The Senate on Thursday asked the Federal Government to immediately commence the review of the revenue allocation formula in favour of states and local governments in order to reflect true federalism.The upper legislative chamber also directed its committees on Finance, National Planning and States and Local Governments to study the situation and suggest remedial measures to avoid a total collapse of the economies of the states.The resolutions arose from a motion brought by Senator Olubunmi Adetumbi, in which he argued that many states of the federation were faced with the danger of imminent bankruptcy due to poor revenue generation.While leading the debate on the motion, Adetumbi said, "Most states have become social employers of labour with unsustainable high workforce that does not reflect in improved service delivery to the people."In most states, the private sector is weak and unable to generate economic growth and jobs that are required, thereby making the states and local governments the largest employer of labour with attendant fiscal imbalance."Adetumbi added, "The bulk of the revenue of these states is currently financing the payroll of the civil service, which constitutes less than four per cent of the total population in all the states. "With this development, six states are approaching a state of distress with Kano spending 127 per cent of its gross annual revenue on civil service personnel; Sokoto, 62 per cent; Niger, 56 per cent; Zamfara, 54 per cent; Katsina, 50 per cent; and Osun, 50 per cent."He further said that most of the state governments were now rushing to the capital market to raise long-term bonds to finance development projects, adding that without an appropriate framework, misuse of such funds could spell doom for the future of the states.According to him, the financial situation of the states calls for urgent review of the revenue sharing formula between the Federal Government, states and local governments.He noted that a recent research by the Nigeria Governors Forum revealed that 20 states faced the prospect of unstable and unfavourable financial standing, given the high percentage of their wage bills to the total revenue accruable to them.Adetumbi also attacked the continued centralisation of labour and wage legislation without reference to resource endowment of states, saying that such contradicted true federalism and was unhealthy for economic development.Supporting the motion, the Senate Leader, Mr. Victor Ndoma-Egba, said it confirmed the fact that some states of the federation were not viable, and urged those agitating for more states to be cautious as there was now a growing need for the Constitution to be amended to include the possible merger of non-viable states.He said the financial problems facing the states were as a result of the skewed federal system being practised in the country, noting that the time had come to review the terms of the nations fiscal federalism."This is a warning to those calling for the creation of new states. I think we should have a provision in our Constitution for states to freely merge considering the situation facing them right now," he said.Those who spoke in the same vein included senators Nkechi Nwaogu and James Manager. They called for the review of the fiscal principles being operated by the country, adding that states that were not viable should be free to be acquired or merged with other states as it was being done in the banking sector.Senator Ahmed Lawan disagreed with the view that more states should not be created, but noted that the review of the fiscal allocation formula was long overdue."I support the creation of new states for self actualisation. The Federal Government is frustrating the review of the revenue allocation formula; 53 per cent is too much for the Federal Government. This seventh Assembly should ensure that the formula is amended to ensure that states can get more money," he said.Senator Alkali Jajere, in his contribution, said states would be viable if they looked inwards and harnessed the natural endowments within their domains.Although senators noted that the states were not doing enough to general revenue internally, Senator Bukola Saraki cautioned that most states actually did not have viable economies from which to derive enough revenue.He said the centralised policies of government had also affected the economies of the states, adding that leakages in government revenues should be plugged to make more money available for all the tiers of government.Senator Sola Adeyeye, however, blamed the military for the unitary system still in operation in the country and asked the political leaders to immediately correct the anomaly.Senator Ifeanyi Okowo warned that even with the review of the revenue formula to make more money available to the states and local governments, there would still be a need to question how states were spending and accounting for the revenues accruing to them.
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