Welcome, Guest: Register On Nairaland / LOGIN! / Trending / Recent / New
Stats: 3,155,819 members, 7,827,998 topics. Date: Tuesday, 14 May 2024 at 09:04 PM

Bailouts Reveal Precarious Finances Of Nigerian States - Politics - Nairaland

Nairaland Forum / Nairaland / General / Politics / Bailouts Reveal Precarious Finances Of Nigerian States (8897 Views)

Cattle Colonies In Nigerian States Begin Next Week – FG / Stop Giving Bailouts To Govs, Labour Tells Pmb / FG Appoints Audit Firms To Monitor Finances Of 35 States (2) (3) (4)

(1) (2) (Reply) (Go Down)

Bailouts Reveal Precarious Finances Of Nigerian States by Adesiji77: 8:40am On Apr 25, 2016
The continuing reliefs and bailouts given to states by the Federal Government reveal the dangerous financial situations of various sub-national governments in Nigeria.

They show that most states are not viable and may need to merge to consistently meet their social and economic obligations to their citizens.

As at the fourth quarter of 2015, the debt owed by Nigerian state governments to deposit money banks (DMBs) was in excess of N600bn.

In addition to N338 billion injected by the Central Bank of Nigeria (CBN) as bailout, the total credit to some 27 financially distressed states was in the neighbourhood of N1 trillion, an amount analysts say is quite significant.

The Federal Government is again offering a relief, which has led to the suspension of further deductions from their monthly allocations from the Federation Account for an unspecified period.

“There is no doubt that these states will not survive a day if there is no money coming from Abuja. How sustainable are these Federal Government bailouts? Is there any hope that the states will become viable tomorrow? Do they now have new investors, or do they have plans to survive without Abuja? These are questions we keep shying away from,” said Matthew Ibeabuchi, CEO of Abuja-based MD Services Limited.

Adamawa, Borno State, Ebonyi, Edo, Ekiti, Gombe, Imo, Kebbi, Kogi, Kwara, Niger, Nasarawa, Ondo, Osun, Oyo, Plateau, Taraba and Zamfara could be classified as vulnerable, as their IGRs are low and there is little hope of improving soon on that score. These states depend largely on the Federal Government allocations and might not survive for six months without handouts from Abuja.

The vulnerable and fair states include Delta, Benue, Kano, Katsina, Enugu, Kaduna, Rivers, and Sokoto.

States that are better include Lagos, Akwa Ibom, Ogun, Anambra which have found some innovative ways of increasing their revenues. Lagos State with its vantage position as the economic hub of the country ,leveraging taxes, raking an average of N23 to N24 billion IGR monthly.

“We enjoy the incentives given to us by Ogun,” Frank Udemba Jacobs, president of the Manufacturers Association of Nigeria (MAN told BusinessDay.

Developmental projects are suffering serious setbacks in many states, while contractors are owed huge amounts of money.

Nigerian states failed to plan during the oil windfall, as corruption and bad leadership stunted planning.

Analysts trace the precarious finances of nearly all the 36 states to lopsided Federal structure, absence of fiscal federalism, a sharing formula which gives the Federal Government undue financial advantage over the federating units, as well as failure of the states to look inward and tap into available resources to shore up their IGR and become less dependent on the centre.

According to a publication by the Central Bank of Nigeria (CBN) in 2000, “the nature of the fiscal federalism and revenue allocation places the Federal Government at a vantage position to control the economy. The economic role of the public sector in a federal polity is the joint responsibility of all tiers of government. But in the case of Nigeria, the joint responsibility of these tiers of government in carrying out the functions of socio-political, administrative and economic management introduces complications in the nation’s fiscal system.”

Nigerian states have enormous mineral resources that are yet untapped. The Nigerian Investment Promotion Council (NIPC) says the country has over 40 million tonnes deposits of talc in Niger, Osun, Kogi, Ogun and Kaduna states. Incidentally, the Raw Materials Research and Development Council (RMRDC)’s 3,000 tonnes per annum catalytic plant is the only talc plant in the country. With the right environment and laws, pharmaceuticals and cosmetic firms can exploit talc, which is an essential input.

There are over three billion metric tonnes of iron ore deposits in Kogi, Enugu, Niger States and the Federal Capital Territory. But closure of Aladja and Ajaokuta Steel complexes has made it difficult for this resource to be fully exploited.

Uburu and Okposi in Ebonyi State have large deposits of salt that are yet to be fully developed. Rock salt is also available in Benue State. Despite these deposits, the National Salt Company of Nigeria and Royal Salt are the only salt makers in the country.

Kaolin, used in making ceramics and chalk, is found in Edo, Plateau, Ogun and Nasarawa, among other states. Feldspar, silica and quartz, which are also used in ceramics production, are found in more than 20 states in Nigeria, according to Patrick Oaikhinan, CEO, Epina Technologies Limited and professor of ceramics engineering.

Other minerals found in almost all parts of the country are gemstones, coal (over 600 million tonnes), bitumen (over 42 billion tonnes) and lead/zinc (over 10 million tonnes), NIPC said.

Seun Olatunji, president, Association of Metal Exporters of Nigeria, suggested that for the states to free themselves of the financial difficulty, they would need to partner the private sectors in their domains to harness solid minerals within their domains.

Also, Muda Yusuf, director-general Lagos Chamber of Commerce and Industry, told BusinessDay that there must be amendment of laws to put the mining sector in the hands of states.

Benjamin Osisioma, professor of accounting at Nnamdi Azikiwe University Awka, attributed the current situation to Nigeria’s warped federal structure.

“What we are reaping now is the result of our warped federal structure. Many years ago, when Chukwuemeka Ezeife was governor of Anambra State, I was part of a committee called the Financial and Economic Advisory Council. We were given a mandate to move round the state and see how we would identify resources that would generate enough money and enable it stand on its own.

“We found out that each of the local governments had two natural resources that would be the goldmine. Some local governments in Anambra had clay, which is suitable for ceramics making. So also did other local governments have peculiar natural resources that could be exploited for industrialisation. The point is that our states have failed to exploit agriculture and manufacturing,” Osisioma said.

At the moment, up to 27 states are finding it difficult to pay workers and are mired in debt. In 2015, 18 of the 36 states were declared technically broke. Almost all the states applied for the bailout from the Federal Government to offset backlogs of deficits.

According to experts, states have not done enough to create enabling environments for investors who can set up plants, create jobs and then pay taxes into their coffers.

Paul Collier, professor of economics and public policy, recently told the Nigerian government that one way of cushioning the effect of oil sector woes is to form businesses into clusters, provide them with the needed infrastructure, and then ask for taxes.

Analysts also worry that multiple taxation, insecurity and other issues have failed to convince investors to come to many states, adding that many governors have also not done enough to sell their states to investors. They add that the country lacks appropriate strategies with which to attract solid minerals explorators.

“The raw materials for most of the industries are here. But there is no appropriate strategy in place for the development of many industries. In the ceramics industry, an estimated 1.2 million direct and indirect jobs can be created but the problem is still lack of strategy. This is why we keep importing ceramics products of over $400 million from China and Europe every year,” Oaikhinan said.

http://businessdayonline.com/2016/04/bailouts-reveal-precarious-finances-of-nigerian-states/
Re: Bailouts Reveal Precarious Finances Of Nigerian States by Primusinterpares(m): 12:53pm On Apr 25, 2016
Diversification remains the best way forward for any state to survive this perilous time... States should start thinking of ways if generating income and stop being over dependent on the federal government. #teamGodblessNigeria. #FTC #

2 Likes

Re: Bailouts Reveal Precarious Finances Of Nigerian States by ekorian: 12:53pm On Apr 25, 2016

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by SenJoe(m): 12:54pm On Apr 25, 2016
Zombies over to you

Have you blamed GEJ today?

Zombies will still say Bubu is working

Don't be amazed, that's Why they are called Zombies.

10 Likes 1 Share

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Timoleon(m): 12:54pm On Apr 25, 2016
b
Re: Bailouts Reveal Precarious Finances Of Nigerian States by samuelito46(m): 12:54pm On Apr 25, 2016
.
Re: Bailouts Reveal Precarious Finances Of Nigerian States by Schematics: 12:55pm On Apr 25, 2016
The highlighted are the first-class and elite Nigerian states that can stand their ground financially without FG intervention, other states outside these four apart from maybe Rivers, Kano and Delta are just as good as non existent entities that should have been merged with other economically viable states. God continue to Bless Lagos, Akwa Ibom, Ogun and Anambra States.


States that are better include Lagos, Akwa Ibom, Ogun, Anambra which have found some innovative ways of increasing their revenues. Lagos State with its vantage position as the economic hub of the country ,leveraging taxes, raking an average of N23 to N24 billion IGR monthly.

12 Likes

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Pidggin(f): 12:56pm On Apr 25, 2016
Without adequate power how do we expect manufacturers to function? No foreign investors will risk investing in an insecure environment This is simple logic

10 Likes 1 Share

Re: Bailouts Reveal Precarious Finances Of Nigerian States by ecmb(m): 12:56pm On Apr 25, 2016
Feeling the suffering everywhere. Rivers state can't pay salaries easily

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Standing5(m): 12:58pm On Apr 25, 2016
Bayelsa in deep shìt too . . .
Re: Bailouts Reveal Precarious Finances Of Nigerian States by Project400: 12:58pm On Apr 25, 2016
A result of the failure of the F.G to give adequate attention to states.

We've over the years given too much attention and powers to Lagos, Abuja and Oil producing states, at the detriment of other states with diverse viable but untapped mineral resources. It has gotten to a level where people from these economically viable states now see themselves as better citizens to other neglected states.

The government needs to checkmate these excesses. A lot of people are abandoning and dejecting their states of origin because of this socioeconomic gap. Whether we like it or not, Nigeria will never develop if we all migrate to Lagos, Abuja and Rivers.

This change we all call for starts with you and I. Let each & everyone of us be proud of our origin, villages and home towns. With a positive mindset, we then call give our resources and energy into ensuring a better and quality living.

Majority of these Governors in less viable states do whatever they like because those who ought to monitor the excesses of their leaders are busy denying their hometowns and even grandparents because of the gains they accrued in Lagos, Abuja and P/H. They do not care whether their states crumble or not.

The F.G, in as much as it has a lot to do, can never do it all.

When was the last time you visited your hometown in Ekiti, Bauchi, Nassarawa, Abia, Kogi? Have you ever thought of establishing a viable industry in your state of origin? get people of the streets, and pay tax to the government?

You cannot be in Lagos, & Abuja and expect your Governor in Ekiti or Kogi to pick taxes from the streets.

15 Likes 1 Share

Re: Bailouts Reveal Precarious Finances Of Nigerian States by VampireeM(f): 12:58pm On Apr 25, 2016
Even Imo state? Shame on Rochas Okorocha.. He has reduced Imo state to a state of mockery..

4 Likes

Re: Bailouts Reveal Precarious Finances Of Nigerian States by SamuelAnyawu(m): 12:58pm On Apr 25, 2016
Adamawa, Borno State, Ebonyi, Edo, Ekiti, Gombe, Imo, Kebbi, Kogi, Kwara, Niger, Nasarawa, Ondo, Osun, Oyo, Plateau, Taraba and Zamfara could be classified as vulnerable, as their IGRs are low and there is little hope of improving soon on that score. 


Rochas if Imolites have wronged you please forgive us cry cry cry cry cry Just Negodu the states they are comparing with Us. Chineke cry kiss

3 Likes

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Schematics: 1:01pm On Apr 25, 2016
Pidggin:
Without adequate power how do we expect manufacturers to function? No foreign investors will risk investing in an insecure environment This is simple logic

Keep waiting for FG. Innoson did not achieve this at Nnewi with 24/7 power supply with CIA/FBI guarding him!

10 Likes 1 Share

Re: Bailouts Reveal Precarious Finances Of Nigerian States by RedCapChief(m): 1:01pm On Apr 25, 2016
Anambra has truly become a great state. Just a little over 10 years ago, Mbadinuju essentially ran the state like Aregbesola. No salaries for civil servants. No investments in the state. Nothing except big gbese. Mr. Peter Obi really brought a massive change with his financial prudence and sound investments which Obiano has been wise enough to consolidate. Anambra is a state for the future.
Even though Ikpeazu seems to be working in Abia, I feel Alex Otti would have done better.

1.Nigeria needs more technocrats in governance.
2. FG should hand more power to the geopolitical regions.

10 Likes

Re: Bailouts Reveal Precarious Finances Of Nigerian States by rawtouch: 1:01pm On Apr 25, 2016
.... caused by governors who lack innovation and foresight, having lazy and idle minds
Re: Bailouts Reveal Precarious Finances Of Nigerian States by Pavore9: 1:01pm On Apr 25, 2016
States should be collapsed into regions as it will also reduce the cost of governance!

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Standing5(m): 1:01pm On Apr 25, 2016
Our state find themselves here because they don't invest n lay emphasis on a productive workforce, they prefer hand outs. Imagine thousands of ghost workers in the system, in a private setting where pay goes with output is that possible?
Re: Bailouts Reveal Precarious Finances Of Nigerian States by banmee(m): 1:02pm On Apr 25, 2016
Schematics:
These are first class Nigerian states that can stand their ground financially without FG intervention, others states outside these four are just as good as non existent entities that should have been merged with other economically viable states. God continue to Bless Lagos, Akwa Ibom, Ogun and Anambra States.



Lol....first class states indeed.
Re: Bailouts Reveal Precarious Finances Of Nigerian States by madenigga(m): 1:02pm On Apr 25, 2016
j
Re: Bailouts Reveal Precarious Finances Of Nigerian States by Akshow: 1:03pm On Apr 25, 2016
Nigeria is a failed state honestly. I just wonder and marvel at how foolish these state governors are. Can't they generate money internally? Nigeria is do blessed that no state is barren without a natural resources that can be tapped to and utilized. At least all states have a federal University, what the hell are those lady arsedd lecturers researching?

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Standing5(m): 1:03pm On Apr 25, 2016
Pidggin:
Without adequate power how do we expect manufacturers to function? No foreign investors will risk investing in an insecure environment This is simple logic
Power is crucial but it doesn't take 1 year to be fixed.

2 Likes

Re: Bailouts Reveal Precarious Finances Of Nigerian States by three: 1:04pm On Apr 25, 2016
6 REGIONS and not 36 states!!!

This seems to be the only viable Socio-Economic/Political Structure for this country!

Federal-Regional-Local is the way to go

Coupled with Federal Territories - Lagos/Port Harcourt/Kano

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Pavore9: 1:05pm On Apr 25, 2016
SenJoe:
Zombies over to you

Have you blamed GEJ today?

Zombies will still say Bubu is working

Don't be amazed, that's Why they are called Zombies.

This is not about GEJ nor PMB but how the Governors have applied their intellect to harness the resources of their states!

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by Abeymills(m): 1:05pm On Apr 25, 2016
U are all welcome to d most clueless most incompetent useless government of d century bubuhari is a disgrace 2 humanity God bless my ex president Jonathan

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by OCTAVO: 1:07pm On Apr 25, 2016
Ok.
Re: Bailouts Reveal Precarious Finances Of Nigerian States by Presbulg(m): 1:07pm On Apr 25, 2016
Have you blamed PMB today If NO, here's your chance.
Re: Bailouts Reveal Precarious Finances Of Nigerian States by mandax: 1:10pm On Apr 25, 2016
But no body, except a military government can merge the states.

When 20 states and Abuja were created in once one northern Nigeria federating unit, but 17 in the two southern federating units, that was when the problem started.

For now, not even in the NASS can the non viable states get merged, because the north which draws more reps to the NASS can't allow political restructuring. And the north draws more of national development resources through the large number of states.

No true federal country created new federating units from the old ones through use of land mass as criterion, as was done in creating states in Nigeria by northern military generals.
Re: Bailouts Reveal Precarious Finances Of Nigerian States by Rajiolaade: 1:10pm On Apr 25, 2016
Result of unending state creations craving, think of it can someone or group be obtaining what a state is getting every month, not loan, interest free to finance a business & still fail woefuly. God will punish some governors.

1 Like

Re: Bailouts Reveal Precarious Finances Of Nigerian States by dyn1800: 1:12pm On Apr 25, 2016
what would you've done differently if you found yourself in BUBU's Position as regards this Bailout issues?

Abeymills:
U are all welcome to d most clueless most incompetent useless government of d century bubuhari is a disgrace 2 humanity God bless my ex president Jonathan

(1) (2) (Reply)

Kemi Olunloyo Announces The Death Of Another Top Member Of Buhari’s Government / Abdullahi Adamu Reacts To Impeachment Threat Against Buhari / Have You Collected Your PVC??

(Go Up)

Sections: politics (1) business autos (1) jobs (1) career education (1) romance computers phones travel sports fashion health
religion celebs tv-movies music-radio literature webmasters programming techmarket

Links: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Nairaland - Copyright © 2005 - 2024 Oluwaseun Osewa. All rights reserved. See How To Advertise. 54
Disclaimer: Every Nairaland member is solely responsible for anything that he/she posts or uploads on Nairaland.