States devise strategies to survive economic recession
Findings revealed that the monthly allocation accruing to the 36 states and Federal Capital Territory (FCT), Abuja, from the federation account has continued to dwindle due to the fall in crude oil prices.
This, BH investigation revealed, has forced many state governments to focus more on cost cutting and on how to drive economic revolution in their states to raise more revenue.
Latest figures released by the National Bureau of Statistics (NBS) on the internally generated revenue capacity of the 36 states confirm that most states cannot survive without the monthly statutory allocations, which is largely funded from crude oil sales and taxes like VAT, duties collected by the Nigerian Customs Service (NCS) and the Federal Inland Revenue Service (FIRS).
The report observed that 35 states cannot pay salaries without federal funds. This means that without federal funds, these states cannot afford to pay salaries, not to talk of executing projects.
Information on states’ wage bills and comparisons with data on their internally generated revenues (IGR), published by the NBS showed that only Lagos State can pay salaries of its workers by solely relying on revenues generated internally.
The NBS reports also revealed that none of the 19 Northern states has the financial muscle to sustain itself. They all depend on federally allocated subventions, mainly made up of funds generated from sales of crude oil.
The implication of the low revenue generation by the states, according to findings, is that most of them can barely sustain themselves without recourse to monthly federal subventions.
Most states resorted to taking short-term bank loans to settle wages whenever there were delays in the monthly disbursements by the Federation Accounts Allocation Committee (FAAC), thereby mortgaging their federation account allocations by signing irrevocable payment orders with various banks.
As a result, payment to contractors and other debt instruments are deducted at source and have become first line charge on their lean resources, making eighteen states to be technically bankrupt.
The states owing workers, according to the Nigeria Labour Congress (NLC) include Abia, Akwa Ibom, Bauchi, Benue, Cross River, Ekiti, Imo, Jigawa, Kano, Katsina, Kogi, Ondo, Osun, Oyo, Plateau, Rivers and Zamfara
This situation has resulted in workers on several occasions going on strikes to protest the non-payment of their salary, as well as deductions among others.
However, several states, according to BH findings, are now deploying means to overcome the challenge.
One of the strategies adopted by some of the states to stay afloat is the reduction in official working days from five days to between four and three days a week.
Benue State took the lead by declaring Fridays as work free days for the months of June and July, with unconfirmed reports suggesting that it had been extended to August.
Governor Samuel Ortom, while defending the decision, maintained that the decline in federal allocation occasioned by fall in oil prices in the international market necessitated the declaration of Fridays as work free days for the months.
Ortom said that such a measure would reduce the effect of economic crunch on the workers.
He called on the people of the state, particularly civil servants to intensify farming activities, stressing that farming pays more than any other business in Nigeria.
Also, in a bid to increase the state’s internally generated revenue and diversify its economy, the Imo State government also introduced a policy where state civil servants are to work for only three days in the week, Monday to Wednesday while they are to go to their farms on Thursday and Fridays to cultivate what they would eat.
According to the governor, the declaration was informed by the urgent need to engage the teeming workers in the state’s new agricultural programme ‘Back to Land for Agriculture’ that was commenced on August 1, 2016.
The governor who categorically made it clear that workers on essential duties to include those in the information, health, security, teaching and IGR sectors, as well as political appointees are exempted from the free working days, went further to disclose that the bill for the initiative would be sent to the state’s House of Assembly for legal backing.
Feelers from other affected states indicated that their executives are also contemplating going the ways of Benue and Imo.
Some states such as Osun have also cut their budgets 2016 to save cost. Governor Rauf Aregbesola of Osun State recently sought the approval of the state lawmakers for a downward review of the 2016 budget estimates from N150.7 billion to N137.9 billion.
According to the letter, the governor asked for a downward review of the personnel cost from N33 billion to N32 billion, overhead cost from N12 billion to N9 billion.
The capital expenditure was also reduced from N67.9 billion to N58.8 billion, while the consolidated revenue fund charge remained N37 billion.
The governor disclosed that the current economic downturn in the country, occasioned by the dwindling revenue accruable to the federation account, necessitated the need to reduce the cost of governance.
“Therefore, it has become pertinent and inevitable to restructure the 2016 draft budget in line with the reality on ground.
“In line with the extant rules and regulations, the house, through your office is being informed about this new development”, the governor stated.
It would be recalled that the governor had on December10, 2015, presented appropriation bill of N150.7 billion to the assembly.
Another measure taken by state governments to stay afloat is the constitution of a Continuous Audit Team to verify staff strength and audit the payroll of the government.
The gale of staff audits and verification exercises at the local, state and Federal Government levels has uncovered thousands of ghost teachers and ghost schools who have reportedly fleeced successive administrations of billions of naira.
According to a report, the Federal Government and 10 other states lost over N538bn to thousands of ghost workers in the last five years.
Of the amount, the Federal Government paid N220bn to 103,000 ghost workers between September 2013 and May 2015.
The remaining N318bn was paid by 10 states of the federation. The states are Katisna, N30bn; Kano, N17bn; Rivers, N60; Benue, N10.2bn; Oyo, N18bn; Abia, N26.5bn; Adamawa, N20.4bn; Akwa-Ibom, N15bn; Bayelsa, N120bn and Ekiti, N1.2bn.
A breakdown of the amount showed that the sum of N170bn involving 60,000 ghost workers was saved during the administration of former President Goodluck Jonathan, while the balance of N50bn, involving 43,000 ghost workers, was saved between February and May this year.
The sum of N45bn was saved between September 2013 and May 2015 when Jonathan’s administration implemented the Integrated Personnel Payroll and Information System.
The IPPIS scheme is one of the Federal Government’s initiatives designed to undertake human resource management activities from recruitment to separation, including payroll and pension processing.
It was gathered that the scam, which also involved ghost pensioners and other categories of civil servants, were perpetrated with sundry methodologies, including working with fake certificates, injecting the names of minors into government payroll or posing as diaspora workers.
In one instance, the Plateau State Government traced 1,832 teachers to one individual.
In Rivers State, some of the ghost workers recently discovered in the state have begun to return funds illegally collected as salaries.
According to the state government, the action by the ghost workers was aimed at avoiding being prosecuted.
The Commissioner for Information and Communications, Dr. Austin Tam-George, said that the state government had recovered over N1bn per month through its renewed campaign against ghost workers.
Tam-George said that about 2,000 ghost workers had also been identified.
He explained that the state Governor, Nyesom Wike, through the identification of Bank Verification Numbers of civil servants, fished out the ghost workers.
In the same vein, the Oyo State Government saved about N300m after a workers’ verification exercise. A senior government official said the panel set up to investigate workers allegedly collecting multiple salaries were still working. The state Governor, Abiola Ajimobi, had said on a radio programme that those involved in the fraudulent practice would be charged to court.
The source said that one of the workers involved was drawing nine salaries, while another was receiving 11 salaries. He said arrests had already been made, but details had yet to be made public.
On May 11, the media team of the state government released a statement claiming that the state had temporarily expunged the names of 16,532 workers and pensioners from its payroll following their alleged involvement in collection of multiple salaries, falsification of retirement age and other infractions.
The Bayelsa State Governor, Seriake Dickson, also recently disclosed that the state lost about N24bn yearly to the activities of payroll frauds. The payroll frauds, Dickson claimed, connived with some financial institutions to defraud the government.
Ekiti State Government also discovered it had been losing over N17m monthly to ghost workers after a verification of the state civil servants was carried out last year.
A government official disclosed that about 307 ghost workers were discovered during the exercise, meaning that Ekiti State lost N204m in a year and N1.02bn in five years to ghost workers.
This figure is aside from the N155.7m the state lost in two years to 1,154 civil servants collecting more than their actual salaries, according to an interim report by the state’s Teaching Service Commission.
In Katsina State, the state government detected names of children and wives of some prominent persons on the payroll of local government areas in the state.
The state Governor Aminu Masari, who made this known, said that the state could now save about N500m monthly after flushing out the ghost workers.
The Kano State Government also discovered 7,629 ghost workers after a biometric verification of its workforce. The state Head of Service, Muhammad Na’iya, said following the discovery, the state would now save over N283.5m monthly from paying the ghost workers.
In Benue State, Governor Samuel Ortom said a report by a biometric audit consultant showed that over N170m was being spent by the state government as salaries to 14,000 ghost workers every month. This means the state government has been spending over N2.04bn monthly on the ghost workers and N10.2bn in the last five years.
On June 13, 2016, the Abia State Commissioner for Finance, Mr. Obinna Oriaku, revealed that the state uncovered no fewer than 1,800 ghost workers after a biometric verification exercise. He said with the exercise, the state had succeeded in reducing its monthly wage bill from N1.5bn to N1.0 57bn.
The Adamawa State Government uncovered 12,609 ghost workers in the state’s local government payroll. The Chairman of the Local Government Staff Verification Committee in the state, Mr. Maurice Vunobolki, disclosed that 12,609 ghost workers had cost the state a monthly wage bill of N341m N4.1bn annually.
While some states have concluded biometric verification exercises and have identified ghost workers in their thousands, civil servants are regularly undergoing verification in many other states.
The Niger State Government said the screening exercise it initiated was ongoing and that it would go a long way to fish out ghost workers at the state and local government levels.
The economic crunch has also forced several states to strategise on how to drive economic revolution in their respective states.
Enugu State Governor, Ifeanyi Ugwuanyi, recently set up an economic team to scout for organizations from all parts of the globe to invest in the state.
Towards this direction, a 15-man team to act as an Economic Advisory Committee was set up by the state governor to guide the state government on the best economic policies that will engender sustainable economic growth in the state, amidst dwindling revenue from the Federation Account.
Members of the committee includes a former minister of power from Enugu state, Prof. Barth Nnaji, deputy senate president, Chief Ike Ekweremadu, Chief Innocent Chukwuma, the chief executive of Innoson Group of Companies located at Emene near Enugu.
Others include Professor Osita Ogbu, a former Economic Adviser to the president and current Director of the Institute of Development Studies at University of Nigeria Nsukka, Mrs. Lorreta Aniagolu, Monsignor Prof. Obiora Ike, Chief Chilo Offiah, former Aviation minister, Ambassador. Fidelia Njeze, Dr. Chikelu Mba, Mr. Kelvin Emeka Onah, Mr. Emeka Odo, Princess Ngozi Nnaedozie, Mr. John Okoye and Mr. Ikechukwu Chioke.
A government house press statement said “The governor’s move is basically a response to the concern across the country owing to the frightening development in the oil sector, which has made it difficult for some states and even the federal governments to pay their staff salaries and meet other obligations starring them in the face, as governments that should be responsive to the yearnings of the people.
“The advisory committee is coming at a time when “Enugu State Government has come to the conclusion that the advisory committee will assist us in investments promotion, mobilization of funds, increased internally generated revenue (IGR) and establishment of industries.”, the statement said.