State Level Fiscal Sustainability Plan (2).

Continued from last week

Creativity is required for new policy frameworks meant to increase tax and revenue collection. With the dire irresponsibility of state level political actors, increased revenue must be tied to improved public service delivery. For the bulk of the population who are poor to increase their giving to the state without a concomitant obligation for the state to improve their lives will be to encourage slavery. Therefore, serious dialogue is needed at the state level between state officials and the wide spectrum of civil society, business, labour, women and youth groups, etc. This is to set the irreducible minimum package of services a citizen will expect in return for parting with their money. The days of the arrogance, impunity and condescending attitude of governors, legislators and other state level officials who do not feel accountable to anyone but their dead conscience must be over for good if Nigerians are to cooperate with them.

Objective 3 of the Plan is to rationalise public expenditure with action on setting limits on personnel expenditure as a share of total budgeted expenditure; biometric capture of all state civil servants to eliminate payroll fraud and the establishment of Efficiency Unit. It also plans to provide the Federal Government an online price guide to states and to introduce a system of continuous audit (internal audit) in states. All the activities under this objective have a December 2016 deadline. The limitation should not be on personnel expenditure alone, but should include overheads and the entire components of recurrent expenditure. The limits on personnel expenditure must also include cutting down the payroll and perks of office of political office holders. A situation, such as the one unfolding in Ebonyi State, where the state government is unable to pay workers salaries but buys brand new Toyota Prado SUVs for legislators, and offers cars to the former governor is totally scandalous, unacceptable and an assault of incalculable proportions on the livelihood rights of workers and tax payers.

However, caution must be taken so as not to provide an excuse for mass retrenchments at the state level. States must be able to finance recurrent expenditure with their IGR and use the Federation Account proceeds and other sources of revenue for capital expenditure. We may recall that in the memorandum submitted by creation of state agitators, they usually indicated the viability of their states to survive without federal allocation.

Biometric capture of staff is an exercise that has been ongoing for some years now and even if it has to be done afresh, it should not just be a job for the boys’ agenda.

What is the Efficiency Unit and what work is it set up to do? Under what law is it set up and what is the legality of such a unit? Nigeria cannot become the home ground to endless guinea pig experimentations that have no bases in law. The fact that the Minister of Finance got away with such a unit at the federal level should not empower her to impose such on states. The unit, I dare say, is an illegal unit and should not be replicated across the federation. Clearly, what the unit proposes to do is already covered by the mandate of agencies such as the Bureau of Public Procurement and the Fiscal Responsibility Commission. The Federal Government’s online price guide will only be relevant to states if they do not reform their procurement processes. The proper action plan should have been a demand for the enactment of a state level public procurement law and setting up the right structures, processes and policies for procurement reform. Continuous internal audit makes good sense and should be supported.

The fourth objective is to improve public financial management with action plans around creation of a fixed asset and liability register; privatisation or concession of suitable state-owned enterprises to improve efficiency and management; establish a Capital Development Fund to ring-fence capital receipts and adopt accounting policies to ensure that capital receipts are strictly applied to capital projects and domestication of the Fiscal Responsibility Act. The first action should be expanded to include the enactment of Project Implementation and Continuity Law which documents all projects, assets and liabilities and prioritises existing uncompleted projects in the budgeting process, except cause is shown that they do not effectively contribute to policy priorities. Privatisation and concession are old concepts that demand no further clarification. Ring-fencing capital receipts will enhance capital budget implementation and achievement of project goals. This suggestion tallies with the earlier demand for reduced personnel expenditure. The enactment and activation of state-level Fiscal Responsibility Laws are long overdue and should be supported by all reasonable stakeholders. However, one will not be surprised if governors resist this move as it will cut down their penchant for mismanagement of state resources.

The last objective is on sustainable debt management with five action points. These points would ordinarily be well-covered in a good Fiscal Responsibility Law. Debt management is on the constitution’s Exclusive Legislative List and the Federal Fiscal Responsibility Act and Debt Management Act already cover the ground on this subject. What then is missing, which has led to the poor debt management situation across the federation? It is the refusal of the federal executive to activate the relevant sections of the Fiscal Responsibility Act. The Minister of Finance under Section 42 of the Fiscal Responsibility Act should advise the President to send the bill for limits of consolidated debts of the three tiers of government to the National Assembly, which will approve the same. When this is done, it activates the power of the Fiscal Responsibility Commission to monitor federal, state and local governments’ debts and issue the necessary orders to introduce sanity in the debt management space. With the collaboration of the FRC, Debt Management Office and state government agencies, the action points in this objective will be easy to implement.

Many of the proposals in the Fiscal Sustainability Plan are reasonable and can form the bedrock of improvement in fiscal governance, prudent management of our resources and creating new avenues for domestic mobilisation of resources. But they demand honesty of purpose, utmost good faith of the political leadership, participation and vigilance on the part of the people who are the ultimate custodians of sovereignty. The plan needs charismatic and visionary leaders who are truly the servants of the people and who see beyond the immediate gratification of today. I hardly see these qualities in the leadership at the state level whilst the bulk of the citizens seem not to be ready to do the hard work of engaging elected leaders in a way and manner that holds them strictly accountable. For those of us who have been on the task of advocating improvements in governance, the challenge is therefore to engage in activities that offer alternative view points, provide more enlightenment and sensitisation; strategic impact litigation, rights and empowering road shows, among others to wake the people up from their slumber. It is only the people that can shape and re-shape their government.


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