Posts
One would not be a prophet of doom to say there is high probability that two-third of states in Nigeria might not be able to pay salaries in 2015.
Wale Oshun, National Chairman, Afenifere Renewal Group, January 1, 2015, in PUNCH, p 21.
Blessed are politicians when out of power. They reveal all the things which those in power labor to hide from us. Since December 2013, I had warned My Fellow Nigerians, about the inevitable collapse of crude oil prices and its consequences. Obviously, nobody listened. In May 2014, out of sheer frustration, associated with talking to the deaf, I wrote a column titled SO YOU WANT TO BE GOVERNOR IN 2015.
In it, Nigerians were told that states, and even the Federal government, might not be able to pay salaries by 2015. Those wanting to be governors were warned about the empty purses and huge debts they will inherit. In December, an ethnic brother to Okonjo-Iweala, sent me a message, calling me a Prophet of Doom who hates Igbos as if Igbos alone will suffer when the calamity occurs.
As it turned out, I was even slightly off the mark. By the end of 2014, all the states of Nigeria, my own Lagos State included, owed their staff salaries, arrears of allowances etc. To cap the dreary situation, thousands of civil servants, including Federal workers, spent Christmas without their salaries despite assurances from the Finance Minister. To the best of my knowledge Igbos were not exempted from that punishment.
But, today, everybody is singing our song. Afenifere Renewal Group is only the latest among the new converts to the doctrine I have been preaching since 2013 while Nigerians were treated to empty assurances by the Federal Government. In that same PUNCH edition, ECOBANK was quoted, on page 10, as saying: The plunge in oil prices exposes banks to refinancing and re-pricing risks, stemming from the fact that oil and gas clients are the biggest source of non-interest bearing foreign currency deposits. What the bank said is bad news enough; what it failed to reveal is the more troubling aspect. Oil and gas companies have secured the lions share of banks loans and with crude and gas prices plummeting globally the risk of default increases everyday. One or two banks might actually fail again.
It is against that background that the fate of Governors is being considered right now. From Area Boys sniffing around some state capitals, and watching closely, there is the possibility that some state governors, who had secured dual citizenship in some countries, might actually abscond before May 29, 2015. The reasons are not difficult to understand. And, it is all related to the price of crude oil.
One does not need to be an economist to understand the points being made here. A sound understanding of elementary school arithmetic will be sufficient. If a state owed its staff three or four months salary, by December 2014, when the average price of crude was over ninety dollars ($90) per barrel, how would it be able to pay now that the January 2015 price is fifty-seven dollars ($57) and falling?
Furthermore, except for July, the revenue from crude oil in 2014 fell below budget every month. By October, it was as low as 45 per cent of budget and went steadily down till December. The Federal Government had augmented the revenue by drawing down the Excess Crude Account, ECA, until it came down to $4.5 billion in October when $2 billion was again peeled off to help all the tiers of government. At the moment, there is little money left in the ECA to cushion the impact of dwindling oil revenue. In 2015 there will be no ECA cushion.
Meanwhile, every state has incurred huge debts, deductions for loan repayment are made up-front by the Central Bank before the states are handed the balance. I worked out a model to predict how much the average state will receive for its own January 2015 allocation and it comes out to 42% of what they received in January last year. That is hardly sufficient to cover the expenses of running the Governors Office, Mansion, paying his Special Assistants, the House of Representatives, and, if he has a jet, paying for jet maintenance. Given that plausible scenario, it is difficult to imagine where the funds to pay staff salaries will come from. The governors might run away.
To be continued..
ADVICE FOR GOVERNOR FAYOSE
He who sets out on revenge must first dig two graves. (VANGUARD BOOK OF QUOTATIONS, VBQ, p 215).
I campaigned against you; but I was also one of the first to admit that you won the election fairly. Ekiti people have made their choice for a governor to lead ALL of them for the next four years. You have one of the five most difficult states, in Nigeria, to govern in the next four years. Already, you know what you inherited financially.
The situation will get a lot worse before it gets better. You will have a tough time maintaining your level of popularity — even if you are sharply focused on governance and how to manage severe austerity. You can only make your own challenges more difficult to overcome by dissipating your energies on seeking revenge. Forget revenge; it is corrosive and it will only make it impossible to obtain the collective support you need to get Ekiti State through this most difficult period ahead.
I wish you God’s guidance.
Visit: www.delesobowale.com or Visit: www.facebook.com/biolasobowale or follow on Twitter @ DrDeleSobowale.
No comments