Nigerian States Will Get ‘Series B’ Bailout, But Under Tough Conditions

The federal government of Nigeria is putting finishing touches to its plan to bail out economically-failing states in the federation.

The federal government had given a NGN804.7 billion bailout last year’s July to save them from a total collapse. However, this time around, states will be bailed out based a stringent conditions under the fiscal sustainability plan.

Bailouts should only be given to responsible politicians, not rent seekers who count 30 days to get handouts from Abuja.

It is a plan by the federal government to ensure states do not see bailouts as a meal ticket to go on spending sprees while neglecting their constitutional duties of paying their staff salaries and fixing basic infrastructure in their states.

The fiscal sustainability plan consist of 22 points system. A very important part of the system is that states are required to publish their financial statements monthly or quarterly.

Image Credit: nigerianewsheadlines.com
Kemi Adeosun, Minister for Finance. Image Credit: nigerianewsheadlines.com

To enable states report their financials, the federal ministry of finance will be supplying states with International Public Sector Accounting Standards, IPSAS compliant software to use. All staff under their payroll must be verified with unique bank verification numbers, BVN. This would ensure that states are not wasting money to pay ghost workers.

States are required to adopt the fiscal responsibility plan in their various jurisdiction. They are to put a stop to their penchant for bank loans they cannot repay. Also, efficiency units that will cut their cost of governance are to be set up before they can access the bailout fund.

States are also required to put in serious efforts at shoring-up their internally generated revenue, IGR. This is a very sensitive issue with serious consequence on the existence of many states in Nigeria.

Going by the fiscal sustainability plan, it is unclear how many states can meet up with the stated requirements. Most states in Nigeria are running analog and oftentimes an undocumented system that makes their administration cumbersome and prone to corruption.

Many states in Nigeria are not financially viable. This is actually a paradox as no state in Nigeria exist lacks viable natural resources. These resources are either left untapped or left to illegal miners and touts who give kickbacks to government officials. Agriculture which should be a default investment opportunity has been reduced to token projects for political jamborees.

To make Nigerian states viable again, is a complex task. Apart from scientific solutions such as the fiscal responsibility plan, democratic process that throw up governors has to be looked into. Many state governors are not only bereft of ideas, they lack the seriousness to run their states. Bailouts should only be given to responsible politicians, not rent seekers who count 30 days to get handouts from Abuja.

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