLXXVI:
Enugu and Anambra are not in the list.
Hmmm...

Interestingly, all the "sophisticated" states are well represented there except, of course, Lagos.

MCMLXXVI:
Enugu and Anambra are not in the list.
Hmmm...

Interestingly, all the "sophisticated" states are well represented there except, of course, Lagos.

petersje8:


U can imagine a whole state collecting paltry N40m monthly. I can even give them that one. Too bad.

OkutaNla:


Remove Peter Obi's prudence and Anambra will be in the same boat as the rest of the SE. Remember even Obiano has started borrowing to complete projects -- e don spend all of Obi savings finish Your SE with the exception of Anambra isn't any better than the Yorubas states you are running down. Even Osun is far better than Imo and Abia which are oil producing and a market states. Abi dem no be Igbo/SE states again? What did Rochas do with all the Oil money? Osun never fire workers like Rochas did o.

MCMLXXVI:


Bros, abeg no vex, but no repeat that bolded part again o.
As bad as things may be, both states can NEVER be as bad as Osun state at the moment.
You want us to count the ways?

Do you mean Osun state that is SO indebted, that the creditors now deduct from the state's monthly allocation, to the point that only 55 MILLION ends up getting to the state? the raw, cold and bitter facts are there with the National Bureau of Statistics if you want them. We're talking real facts here, not conjecture.

Even as indebted as Imo state is, they don't have churches and Senators ALL THE WAY FROM BAYELSA donating money to buy them food like refugees. But we all know Osun's story, don't we?

Agreed, the three states experienced profligacy at the hands of their governors whp betrayed them. That's a fairly good point from you.
But abeg, don't attempt stretching it to say Imo and Abia are anywhere close to Osun in spine-chilling "sufferheadism", because na there you go chop L.