25042021 - B/Haram bandits almost succeeding in their mission CAN president warns
Vanguard Newspaper 25042021
Vanguard Newspaper 25042021
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PAGE 8—SUNDAY VANGUARD, APRIL 25, 2021<br />
CASH CRISIS:<br />
Tough survival choices<br />
confront states<br />
—Experts<br />
•Govs should explore AfCFTA platform,<br />
SMEs, rationalise cost, prune workforce’<br />
By Peter Egwuatu, Assistant Bus<strong>in</strong>ess<br />
Editor, Nkiru Nnorom, Tunde Oso &<br />
Nnamdi Ojiego<br />
Follow<strong>in</strong>g the f<strong>in</strong>ancial crisis across the<br />
36 states of the federation, economic<br />
experts have suggested measures to be<br />
taken for the sub-national governments to<br />
survive.<br />
As of press time, many states of the<br />
federation appear cash-strapped follow<strong>in</strong>g<br />
the fall <strong>in</strong> revenue accruable to the<br />
federation account.<br />
This has resulted <strong>in</strong> the drop <strong>in</strong> the monthly<br />
allocation to states from the Federal<br />
Account Allocation Committee, FAAC.<br />
Accord<strong>in</strong>g to the National Bureau of<br />
Statistics, NBS, the Internally Generated<br />
Revenue at state Level Q4 of 2020 <strong>in</strong>clud<strong>in</strong>g<br />
the Federal Capital Territory, FCT,<br />
decreased from N3.8 trillion <strong>in</strong> 2019 to<br />
N3.599 trillion <strong>in</strong> 2020.<br />
To compound the woes of the states, the<br />
Central Bank of Nigeria, CBN, has<br />
requested a refund of the repayment of the<br />
N2.1bn Budget Support Loans granted to<br />
them by the Federal Government.<br />
The money was an <strong>in</strong>tervention package<br />
approved <strong>in</strong> 2015 to assist states <strong>in</strong> the<br />
payment of salaries.<br />
As a result of these, state governments are<br />
troubled over how to meet up with <strong>their</strong><br />
f<strong>in</strong>ancial obligations. Many are already<br />
contemplat<strong>in</strong>g tough measures aimed at<br />
manag<strong>in</strong>g the lean resources accruable to<br />
them.<br />
However, experts told Sunday Vanguard<br />
that <strong>in</strong>stead of reduc<strong>in</strong>g wages of workers<br />
and retrenchment of workforce as be<strong>in</strong>g<br />
contemplated by some states, they should<br />
be prudent <strong>in</strong> spend<strong>in</strong>g, trim the size of<br />
government, especially number of<br />
M<strong>in</strong>istries, Departments and Agencies,<br />
MDAs, reduce the number of political<br />
appo<strong>in</strong>tees and deploy technology to widen<br />
the base of revenue collection among<br />
others.<br />
The experts, drawn from different sectors<br />
of the economy <strong>in</strong>clud<strong>in</strong>g academia,<br />
warned that measures other than those<br />
suggested would not engender growth.<br />
Block leakages, deploy<br />
technology —Prof Uwaleke<br />
A former Com<strong>mission</strong>er for F<strong>in</strong>ance <strong>in</strong><br />
Imo State, Prof Uche Uwaleke, said: “The<br />
first step is to plug leakages <strong>in</strong>clud<strong>in</strong>g<br />
through the effective operation of the<br />
Treasury S<strong>in</strong>gle Account, clean<strong>in</strong>g up the<br />
payroll through biometrics and deploy<strong>in</strong>g<br />
technology to elim<strong>in</strong>ate as much as possible<br />
the handl<strong>in</strong>g of cash <strong>in</strong> government<br />
transactions.<br />
“It is equally important to enthrone<br />
accountability and transparency <strong>in</strong> public<br />
f<strong>in</strong>ances through the adoption of<br />
<strong>in</strong>ternational public sector account<strong>in</strong>g<br />
standards. This also <strong>in</strong>cludes proper<br />
record<strong>in</strong>g and management of state debt<br />
to ensure it is susta<strong>in</strong>able. These are crucial<br />
to attract<strong>in</strong>g grants from <strong>in</strong>ternational<br />
donors such as the World Bank.”<br />
He further warned state governments not<br />
to reduce the wages.<br />
“The high poverty and unemployment<br />
rates across the states do not support the<br />
reduction <strong>in</strong> wages or <strong>in</strong>creas<strong>in</strong>g taxes.<br />
Instead, sub-national governments should<br />
be prudent <strong>in</strong> spend<strong>in</strong>g, trim the size of<br />
government, especially the number of<br />
m<strong>in</strong>istries and political appo<strong>in</strong>tees and<br />
deploy technology to widen the base of<br />
revenue collection.”<br />
States should develop local<br />
resources –<br />
Former<br />
NACCIMA boss<br />
On his part, ex-<br />
Director-General of<br />
National Association of<br />
Chamber of Commerce,<br />
Industry, M<strong>in</strong>es and<br />
Agriculture,<br />
NACCIMA, Dr. John<br />
Isemede, called on state<br />
governments to look<br />
<strong>in</strong>ward for products and<br />
commodities with huge<br />
export potential.<br />
“The states are <strong>in</strong> a<br />
f<strong>in</strong>ancial crisis because<br />
they rely on the federal<br />
allocation. The way the<br />
country operated before<br />
1963, no state was<br />
com<strong>in</strong>g to the central<br />
government to share<br />
money. They paid<br />
royalty to the federal<br />
The first<br />
step is to<br />
plug leakages<br />
<strong>in</strong>clud<strong>in</strong>g<br />
through the<br />
effective<br />
operation of<br />
the Treasury<br />
S<strong>in</strong>gle Account<br />
government. Nigeria should go back to the<br />
1963 constitution where states were allowed<br />
to develop <strong>their</strong> resources and pay royalties<br />
to the central government,” he noted.<br />
Wages<br />
He further warned: “State governments<br />
should never th<strong>in</strong>k of reduc<strong>in</strong>g wages given<br />
the high <strong>in</strong>flationary rate <strong>in</strong> the country.<br />
Our union would resist it and ground the<br />
economy by go<strong>in</strong>g on strike.”<br />
Isemede said: “My advice to state<br />
governments is to identify local natural<br />
resources <strong>in</strong> <strong>their</strong> states and create<br />
strategies to develop and market them<br />
through the African Cont<strong>in</strong>ental Free Trade<br />
Agreement, AfCFTA, platform.<br />
“They should also focus on Small and<br />
Medium Enterprises ,SMEs, with export<br />
potentials because they rema<strong>in</strong> the drivers<br />
of economic growth. Export <strong>in</strong>centives for<br />
the manufactur<strong>in</strong>g sector should be targeted<br />
at SMEs to boost the contribution of the<br />
manufactur<strong>in</strong>g sector to Nigeria’s Gross<br />
Domestic Product, GDP.<br />
“Mult<strong>in</strong>ationals are not <strong>in</strong>terested <strong>in</strong><br />
export. Most of them still have the Berl<strong>in</strong><br />
Conference mentality. They came <strong>in</strong>to this<br />
country to take advantage of the over 200<br />
million consumers<br />
“The hope is on the SMEs. If we are<br />
serious about this matter, we<br />
should avoid go<strong>in</strong>g the way of<br />
the Africa Growth<br />
Opportunity Act, AGOA, and<br />
other trade agreements <strong>in</strong> the<br />
past. There should be a proper<br />
alignment of trade<br />
agreements signed by the<br />
federal government, as well as<br />
a synergy between MDAs for<br />
proper coord<strong>in</strong>ation and<br />
communication.”<br />
Govs should<br />
enhance capacity<br />
for wealth<br />
creation—Adonri<br />
Economist and Vice<br />
Executive Chairman, HIGH<br />
CAP Securities Limited,<br />
David Adonri, said: “The<br />
Nigerian economy is fragile<br />
and prone to crisis due to<br />
fiscal weaknesses, low<br />
production base and<br />
dangerous trad<strong>in</strong>g practice.<br />
“Federal Government has more to do <strong>in</strong><br />
correct<strong>in</strong>g these weaknesses. However,<br />
states can also contribute to lay<strong>in</strong>g a solid<br />
foundation for the economy. With the<br />
enhancement <strong>in</strong> the capacity for wealth<br />
creation, revenue to government will<br />
Cont<strong>in</strong>ues on page 9