My Ten Cents

Wednesday, May 27, 2015

Public Debts Management In Nigeria: Time For Creation Of Public Debts Management Commission

(Fiscal Accountability & Good Governance, Onitsha Nigeria, 12th May 2015)-It is the observation of International Society for Civil Liberties & the Rule of Law that time has come for the creation through an Act of Nigeria’s National Assembly of the Public Debts Management Commission of the Federation to centrally coordinate the compilation and management of the country’s public debts of the three tiers of Federal, State and Local Government systems.
Though the Federal Ministry of Finance on 4th October 2000 created a relatively autonomous office called the Debt Management Office (DMO) to centrally coordinate the management of Nigeria’s debts; formerly handled by a myriad of establishments in an uncoordinated manner; but it is now more desirable to create and have an all encompassing public debts management for the Federation of Nigeria. Also, the present Debts Management Office does not have legal tooth to bite. While it has substantially compiled and computed with fair accuracy the Federal Government’s domestic and foreign debt stocks, it has woefully failed to capture the actual or full local debt stocks of the 36 States and the FCT.
For instance, the DMO has for years used and still uses “estimates” in its categorization of public debts of Bayelsa State. This followed the failure of the referenced State to remit its local debt stocks with the DMO. The DMO’s substantial success in compiling and computing the external component of the States’ public debts stems from the fact that States cannot borrow externally without the Federal Government approval. But in that of local borrowings, the borrowing State Executive Council only requires the approval of the State House of Assembly to secure the said local loan leading to conspiracy and roguery of the highest order between the two at maximum public expense.
Till date, there are no records residing in the DMO; whether sound or unsound showing the local debt stocks of the constitutionally recognized 774 Local Government Areas (LGAs) in Nigeria. It has also long been discovered that the records of the local debts submitted by most of the 36 States of the Federation to the DMO are doctored and under-reported. That is to say that they are far from the actual amounts borrowed locally by the affected States. Owing to absence of compelling, mandatory and sanctionable body of law or legal instrument empowering the DMO to that effect, the body relies on persuasive and voluntary approach so as to get the States into compliance.
An example of the referencing difficulties facing the DMO is its inability to update and publicize the local debt stocks of the States for period of 2014 and second quarter of 2015 fiscal periods. In its March 2015 edition of update of the country’s total public debts, which puts the Federal Government and States’ local and foreign debt components at $63.5 billion or N12.06 trillion; the DMO noted that its compilation of the local debt stocks of the States (36 States & the FCT excluding Bayelsa State) for 2014 is in progress. Yet the same DMO has since updated the States and the Federal Government’s foreign debt stocks up to March 2015.

We had in the course of our recent investigation on the issue discovered that the amounts transmitted to the DMO by the States as their total local debt stocks are in many cases not up to 50% of what they actually owe local lending institutions. One of the ways to unearth this is to look at and calculate the statutory federal allocations received by each of the affected States in every fiscal year. When the statutory allocations of the referenced States are deducted from their total budgets of every fiscal season, it becomes easier to note the amount of loans borrowed particularly from local sources. Further to this is the fact that statutory allocations to the States from the Federation Account constitute about 70% to 80% of their non loan budgetary funds, while the remaining 30% to 20% comes from their internally generated revenues (IGRs) and donor supports. Lagos State is an exception because it is the only State in Nigeria with bulk internally generated revenues surpassing its monthly federal allocations.
Furthermore, to get a clearer picture of what a State’s local debt stocks look like, its budget size should be looked into and broken down.  In Imo State, for instance, to get the picture of the total debts of the State in the past eleven years or 2005 to 2015 fiscal years,  its total federal allocations within the periods should  be calculated and deducted from the its total budgets within the periods.  Imo State has budgeted a total of 1.269 trillion in the past eleven years. Its yearly statutory allocations from the Federation Account stand at average of N60 billion monthly and this translates to N660-N700 billion.   For instance, between January and June 2014, it received a total of N29.7 billion from the Federation Account. Assuming its IGRs is N12 billion yearly in addition to estimated received donor funds of N50 billion in the past eleven years, the duo instantly translates to N182 billion. When this is added to N700 billion block federal allocations to the State in the past eleven years, the total non loan cash of N882 billion is most likely to have accrued to the State since 2005.  When deducted from the total budgets of N1.269 trillion, a deficit of N387 billion is identified.
 While the foregoing does not mean in the context of accuracy that Imo State owes N387 billion, it leads us to the fact that the State is heavily indebted, contrary to its present publicized local and international debt stocks which the DMO gave as N23.2 billion comprising foreign debt of $53M (N10.6 billion) and local debt of N12.6 billion as at March 2015 and December 2013 respectively. In Anambra State, the 2015 budget of N164.4 billion is very unrealistic in terms of factoring it into non loan-based budget. Whereas allocation of N110.9 billion to capital expenditures and N53.5 billion to recurrent expenditures is still commendable; its funding sources are substantially loan based. For instance, it is very unrealistic to for the State to realize internally generated revenues worth of N54 billion, which is more than projected statutory allocations of N48.4 billion from the Federation Account. The remaining N62 billion projected to come from “capital receipts” expressly means “loans and donor supports”. It is likely that the donor support component will not exceed 10% of the total figure. Also, Anambra State’s IGR is realistically in the neighborhood of N12-N15 billion per annum.
 Because of indiscriminate borrowings available at local lending bodies, States have resorted to over-bloated budgets instead of cutting their coats according to their sizes. The foregoing instances in Imo State and Anambra States are also obtained in most States of the Federation and the FCT. These Explain why we are deeply worried over the absence of effective policies and actions in Nigeria to regulate the Federation’s loan borrowings, management and spending.
Creation Of Public Debts Management Commission Of The Federation: We call on the incoming National Assembly of Nigeria to enact an Act creating Public Debts Management Commission of the Federation. The law creating the Commission will ensure its membership is drawn from the country’s three tiers of Government and the FCT in representative capacity. Its leadership composition must also reflect the provisions of Section 14 (3) of the Constitution of Nigeria 1999 (equitable representation). The propose Act should  make it mandatory and sanctionable within a specific time frame for the three tiers of government particularly States and the LGAs to furnish the Commission with full details of their local debt stocks. One of the sanctions will be the use of order of the court of competent jurisdiction to temporarily freeze the accounts of the defaulting State, particularly any State that doctors or under-reports its debt stocks.
There should be a provision in the Act as well compelling all local lending institutions including commercial banks to independently furnish the Commission periodically with details of loans given to the States/LGAs. The Act should expand in definition and scope the public debts to include unpaid workforce-retired and serving wage arrears including pensions, allowances, salaries and gratuities running into six months and years. Judgment and MDAs debts should also be captured; likewise contract debts for completed and certified public contracts all for their effective management and liquidation.
Katsina State Is Not A Debts Free State: Contrary to a recent public comment credited to the former Chairman of EFCC, Malam Nuhu Ribadu to the effect that outgoing Governor Ibrahim Shehu Shema of Katsina State is only the governor in Nigeria that will be leaving office without public debts, we wish to state clearly that Malam Nuhu Ribadu lied. It is not true that the outgoing Governor is leaving a debt free Katsina State, but it may be correct to say that Katsina State based on information available at the DMO is not a heavily indebted State in Nigeria. Katsina State presently owes a total sum of N15.6 billion comprising external loan of N$78.9 million (N14.8B) and local debts of N269 million. This figure does not include the 2014/2015 component of the local debts of the States in Nigeria that are yet to be updated by the Debts Management Office.
Be that as it may, if at the end, it is found  that Katsina State does not have any outstanding local debt other than the foregoing, then its outgoing Governor deserves to be commended at all times with a befitting award as  one of the very few non serial borrower governors in Nigeria.
Fashola’s Huge Debts Overshadowed His Achievements In Office: Contrary to celebrations going on in some quarters of Lagos State over the achievements in office of outgoing Governor Babatunde Raji Fashola, SAN; we wish to observe that huge debts of N316 billion incurred under his eight year-administration has dwarfed his achievements under reference. A governor who generated N2.433 trillion in eight years and spent N2.769 trillion with only N1.1 trillion of the huge sum channeled into execution of key infrastructures and provision of social services; as a matter of fact, has nothing to celebrate. This is more so when a staggering sum of over N1.6 trillion got liquidated into recurrent expenditures.  Our question is: with high level of urbanization in Lagos State, which of its virgin lands played host to 262 new roads that were built by the outgoing administration as claimed?  Is it not correct to say 262 existing roads were rehabilitated; instead of 262 new roads were built?
However, the decision of the outgoing Governor of Lagos State to heed to our clarion call of letting out publicly his governance scorecard is commendable at all times. It remains our irrevocable position that Lagos State under Mr. Babatunde Fashola, SAN, ought not to enmesh the State into serial borrowings. When it upgraded its IGRs from N600 million monthly in 1999 to over N20 billion per month from 2007 till date, the State became a reference point. A State like Anambra State at a point sent a team to go to the State to learn its IGR compilation and collection success. Yet, in spite of this enviable feat, the State messed up by earning notoriety as Nigeria’s most indebted State and Africa’s ocean of poverty in the midst of plenty. The worst of it all is that the referenced loans are not capable of repaying themselves.
This, notwithstanding, the outgoing Fashola’s administration will be remembered as an administration that made Lagos  State to have the most modern and advanced body of State laws in Nigeria. It is a truism that a number of laws both criminal and civil in the State are more upgraded and advanced than their federal counterparts. The major challenge facing the incoming Ambode administration lies on the State’s huge debts of over N500 billion including N316 billion incurred by the outgoing Fashola administration. The incoming administration must avoid further borrowings and devise means of liquidating the existing ones as well as restricting its public expenditures to its non loan earnings.

Emeka Umeagbalasi, B.Sc. (Hons) Criminology & Security Studies
Board Chairman, International Society for Civil Liberties & the Rule of Law
Uzochukwu Oguejiofor, Esq., (LLB, BL), Head, Campaign & Publicity Department
Chiugo Onwuatuegwu, Esq., (LLB, BL), Head, Democracy & Good Governance Program

Wednesday, May 20, 2015

Change: Proposals for the Buhari Administration

Like millions of Nigerians who prayed and fasted all over the years for some kind of change in Nigeria, for some sort of leadership that will take the collective social and economic interest of the ordinary Nigerian at heart, and work towards a semblance of betterment of their current situation where the distance between the classes have widened exponentially, and the middle class completely eliminated, I was elated when the All Progressives Congress (APC) swept the presidential and national assembly polls.

My elation is not borne out of expectation of some waving of a magic wand by APC that will solve a myriad of problems that have long plagued that country, or a quick succession of miraculous intervention of some high power, partial to the APC, that will decree henceforth and it is done with fiat; rather, it was borne out of the realization of a long hoped-for emergence of an alternative choice for Nigerians; an offering of an opportunity for comparison of a present with a past; a weighing and evaluation of leadership styles, political manifestos, and deliverance on promises. This elation will not be subdued in any form if the PDP were to regain power at the center come 2019, because, mindful of its experience in the last general election, it will strive to outperform its main rival in anticipation of victory 2023 general elections. Finally, an era when political parties will survive in Nigeria based on its performance have arrived; a throwback to the first republic years when leaders of each of the regions struggled to outperform the other in delivery of social services to the people

For sixteen years, Nigerians – even diehard loyalists of PDP – have suffered under a party that appeared aloof to the yearnings and suffering of the people; a party that did little to improve the social and economic lives of the majority of the governed, that concentrated wealth on a mere 1% of the Nigerian population, and distributed the nation’s resources among its members and few friends and loyalists. The PDP elevated corruption to an institutionalized cancerous state permeating every facet of the Nigerian society, and turned a blind eye to the blatant excesses of the haves to the detriment of the have-nots. To make the situation more nauseating, the president, on more than one occasion, insisted that there was no such thing as corruption in Nigeria; rather, what we have is stealing by thieves. This was the proverbial bale of straw that broke the Camel’s back. With that, Nigerians had had enough of the insensitivity of the Jonathan administration, and they let the PDP know it with their votes.

It is against this background that Nigerians have expressed unprecedented optimism for the in-coming Buhari administration; especially, given that over the decades Buhari has come to be seen as a “messiah” of some sort by the rank and file, evidenced by his austere lifestyle – something alien to former African leaders –, his projection as a champion of the poor (an Aminu Kano with a military background), and his continuous railing against corruption. He had further endeared himself in the hearts of many Nigerians, and convinced them of his genuine desire to serve, in the many times he ran for office believing that he will one day have that opportunity to let the people weigh his actions against his utterances. That time has come, and for his administration to succeed, these are a few things they must focus on:

1.    The new administration should focus on securing Nigeria's oil and gas pipelines to ensure steady supply of gas to the turbines and reduce, if not eliminate in its entirety, illegal siphoning of the crude. It is estimated that Nigeria loses about $280,000 daily to illegal bunkering, which is about N56m daily in revenue; a lot of money when one adds it up. Savings accruing from the stoppage of these illegal activities could be channeled towards developing the host communities of these pipelines, by investing them in job-creating or skills acquisition ventures, and cleaning up oil spills.

2.     Improving power generation by insisting that the power companies perform their responsibilities dutifully. Government had generated a lot of revenue from the privatization of the power industry, and that revenue should be used for upgrading and extension of the national grid, developing of hydro, solar, and wind energy sources, funding of new energy source research stations in some universities, and sponsored training of selected Nigerians overseas to form the core of the future in power generation engineering. Also, the licenses of some of the private companies who have not made any impact should be revoked immediately. For those who are serious, government should play an enabling role to ensure that needed equipment is imported and cleared with ease by eliminating bureaucratic bottlenecks.

3.    The administration should counter security problems by adequately equipping the various security agencies- including the Nigerian Civil Defense-, providing continuous training programs, paying them a living wage, housing and sundry allowances, life insurance schemes, thereby making the profession attractive for university graduates. Government should, equally, not hesitate to make an example of any erring security personnel regardless of the branch or rank. Though elimination of a centralized police system is preferable, where it is not achievable, a flatter leadership structure should be introduced to make for quicker decision-making process.

4.    On agriculture, you cannot have adequate food supply without a functional distribution network, and you cannot have such networks without good road and rail networks. To go with a distribution network is a safe, secure, and strategic storage system for excess products or harvests. So, before talking of empowering farmers, the Buhari administration must provide the means to bring the harvests from the farms to the consumers. The cheapest form of mass transportation of people and goods is the rail system, so this administration must continue the rehabilitation of the railways started by the Jonathan administration, and make efforts to extend it to commercial farming communities. A network of quality rural roads connecting rural farming communities to urban, high consumption, areas is very necessary for on-time evacuation of harvests. Also, a network of interstate highways is necessary for improved interstate commerce.

The government should, also, encourage the creation of agricultural enterprising zones within each of the six geo-political zones based on comparative advantage system, and invite international agricultural giants to partner with local commercial farmers to run such zones. It should consider further reduction in import duties for farming equipment too. To decongest the Lagos wharf, and make it easier to clear imports, government should fast-track the construction/rehabilitation of Onitsha, Onne, and Calabar ports. It should also consider the dredging of the Niger-Benue confluence so that a port can be sited there to serve the states of the North Central

5.    On education, Nigeria does not need a wholesale reform of the system; what the schools need are good and conducive facilities, instruction materials, and modern technological tools to compete with the rest of the world. Teachers and lecturers should be paid a living wage, and on time too; however, they must also be forced to enroll in continuing education programs every two years to maintain the currency of their teachers’ certificates at primary and secondary school levels. A uniform academic curriculum, with a focus towards the future and what drives it, should be developed at the state and federal universities level. Also, government should encourage the designation of research programs in various fields at select universities in each of the geo-political zones. Nigeria graduates the most of university students in Africa; unfortunately, their knowledge is more theoretical than practical. Government should set guidelines for universities to invest more on the practical aspect of teaching than the theoretical, in line with international best practices. Finally, emphasis should be more on 2-year vocational and technical education than it has been before.

6.    On healthcare, all the 774 local governments should have a functional hospital that will serve as a hub for rural primary care clinics. The national health insurance program should be revisited and the kinks worked out so Nigerians can easily enroll in, and benefit from, the program. Indigenous drug manufacturing companies should be financially supported, with a caveat that will deter nefarious activities and corruption. Importation of durable medical equipment should be facilitated through the waiver of time-wasting bureaucracy, and any such company wishing to invest in Nigeria should be granted express consideration.  

An immunization program for every child ten years and under should be free and enforced to nip some illnesses in the bud. Government should draw up requirements and guidelines for establishment of rural clinics and private hospitals in Nigeria, to ensure a safe and healthy environment. Training program of healthcare workers should meet the minimum of international acceptable standards; finally, the national assembly should enact a law making it easier to sue healthcare workers – especially doctors – for medical malpractice and criminal negligence.

7.    Small and medium scale businesses, being the foundation of every nation’s employer and economic growth and development, should be encouraged by providing low-interest loans for technology and service-oriented companies, and tax breaks for establishing of manufacturing facilities in rural communities. An inducement fund should be created by the ministry of commerce to encourage research into new, safer and cheaper consumer products by universities and other independent research facilities. Banks should be encouraged to invest in promising inventive ideas that will benefit the society at large. The administration should, also, encourage foreign direct investment by offering attractive incentives such as ease of entry, movement of capital, tax breaks, and ease of exit – where applicable. It must also encourage domestic production by assisting in sourcing for markets for made in Nigeria products through the ministry of commerce.

8.    On ways to decongest some major cities like Lagos, Kano, Kaduna, Ibadan, Owerri, Port Harcourt, and Aba, governments should site needed infrastructure and social services, like water, power, roads, effective transportation system, and adequate security in rural areas to make it attractive for corporations to relocate headquarters to rural areas. Some Fortune 500 corporations in US and Europe have their headquarters in the so-called suburbs, and the main attraction is provision of what I listed above. Also, this administration should encourage corporations to engage in community restoration actions to augment the efforts of local governments in stemming migration to urban areas

9.    On solid minerals development since this requires advanced technology and is capital intense, government should seek out and partner with foreign companies with the necessary capital and technological expertise to extract and develop Nigeria's solid minerals on an arrangement that will include training of Nigerians for possible transfer of management responsibilities, transfer of technological and technical know-how to the indigenous employees, and creation of foreign markets for these minerals.

10.  Corruption has been diagnosed as the cause of what ails Nigeria, and the first monster that must be tackled if any/all of the first nine suggestions are to work. The president-elect has harped so much on corruption that one would expect corruption, if it were a being, to be seeking a hiding place by now. Unfortunately, corruption is not a being, it has assumed the status of a characteristic in Nigerian state; it is now a way of life, and it has eaten into the souls of many at every level in government. However, as the saying goes; cut off the head of the snake and the body withers. The fight for corruption must start at the top; it must start with the judiciary, the heads of federal parastatals, police commissioners and their superiors, heads of financial institutions, friends and families of the presidency. Because eradicating corruption has a trickle-down effect, when the larger Nigerian society sees those “untouchables” being convicted of even the smallest of crimes, the petty thieves (apologies to President Jonathan) will get the message and mend their ways.

For the fight against corruption to succeed, Nigerians must play a larger role than the government. Anti-corruption agencies can only prosecute if they know of an act, if Nigerians in the know choose to keep silent because of their complicity, or because their kit and kin are involved, then corruption will never be eradicated; the roads will never be built, neither the borehole, the railway line, the transformer, the national grid, the hospitals nor clinics will see the light of day. This means that the majority will continue to suffer, and unnecessarily blame the government for their own refusal to carry out their civic duties. The Buhari administration should cause the national assembly to set up a special tribunal (akin to a military court martial), devoid of civilian court interference, to try cases of corruption. The DSS/SSS should collaborate with the EFCC in the investigation of corrupt practices. Finally, prosecution must involve both the giver and recipient of bribes, and the proceeds of the corrupt practice must be forfeited and sold off at auction as a part of the punishment.

One thing is clear, this administration is not expected to achieve all of these feats in four years; however, a convincing effort is what Nigerians want to see, and they want to see it soon. Where the new administration fails to show best effort in the first 100 days, the hope and faith Nigerians have placed on Buhari will fade overnight. On their part, Nigerians should exercise some patience, considering that the damage and destruction of the Nigerian society took more than 16 years and it will take more than that amount of time to steer the ship of state right again. What the Buhari administration needs to do is lay a solid foundation that his successor can continue to build on, and for that to happen, it must continue to groom a collection of successors with the love for, and progress of, Nigeria as their first priority of public service.