The move by the federal government to help reduce the burden being experienced by 36 states of the federation by offering them a N90 billion loan ($453 million) is a move in the right direction but then, of what impart will it have on Nigerians residing in those states?
In the face of economic down-turn and poor return on the nation’s oil production, this sort of loan could be regarded as a bailout so as to fortify some of these “broke” states to actualize certain developmental projects and infrastructures.
The money is to be disbursed in two tranches, with an initial N50 billion released in three months and another N40 billion in nine months, and will be shared among qualified states at a 9% interest rate.
In the words of the Finance Minister, Kemi Adeosun, “it is a loan and it is fully repayable, although it has a secured tie against future dividends, revenues and any amount that government might owe the states”. She added that the loan is a bond and it has been guaranteed by the federal government.
The states remained in financial hardship despite a July 2015 Central Bank of Nigeria-packaged special intervention fund that doled out between N250 to N300 billion in the form of soft loans to enable the states pay a backlog of salaries.
The states also enjoyed a debt relief program designed by the Debt Management Office (DMO) which helped them to restructure their commercial loans of over N660bn, extending the life span of the loans while reducing the states’ debt-servicing expenditures.
Some of the states that were assisted from the first bailout are; Adamawa, Bauchi, Benue, Cross River, Ekiti, Katsina, Gombe, Kogi, Nasarawa, Niger, Ondo, Osun, Ogun, Plateau, Sokoto, Kwara, Bayelsa Imo, Enugu, Oyo, Delta, Kebbi and Zamfara.
On paper, the main purpose of these bailout funds is meant to clear out some of the debt being owed by some state governors, such as the payment of salaries and other miscellaneous needs, however, such moves are gradually becoming uncalled for, considering the fact that some governors often lavishly spend this money unnecessarily.
According to an analysis carried out by the Independent Corrupt Practices and Related Offenses Commission (ICPC), most of the states that received bailout funds from the federal government diverted the money for other means. 23 states received bailout funds from the President Muhammadu Buhari-led government to pay the salaries of their workers out of 27 that applied from the Central Bank of Nigeria.
For the record, this is the second time that the Buhari-led government will be offering bailout funds to some of the states, with the initial disbursement occurring last year December.
However, it is sad to imagine that the federal government would embark on such a move at the expense of the masses who are still finding it difficult to make ends meet in the current state of the Nigerian economy.
Besides, some of these states generate revenue on a daily or monthly basis whether through direct or indirect tax, of which it is expected that the money should be used to develop the state.
More importantly, with the disbursement of this loan to the various states, will it help to improve the standard of living of the people?
Again the ideal behind this loan was meant to pay workers salaries, something which could be falsified in order to meet up with a certain agenda.
In addition, the federal government has done little or nothing to alleviate the high poverty level in the country but has the capacity to dole out huge amounts of money to some state governors.
It would have been ideal if certain committees were setup that would ensure proper distribution of the money rather than handing it over to the state governors.
Furthermore, the FG is indirectly encouraging massive corruption from some of these state governors who usually don’t fulfill the purpose of this loan to their various states.
Such allocation, which is considered as a loan will be taken for granted by some of these state governors who don’t genuinely take the plight of the masses to heart and instead continue to enrich their personal accounts.