TO end the monthly custom of state executives looking up to the Ministry of Finance, Abuja, for federal allocation, Governor Abiola Ajimobi of Oyo state has reiterated the need for fiscal independence of states and resource control.
This is as he also restated calls for devolution of powers accompanied by review of the revenue allocation formula.
Ajimobi made these calls as one of the panellists at the ongoing 57th Annual General Conference of the Nigerian Bar Association, in Lagos, on Wednesday.
In what he described as a warped federalism that favoured the federal government, Ajimobi decried the over reliance of many states on federal allocation to manage their affairs.
“There is an urgent need for fiscal independence for the states if we are to be free from going to Abuja monthly cap in hand to collect allocations. Let the states control some of the resources in their domain.
“Let the FG unbundle some of the responsibilities in its care. Some of the items currently on the exclusive legislative list should be moved to the concurrent list. For, instance, there is no reason why the FG should be giving licenses to miners in my state.”
“We need to revisit this arrangement so that the states will not perpetually be at the mercy of the FG. The practice is stifling the development of the states. Financial independence will reduce the rate at which states obtain loans,” he said.
Ajimobi who presented a paper title, “Debt as a drag on institution building”, attributed the country’s high debt profile on political and economic instability, policy fluctuations, bribery and corruption, misappropriation, non-adherence to sound economic philosophy, weak institutions and deficient legal frameworks.
He identified administrative corruption by political leaders and collaborating civil servants, through diversion of loans meant for designated projects to other projects that would cater for their narrow interests, as a major factor responsible for the country’s rising debt profile.
He consequently stressed that Nigeria should deeply examine its debt management and servicing tactics.
“There is a positive correlation between meaningful economic growth and strict financial discipline. The reverse may be the case when debt servicing, whether external or domestic, becomes burdensome due to mismanagement of loans.”
“Nigeria, among some other African countries, has been noted to be among the world growing economies and as such we cannot but take loans, but we must look at the diligent approach and management of our debt.”
“It is no longer news that institutional corruption perpetuated by politicians and colluding civil servants has over time caused the country a lot of problems, as the two divert loans meant for particular projects to other projects they believe their individual purposes would be served.”
Other speakers at the session were the Ghanaian Minister of Finance, Mr Ken Ofori-Atta, and the Director-General, Debt Management Office (DMO), Mrs Patience Oniha.
Speaking, the DMO boss, Mrs Oniha pointed to the need for the federal government to create paths for states and corporate bodies to raise capitals and bonds as availed commercial banks.
She described the country’s revenue as underperforming such that the nation’s revenue level was very low compared to increasing new and old borrowing.
Drawing from the Ghanaian experience, Mr Ken Ofori-Atta said the country approved deficit target by the legislature and criminalized any attempt by politicians or civil servants to undertake projects outside budgetary provisions.
The minister said, “Ghana has criminalized any attempt by civil servants and politicians to execute projects outside the budget. We have created the DMO office and gave legislative approval to deficit target, among other measures to stabilize the debt rise and grow our economy.
“The most important aspect of the measures is to grow revenue and reduce taxes by 40 per cent for the people to get back to business. There is a lot of optimism and we are having a negative to a positive outlook.”