WITH revenues drying up and debts mounting, the Federal Government has resorted to scavenging in order to meet its obligations.
Similarly, states are scampering in every direction to shore up their revenues to meet rising expenses. According to the budget implementation report for the second quarter of 2020 released by Budget Office of the Federation (BoF), total public debt stock as of June 30 stood at US$85.896 million (N 31.0 trillion), an increase of N3.681 trillion or 14.76 per cent when compared to the US$79,303.31 million (N28.628trillion) reported at the end of March 2020. During the same period, total revenue received by the Federal Government stood at N1.650 trillion while it spent N1.105 trillion on debt service.
Similarly, Mr Timipre Sylva, Minister of State for Petroleum Resources, said on Monday that the Federal Government’s earnings from oil and non-oil sectors as well revenue receipts had declined by 60 per cent. Consequently, the Director-General of BoF, Mr Ben Akabueze, disclosed last week that 428 ministries, departments and agencies would not be able to pay November salaries to their staffers.
As a result, government has resorted to scraping every surface so as to be able to meet its financial obligations. For instance, in the 2020 Finance Bill to be soon submitted to the National Assembly, government is proposing to sweep unclaimed dividend that had been idle over the years in the accounts of quoted companies. Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said FG would sweep unclaimed dividend amounting to N158.44 billion.
In addition, government will also seize available funds in the 45.57 million dormant bank accounts in commercial banks. It will then create an “unclaimed dividend and unutilised bank balance trust fund” where dividends declared and unclaimed will be held and used for the funding of infrastructure projects. President Muhammadu Buhari has equally given a six-month deadline for the disposal of all forfeited assets.
While inaugurating the 22-man panel saddled with the responsibility early this month, Attorney General and Minister of Justice, Abubakar Malami SAN, said its mandate was to ensure expedient disposal of all FGN forfeited assets and generate revenue for the Federal Government.
Just a few months ago, a desperate Federal Government had deployed revenue directors to 10 most important government-owned enterprises, which include Nigerian Ports Authority (NPA), Nigerian Communications Commission (NCC), Nigerian National Petroleum Corporation (NNPC) and the Nigerian Maritime Administration and Safety Agency, (NIMASA).
Others are the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), Department of Petroleum Resource (DPR), Nigerian Shippers’ Council (NSC) and Federal Airport Authority of Nigeria (FAAN). Although approval for the scheme had been given since October 2018, there was no desperation for implementation until a few months ago when the reality of acute paucity of funds dawned on government.
Meanwhile, with an increase of 158 per cent in total debt stock since 2015, there is a further projection of a further increase to N38.6 trillion by the end of 2021. In the 2021 budget presented to the National Assembly in October, President Buhari proposed N13.08 trillion expenditure, while putting total revenue available for the budget at N7.886 trillion. “It is projected, based on existing approval, to rise to N32.51tn by December 31, 2020 and N38.68tn by December 31, 2021”
Ahmed told a committee of the National Assembly a couple of weeks ago. As it is with the central government so it is with many of the state governments as 10 of them have yet to start implementing the new minimum wage signed into law by President Muhammadu Buhari in April last year.
Findings from the Nigerian Tribune show that with the recent announcement from Osun State Government of the commencement of the new minimum wage, 26 states have so far implemented the N30,000 minimum wage. The 10 states that have yet to key into the implementation of the new wage include Adamawa, Akwa-Ibom, Anambra, Benue, Ekiti, Kogi, Plateau, Imo, Nasarawa and Taraba. “Available records show that with Osun’s recent announcement, 26 states have so far implemented the new N30,000 minimum wage, with 10 states yet to implement” an impeccable Labour source told Nigerian Tribune.
However, the Federal Capital Territory (FCT), Oyo State, and Kebbi State are still implementing the new minimum wage partially. Nigerian Tribune findings revealed that dwindling allocations from the Federation Account Allocation Committee (FAAC) and unimpressive internally generated revenue have hamstrung states that have yet to start implementing the new minimum wage.
Even those that have started the implementation have had to sacrifice infrastructure development for paying the enhanced salary scheme. Recall that the COVID-19 pandemic precipitated a crash of the oil price and occasioned the lockdown of the economy for over three months. The two incidents shrank revenue accruing to states with many of them having to tweak their budgets. In addition to that, the states have had to make allowances for unplanned expenses to combat the pandemic and provide palliatives for the people. They have also had to announce tax relief for businesses operating within their domain, which has further depleted their revenue.
In his reaction to the financial crisis governments at both the federal and state levels are encountering, Professor of Political Economy and management expert, Pat Utomi, said though he didn’t have all the parameters to conclude that the federal government ‘is broke,’ emerging trends suggested that the cost of running government was too high.
Utomi, who spoke with the Nigerian Tribune in a telephone interview, said the federal government is handicapped partly because a lot of money goes into the maintenance of the presidential fleet, protocol and running of the National Assembly and because recurrent expenditure is high, MDAs are getting desperate to raise more tax revenues. “As a result of this, the tail is wagging the dog.
At a DFID (Department for International Development) presentation, I once suggested that since there are too many people doing nothing other than carrying files in government agencies, there is need to re-train and deploy them to some local government areas where their services are mostly needed. Or they can be trained on entrepreneurship and empower them to be more productive in the economy,” the political economist suggested.
He also believes that Nigeria can reduce the cost of running the National Assembly and save a lot of money by adopting part time legislature.
Speaking to CNBC Africa during the station’s Power Lunch West Africa programme, Bismarck Rewane, Chief Executive Officer of Financial Derivatives Ltd, explained that Nigeria is broke and that the situation has left the country in a rather precarious financial position as far as dealing with the looming recession is concerned.
In an interview with Nigerian Tribune, Mustafa Chike Obi, the Executive Vice Chairman of Alpha African Advisory Limited, a Financial Advisory and Fund Raising firm, said “I will just say that Nigeria as a country is living way beyond its means. All of us have sacrifices to make if we want to reach the goal of economically viable country. We are consuming the assets of future generation. That is what we are consuming today.”
Also, speaking in the same vein, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yusuf, noted that “revenue is very key and very central to the budget. If you look at the last three years there has been large variances, large negative finances in the revenue targets and it is not likely that what we will have in the 2021 budget will significantly be different. “So, the revenue will continue to be an issue if we continue to have the economy the way it is and for as long as the private sector continues to struggle with all the challenges in the business environment,” he said.