The storied federal government bailout to states suggests that, the
federal government is becoming rather motherly. The state
governors are not getting informative about the issue, but acting
picky. You know why? Our states are economic wilderness. The
micro-economic environments in the states are anti- growth and
anti-development. Bailouts have no fiscal sustainability. The
bailout syndrome is a vicious circle. The states will always ask for
more like Oliver Twist. The Greece experience had shown that,
bailouts are not the solution to financial distress. What is required
is financial prudence and creative thinking.
Anyway, the economic definition of the word “bailout” is practical
and not theoretical. The states economies are the sum total of the
national economy. But two halves do not make a whole. The
federal government has no economic control over the states.
Bailout is being used as a political instrument not as an economic
instrument. Nigeria’s economy is disarticulated and not coherent.
There is no sectoral and regional complementarity and reciprocity.
Results can only be obtained by exploiting opportunities, not by
solving problems. Business is a process that converts knowledge
outside resources into economic value. Bailout is only throwing
money at the problem. Business is an economic system
dependant on capacity for economic performance. What have the
Governors done with solid minerals and agricultural potentials in
their states? They have been chasing petro-naira lazily.
Hmmm…, wait a minute! What about the so called oil producing
states? They are also victims of their planlessness. The bailout
syndrome is a deficient political and economic strategy. Permit me
get pastoral. Proverbs chapter 21 verses 5-8 and Hosea chapter
13:6-7 had given us the clues to the problem at hand. We cannot
make successes without good planning. This economic meltdown
calls for godliness and righteous use of our God given resources.
Proverbs 7:14 tells us that, both good and bad times must be
endured because they came from God. What lessons have we
learnt from the situations or circumstances confronting us now as
a nation? We cannot diversify with a bailout syndrome. Every state
should start to explore areas it has comparative advantage. Loans
should be applied to the need structures for which they were
obtained.
The states had become economic colonies to the federal
government. They are not economically viable and so exist only for
administrative convenience. Money received from the excess
crude funds was not used for productive purposes. States existing
as economic parasites cannot have good investment sense. They
have committed economic suicide with loans and bonds, and
thereby creating debt overhangs. The bailout syndrome defines the
problem with our federalism.
And, it is a fact that, political democracy must go hand in hand
with economic democracy. When the political process becomes
excessively monetized, only economic aristocrats will secure
power positions. They can buy their way into political positions and
hijack the process of governance. So, politics will not be a game of
service. It will rather be an investment. Workers in Bayelsa State
had been forced to receive half salaries. The political class in the
state had refused to make any sacrifice. And, they are living in
luxury. The vitality and strength of the state had been mindlessly
looted by rampaging politicians. This was done through dubious
N40 Billion airport loan facilities. But you may ask, what is the
economic value of an airport project to the people and economy of
Bayelsa state? This misapplication of funds is not peculiar to
Bayelsa State. It is the trend in most of the states of the
federation.
Therefore, those who are championing the fight for resource
control should realize that; the oil producing states cannot develop
without good economic sense. The strong should not be allowed to
do what they can-looting the state treasury-and the weak suffering
what they must. Also, those agitating for the restructuring of the
polity must have a rethink. The transformation of the six geo
political zones, into federating units and the 36 states as federating
zones is rather too academic. This will not change our political
culture. We have been evasive of fiscal federalism. Section 134 (1)
of the 1960 independence constitution of the federal Republic of
Nigeria provided for fiscal federalism. It is time enough we wake
up to the truth and stop pettifogging on salient national issues.
States should learn to grow on their own. Our federal system of
governance incentives economic laziness in the states.
Force Bray is a Citizen Journalist
federal government is becoming rather motherly. The state
governors are not getting informative about the issue, but acting
picky. You know why? Our states are economic wilderness. The
micro-economic environments in the states are anti- growth and
anti-development. Bailouts have no fiscal sustainability. The
bailout syndrome is a vicious circle. The states will always ask for
more like Oliver Twist. The Greece experience had shown that,
bailouts are not the solution to financial distress. What is required
is financial prudence and creative thinking.
Anyway, the economic definition of the word “bailout” is practical
and not theoretical. The states economies are the sum total of the
national economy. But two halves do not make a whole. The
federal government has no economic control over the states.
Bailout is being used as a political instrument not as an economic
instrument. Nigeria’s economy is disarticulated and not coherent.
There is no sectoral and regional complementarity and reciprocity.
Results can only be obtained by exploiting opportunities, not by
solving problems. Business is a process that converts knowledge
outside resources into economic value. Bailout is only throwing
money at the problem. Business is an economic system
dependant on capacity for economic performance. What have the
Governors done with solid minerals and agricultural potentials in
their states? They have been chasing petro-naira lazily.
Hmmm…, wait a minute! What about the so called oil producing
states? They are also victims of their planlessness. The bailout
syndrome is a deficient political and economic strategy. Permit me
get pastoral. Proverbs chapter 21 verses 5-8 and Hosea chapter
13:6-7 had given us the clues to the problem at hand. We cannot
make successes without good planning. This economic meltdown
calls for godliness and righteous use of our God given resources.
Proverbs 7:14 tells us that, both good and bad times must be
endured because they came from God. What lessons have we
learnt from the situations or circumstances confronting us now as
a nation? We cannot diversify with a bailout syndrome. Every state
should start to explore areas it has comparative advantage. Loans
should be applied to the need structures for which they were
obtained.
The states had become economic colonies to the federal
government. They are not economically viable and so exist only for
administrative convenience. Money received from the excess
crude funds was not used for productive purposes. States existing
as economic parasites cannot have good investment sense. They
have committed economic suicide with loans and bonds, and
thereby creating debt overhangs. The bailout syndrome defines the
problem with our federalism.
And, it is a fact that, political democracy must go hand in hand
with economic democracy. When the political process becomes
excessively monetized, only economic aristocrats will secure
power positions. They can buy their way into political positions and
hijack the process of governance. So, politics will not be a game of
service. It will rather be an investment. Workers in Bayelsa State
had been forced to receive half salaries. The political class in the
state had refused to make any sacrifice. And, they are living in
luxury. The vitality and strength of the state had been mindlessly
looted by rampaging politicians. This was done through dubious
N40 Billion airport loan facilities. But you may ask, what is the
economic value of an airport project to the people and economy of
Bayelsa state? This misapplication of funds is not peculiar to
Bayelsa State. It is the trend in most of the states of the
federation.
Therefore, those who are championing the fight for resource
control should realize that; the oil producing states cannot develop
without good economic sense. The strong should not be allowed to
do what they can-looting the state treasury-and the weak suffering
what they must. Also, those agitating for the restructuring of the
polity must have a rethink. The transformation of the six geo
political zones, into federating units and the 36 states as federating
zones is rather too academic. This will not change our political
culture. We have been evasive of fiscal federalism. Section 134 (1)
of the 1960 independence constitution of the federal Republic of
Nigeria provided for fiscal federalism. It is time enough we wake
up to the truth and stop pettifogging on salient national issues.
States should learn to grow on their own. Our federal system of
governance incentives economic laziness in the states.
Force Bray is a Citizen Journalist