The Nigeria states governments inability to pay the salaries, pensions and other emoluments of their workers should be a concern for all and sundry. The situation was made worse with revelations from different sources suggesting that the delay shall remain in place as long as the prices of oil remain low. This is coming when the Federal Government needs to look for new buyers of the commodity as most existing buyers have began to turn their back into the country’s main source of income.
It is pretty sure that most states in the country cannot survive without federal allocation. To win elections, politicians have promised practically endless government spending and covered up the cost, leaving generations of taxpayers obligated to pay off the debt. That’s wrong, but neither the US nor Europe has a plan to stop it. To meet the expectations of the yearning populace, some states went on borrowing spree to embark on capital projects like roads, airports, schools, hospitals etc, and the borrowed fund must be serviced despite the reduced allocation.
Beside the high debt profiles, lack of innovations and ideas on behalf of the state chief executives is a setback. Some of these leaders are sort of new contrivances to generate revenue within their states. Though there is no doubts about the nature of the economy of these states, but an aggressive and innovative leaders will device means to bring something out of nothing. The deliberate tax evaders and avoiders have not helped the situation and yet they clamoured for basic facilities from the states.
When a government spends more than it makes, it sends the bill (in form of taxes and inflation) to the taxpayers reflecting the situation in our system today. The same undisciplined government spending and social engineering that has undermined our economy over years are also tearing apart the social fabric of the land. The unemployment figures continue to soar while the few employed are over dependent.
The people at the receiving end are the civil servants who have spent the productive part of their life to keep their state running. Regrettably, these workers suffered hunger, became poorer and even paying the ultimate price – death! With the nosedived economy, the routine economic activities are paralysed. Good governance at the state level is lost due to distraction from avoidable strike actions, fifth columnist, opposition parties and disgruntled individuals and groups who have scores to settle.
Governors should be reminded that increase in government spending can only provide a temporary stimulus to demand and output but in the long run, higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate and work. Some folks have argued for reduced spending but these will also translate to downsizing the work force and de-funding various capital projects that generate money for the economy.
Development of strategies that enhances states Internally Generated Revenue, consensus on debt reduction mechanism without inflicting wounds on salaries and infrastructural development, improvement of tax system that encourage the citizens to pay willingly, looking beyond federal allocation by creating conducive investment environment are antidotes to the economic logjam. The development of tourism industry such as Erin Ijesa waterfall in Osun State will generate enormous revenue to the government purse. The state chief executives should be innovative and proactive in generating concept and strategies that benefits their people and the national economy at large. True federalism is also a key to reposition the states to be an autonomous economic unit without depending on the Federal Government.