Southwest Governors Seek Better Allocation From Federation Account.


To set up full fledged secretariat

Governors of all the states that fall within the defunct Western Region on Thursday afternoon, demanded better revenue for the area for development purposes.

The governors also called for better revenue allocation saying the states are closer to the people for development.

The governors at the meeting held in Abeokuta, Ogun State were Ibikunle Amosun, Ogun, Rauf Aregbesola, Osun, Abiola Ajimobi, Oyo, Kayode Fayemin Ekiti, Babatunde Fashola Lagos, Ali Olanusi representing Ondo State Governor and Pius Odubu representing the Edo State governor.

The communique issued at the end of the meeting reads:

COMMUNIQUE ISSUED AT THE END OF THE MEETING OF GOVERNORS OF STATES IN THE OLD WESTERN REGION HELD AT THE GOVERNMENT HOUSE, OKE-IGBEIN, ABEOKUTA

Preamble

The Governors of the States in the Old Western Region met on February 2nd, 2012 at the Government House, Oke Igbein, Abeokuta. The meeting, which deliberated on national issues and those of common interest to the Governments and people of their respective states, was a follow up to a similar meeting held in July, 2011 in Ekiti State. Some of the issues deliberated on are health, education, agriculture and food security, rural development, transportation and social housing.

In attendance were:

1. Senator Ibikunle Amosun FCA, Governor of Ogun

2. Mr. Babatunde Raji Fashola (SAN),Governor of Lagos

3. Dr. Kayode Fayemi,Governor of Ekiti

4. Ogbeni Rauf Aregbesola, Governor of Osun

5. Senator Abiola Ajimobi,Governor of Oyo

6. Alhaji Alli Olanusi, Deputy Governor of Ondo

7. Barrister Pius Odubu, Deputy Governor of Edo

RESOLUTIONS:

The meeting resolved as follows:

1. SECRETARIAT

i. That a full-fledged secretariat be established for effective coordination of the goal to fully integrate the states in the Old Western Region

ii. That the meeting of the Governors should hold more frequently. In fact a bi-monthly schedule was agreed on

iii. The proposed secretariat would, when established, immediately develop a Blueprint and Work Plan or integration of the region and build on the work of the Technical Committee for integration

2. DEVOLUTION OF POWER

i. The Federal Government is holding to too many responsibilities and power that are supposed to be within the purview of the federating states. The Governors considered it expedient to review the existing arrangement and devolve more power to the states.

3. RESOURCE ALLOCATION

i. The Governors further deplored the imbalance in resource allocation to states that make up the old Western Region given their contributions to the National Gross Domestic Product (GDP). The Governors reaffirmed their determination to ensure that justice is done on the revenue allocation framework in the country.

sheyguy:

Nice move.
Point No.2 is most important and addresses the most disturbing issue with our power structure, the fed should give back some responsibility to the states and the states should be ready to co-operate where the need may arise.

Beaf:

Can we just change the title to; "Lazy governors seek bigger, fatter AWUF?"
Dis Nigeria no go wound pesin o!

alj harem:

There is no way the governors of other regions would keep feed others while the ones with the least population gets the highest allocation

Let everyone go back to their region.

Nigeria: As States Face 'Cash' Crunch
13 November 2011

Malachy Agbo examines the import of the warning raised in the upper chamber of the National Assembly recently suggesting that some states might shut down because of dwindling financial resources

"The bulk of the revenue of these states is currently financing the pay roll of their civil service which constitutes less than four per cent of the total population in all states. If this trend continues, many of the states would become financially insolvent and increasingly handicapped to finance the real sector and drive economic growth, create jobs and improve the livelihoods of their people," was the damning prophesy contained in a motion moved recently by Senator Olubunmi Adetunmbi (ACN, Ekiti North) in the Senate recently.

Since this motion was moved, many reactions have trailed what the senator termed, 'Looming Danger of Bankruptcy in States: The Need for Fiscal Evaluation'. Adetunmbi drew the attention of his colleagues to what he called "the great fiscal challenge and looming danger of insolvency as well as bankruptcy facing the states as a result of the growing wage bill associated with the implementation of the minimum wage and other recurrent responsibilities."

In his reaction, the governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi stated that it was high time that the nation salvaged existing political structures in the country which compels states to spend 96 percent of their resources on salaries and allowances. "We have created states and local governments and ministries as structures that are economically unviable and the result is that we do not have funding for infrastructure. We do not have funding for education. We do not have funding for health," he said.

On his part, the governor of Rivers State and chairman of the Nigeria Governors' Forum, Chibuike Rotimi Amaechi affirmed that states are not bankrupt but that they do not have money to execute projects. "We are not bankrupt, but we don't have money. We need the revenue formula to change to favour the states, so that we can do more. Even the president comes from Bayelsa and he needs Bayelsa to develop, so that when he retires as president he can come to a conducive environment," he said.

Revenue Sharing Formula

The clamour for a review of the revenue sharing formula has gained momentum since President Goodluck Jonathan signed the amended Minimum Wage Bill into law. The Revenue Mobilisation and Allocation Commission, statutorily mandated to determine who gets what, last reviewed the revenue allocation formula in 2002. Under the current revenue allocation formula, the federal government gets 52 percent while states get 26.72 percent and 774 local government areas get 20.60 percent.

The Governors Forum had resolved that the implementation of the minimum wage would depend on more money being made available to other tiers of government - states and local governments - through a review of the revenue allocation formula. The review, according to the governors, would enable them solve other problems in their states.

To drive home their demand, a committee headed by governor of Lagos State, Babatunde Fashola was set up by the forum. According to its report, the committee had recommended a sizeable reduction in the federal government's allocation. It was reported that the committee recommended 35 percent for the federal government, 42 percent for states and 23 percent for local government areas.

But the managing director, Financial Derivatives Company Limited, Mr. Bismark Rewane, who spoke with THISDAY, stated that it is not enough to review the current revenue formula in favour of states and local governments but that state governors should strive to make their states viable and get their priorities right.

"Increasing the revenue allocation to states and local government is not the solution. The states should cut down on their recurrent expenditure and increase their earnings through other means. The fact that you have more money to share does not make your state viable. It does not make them to be self-reliant," he said.

Similarly, the chairman, Nigerian Economic Summit Group, Mazi Sam Ohuabunwa told THISDAY that no matter the allocation ceded to states, the issue of insolvency will resurface someday. "I do not understand this issue of states becoming insolvent because they all have budgets. There should be prudency in managing the economic affairs of the state. They should promote enterprise, generate more internally generated revenue. They need to be more realistic and not chase allocations. The clamour for a review is not the way out," he said.

He further stated that states should be competitive. "There is no competition among states on infrastructure development. In a state where the roads are in good shape and there is security, investors will come and that will translate to more money for the state through taxes and royalties," he said.

In the same vein, the president/CEO, ValueFronteira Limited, Dr. Martin Oluba stated that it is perhaps only two Nigerian states can actually survive for three months without their share of the allocation from the federation account.

"Consequently any perception of or actual exogenous impacts that may relatively decrease the ratio of allocated amount to the fiscal demands

which they face forces them to become irresponsibly austere or start behaving as if they are already bankrupt.

"But that should be expected because it is only very few states out of the entire 36 states and the FCT that are genuinely creating the enabling environment that can support the growth of economic enterprise that will in turn enhance their tax revenue," he said.

Oluba further stated that only about five states are deliberately working on the establishment of structures and processes for enhanced tax administration and are repositioning to reap the developmental benefits of the attendant revenue. "Only few are also attracting external financial intervention for their projects and programmes. In all, without efforts of this nature, many states will always tether on the brink of bankruptcy, particularly when the size of national oil earnings appear threatened by exogenous factors.

"Now whether this is enough justification to call for the amendment of the revenue sharing formula is a different case altogether. Many of these states are managed by people with a jaundiced view of the future and without ideas on how to position their states on paths of sustainable development and will still squander additional allocations even if there are favourable re-alignments in the revenue sharing formula," he said.

Debt Burden

Besides the inability of some states to pay the N18,000 minimum wage, almost all of them are heavily burdened by huge debts. According to a recent report by the Debt Management Office, all 36 states of the federation as well as the Federal Capital Territory had debts to the tune of $2.22 billion (about N333.05bn) as at June 2011. This is considered a burden on state governors who inherited some of the debts. According to statistics released by DMO, Lagos tops the list with an external debt totalling $460.742 million, representing 8.54 percent of the nation's external debt. It is followed by Kaduna State which is said to owe $175.433 million, representing 3.25 percent, and Cross River State which owes $124.022 million, representing 2.30 percent of the nation's external debt.

Mismanagement of Resources

Other that the issue of heavy debt burdens, some analysts are of the opinion that some state governors are enemies to themselves. "I do not see how a state governor will appoint over 50 aides and create new departments and agencies when there is scarcity of funds. You are crying that you do not have money, still you are incurring more cost through needless appointments of cronies as aides," said a financial analyst.

Some observers further observed that some state governors siphon state funds through bloated contracts. "States are crying that there is no money to pay salaries and execute developmental programmes but cross check all the allegations levelled against past state governors by the Economic and Financial Crimes Commission, they run into billions of naira. Those stolen funds could go a long way in transforming the states but they ended up in private pockets," said one analyst.

Another analyst stated that the local government system in the country is a failure, because the state governors have an over bearing control on local government resources, thereby stalling any form of development that should have reached the grassroots. "The state/local government joint account system is a disaster. Some over bearing state governors do not allow the local government councils to do anything. In fact, they are dependent on the disposition of the governors for every action, including payment of salaries," he said.

"Nigeria has untapped, vast arable land. But how many state governments have developed programmes that will attract investors in agriculture? Another problem they have is the leakages in tax remittance by tax collectors. Most of the money they generate internally ends up in private pockets. I am sure that governors are seating on gold mines if they look inwards," said a public affairs analyst.

Furthermore, political watchers have criticised the ability of state governors in embarking on projects that will uplift the living standards of their citizenry. Mostly, what influences their choice of projects are political considerations and not what is in the best interest of the states. "To make matters worse is that they do not even consider the viability of those projects. It is what will earn them political popularity that occupies their minds and not the interest of the masses," said an observer.

"State governors must come to terms with reality because if this trend continues unabated, there will come a time when some of them might not meet their statutory obligations, including payment of salaries, wages and repayment of their debts. That is to say, that many families will go hungry, many roads will be unattended to, many health centres and schools will shut down. There will be labour unrest. And there will be chaos and their economies will be brought to their knees," warned another analyst.
Tagged: Business, Governance, Nigeria, West Africa

alj harem:

There is no way the governors of other regions would keep feed others while the ones with the least population gets the highest allocation

Let everyone go back to their region.

lucenzo:

Instead of seeking for better allocations, they should try and see how much they can generate internally. Asking for more money would give room for laziness. They should try and manage the little they have and think of ways in generating more. I was in warri few days ago and believe me when I say the people and bleeping lazy. Before you construct a road, you'd  touts of different kind starting from their chiefs to the smallest baby would block the road demanding for money before fixing their roads. This mentality of oil money has made the people lazy. Instead of 100% dependence on oil, let's start looking at other means of revenues. Assuming Nigeria divides today how would you generate revenue should be the question because you would not be seeing the oil south.

lucenzo:

 should everyone go to their region, that is when you would realise the effect of accomodating different tribes and what it brings to your economy. Why has Fashola not evacuated them?

sheyguy:

fashola is not driving  them away because he is reasonable. If he drive non indigenes out nothing is going to change. If any foreigner thinks he is doing Lagos a favour let him tell where he hails from and i will prove to him native lagosian are the reason lagos is what it is.

buzor:

the RASCALS are demanding for more money with nothing to show for d one they ve collected.
oil money has done us more harm than good.
i dont think malaysia has oil but look at where they re today. we started this journey together with them.

sheyguy:

For those us directly or indirectly calling these governors names, what the governors are advocating for is not exactly more money per se but more responsibility and the allocation that goes with it. If for example the fed gives power and health back to the states then chances are that the likes of Akpabio, Fashola, Adams, katsina / kwara state governor and other performing ones will manage those sectors better and bad governance will be better exposed.
If u look at Bayelsa and Akwa ibom carefully the developement stride in Akwa ibom is an eye-opener to the bad governance in Bayelsa because they both get similar allocation from the Federal govt and bayelsa has approx one-third (1/3) the population and responsibilty of Akwa ibom but less to show for it.
The allocation will affect all. The proposal of these governors are even more tempting given that the fed govt has become the food basket of the ruling party.