(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.
Signed:
Emeka Umeagbalasi, B.Sc. (Hons) Criminology & Security Studies
Board Chairman, International Society for Civil Liberties & the
Rule of Law
+2348174090052(office)
Uzochukwu Oguejiofor, Esq., (LLB, BL), Head, Campaign & Publicity
Department
Chiugo Onwuatuegwu, Esq., (LLB, BL), Head, Democracy & Good
Governance Program
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