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Playing god

Published by The Nation on Mon, 08 Dec 2014

Except for foreign loans, the Federal Government cannot interfere in transactions between state governments and local banksIt is true that the downward plunge in the international price of crude oil has had very serious negative implications for Nigerias economy. Indeed, so critical is the situation that the crude oil price benchmark of $78 per barrel, adopted for the 2015 budget projection, has been lowered to $73 per barrel.Yet, it is no less true that no level of government can exonerate itself from part-responsibility for the profligacy and fiscal irresponsibility that have made Nigeria ill-prepared to absorb the shocks, resulting from dipping international oil prices.This is why the Federal Governments grandstanding and holier-than- thou attempt to hold other levels of government responsible for the unsavoury economic situation is most unhelpful, to say the least.The Federal Governments latest stance in this regard is its reported directive to banks in the country to obtain the approval of the Federal Ministry of Finance before granting loans to any state government. This measure is purportedly to check alleged abuse of the money market by some state governments.Of course, we appreciate the responsibility of the Federal Government for the overall coordination and management of the national economy. However, the government at the centre is entirely deluded if it assumes that it has managed its own share of accruals to the national treasury with a higher degree of discipline and transparency.Today, the Federal Government is statutorily entitled to 56% of all revenues remitted to the Federation Account and distributable to all tiers of government. On the other hand, the 36 state governments and the 774 Local Government Councils share 44% of accruals to the Federation Account.The implication is that each state and local government accesses less than one per cent of funds shared from the Federation Account. Yet, neither the Federal nor most of the other levels of government can show any appreciable level of development commensurate with the quantum of funds they share at their monthly allocation jamboree.No level of government is, therefore, qualified to try to paint the others black as the Federal Government tries to do in this instance. This is even more so because the Federal Governments failure to effectively discharge its responsibility of securing the countrys oil supply pipelines has considerably worsened the economic crisis.Thus, despite yearly contracts worth N5.06 billion awarded to former Niger Delta militants to protect oil pipelines, the theft of the countrys crude oil continues on an astronomical scale; with the consequence of drastically reducing the funds remitted to the Federation Account.The revenue accruing to states thus continues to fall monthly, with many states now owing a backlog of salaries to workers. Therefore, to make it virtually impossible for states to access the money market for short-term loans for development purposes, which is the implication of the new Federal Government directive, can only inflict further injury on the national economy.The Federal Governments directive to banks, as regards loans to state governments, negates the spirit of federalism. As an agency of the Federal Government, the Federal Ministry of Finance has no business guaranteeing domestic loans to state governments. Such powers can easily be abused in an immature and overly partisan political process like ours, with negative implications for development.Rather, the countrys money market should have clearly stipulated guidelines and regulatory laws for granting loans to private and public entities, including the Federal Government. The operations of the money market must be guided by the laws of supply and demand, rather than the partisan proclivities of any arm of government.What the emergent frightening economic scenario calls for, from all levels of government, is greater discipline, transparency and accountability in the management of public funds.The post Playing god appeared first on The Nation.]]>
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