 |
| 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.
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
No comments:
Post a Comment