| From: Mobolaji Aluko Sent: Monday, June 29, 2015 09:25 To: USAAfrica Dialogue; NiDAN; NaijaPolitics e-Group; naijaintellects; nigerianid@yahoogroups.com; OmoOdua; ekiti ekitigroups; Ra'ayi; Yan Arewa; africanworldforum@googlegroups.com; nigeriaworldforum@yahoogroups.com; Naija Elections Reply To: usaafricadialogue@googlegroups.com Subject: USA Africa Dialogue Series - MONDAY QUARTER-BACKING: Why "Their Excellencies" Cannot Pay Workers (by Bolaji Aluko) |
________________________________________________________________
MONDAY QUARTER-BACKING: Why "Their Excellencies" Cannot Pay Workers
By
Mobolaji E. Aluko, PhD
June 29, 2015
SUMMARY
This is an essay where we claim that the sheer speed and quantum of revenue decline (due to serious oil revenue decline) for most of the states in Nigeria made it almost impossible for them to adjust sufficiently to pay their wage bills; and where we suggest that from here on how, wages and worker hiring should be frozen for a time definite, a Federal bailout should be given specifically from monies prevented from leaking, from looted monies recovered and from fuel subsidy reduction; states should curb conspicuous consumption and diversify away from oil with the implementation of resource control and true federalism.
Figure 1: Nigeria's Revenue Streams and Benefit Flows for FAAC Allocation Meetings
Table 2: Total Revenue May 2011 – May 2015
| Month | May 2011 | May 2012 | May 2013 | May 2014 | May 2015 |
| Total Revenue Available for FAAC Distribution (Naira) | 730,399,392,941.48 | 750,489,721,802.45 | 873,557,985,425.04 | 685,126,383,688.55 | 388,339,071,932.46
|
| Total% Difference compared with May 2015 | -46.83 | -48.26 | -55.55 | -43.32 |
0.00 |
TABLE 3: Beneficiaries of Allocation of Gross Revenue
| Month | May 2011 | May 2012 | May 2013 | May 2014 | May 2015 | |
| Gross Allocation to FGN (Naira)
| 201,312,911,097.48 | 242,272,024,905.55 | 341,765,308,749.88 | 274,773,874,257.92 | 160,631,423,570.89
| |
| Total% Gross Allocation to FGN Difference compared with May 2015 | -20.21 | -33.70 | -53.00 | -41.54 |
0.00 | |
|
|
|
|
|
|
| |
| Gross Allocation to States + LGCs (Naira)
| 254,283,947,824.84 | 320,818,733,658.35 | 435,971,878,580.64 | 351,544,521,790.86 | 216,541,427,616.47
| |
| Total% Gross to State + LGCs Difference compared with May 2015 | -14.84 | -32.50 | -50.33 | -38.40 |
0.00 | |
|
|
|
|
|
|
| |
| Transfer to Excess Accounts+Revenuue Collecting MDAs
| 274,802,534,019.16 | 187,398,963,238.55 | 95,820,798,094.52 | 58,807,987,639.77 | 11,166,220,745.10
| |
| Total% Transfer Difference compared with May 2015 | -95.94 | -94.04 | -88.35 | -81.01 |
0.00 | |
|
|
|
|
|
|
| |
| Total | 730,399,392,941.48 | 750,489,721,802.45 | 873,557,985,425.04 | 685,126,383,688.55 | 388,339,071,932.46 | |
| Total% Difference compared with May 2015 | -46.83 | -48.26 | -55.55 | -43.32 |
0.00 | |
TABLE 5 NET Allocations to the SS Zone States
| Net Disbursements to Some Beneficiary States |
|
|
|
| ||||
|
| 2011 | 2012 | 2013 | 2014 | 2014 | 2015 | ||
|
| May | May | May | May | December | January | April | May |
| Rivers (32) | 13,526,630,827.69 | 17,927,566,175.40 | 26,156,761,412.81 | 14,917,788,394.85 | 13,996,189,941.16 | 13,931,763,824.41 | 8,903,568,532.02 | 6,682,594,712.71 |
| Delta (10) | 12,771,514,638.37 | 14,724,268,588.17 | 22,402,206,785.29 | 16,420,661,102.37 | 15,972,871,359.24 | 13,942,569,129.48 | 9,458,545,719.86 | 8,023,768,432.54 |
| Akwa-Ibom (3) | 10,051,298,564.47 | 18,671,116,092.35 | 25,793,770,042.90 | 22,360,538,098.65 | 21,365,645,130.54 | 20,735,321,385.77 | 13,806,440,977.24 | 10,192,336,103.69 |
| Bayelsa (6) | 8,824,176,512.03 | 10,598,437,596.68 | 19,265,596,720.52 | 13,344,279,475.18 | 12,208,438,283.73 | 11,348,324,080.46 | 8,091,915,142.69 | 5,976,458,128.55 |
| Edo (12) | 3,891,556,305.88 | 4,237,727,317.74 | 6,164,627,461.68 | 4,962,976,537.78 | 4,802,732,174.17 | 4,435,864,888.86 | 2,834,050,993.07 | 2,517,344,409.93 |
| Cross-River (9) | 3,358,997,397.82 | 3,968,282,457.36 | 4,799,215,149.85 | 3,996,054,610.10 | 3,833,013,362.74 | 3,733,048,290.27 | 2,744,448,703.63 | 1,793,199,395.92 |
| TOTAL | 52,424,174,246.26 | 70,127,398,227.7 | 104,582,177,573.05 | 76,002,298,218.93 | 72,178,890,251.58 | 68,126,891,599.25 | 45,838,970,068.51 | 35,185,701,183.34 |
FIGURE 2: Bar Graph of Gross Revenue Allocations in Nigeria
FIGURE 4: Bar Graph of NET Allocations to the SS Zone States
TABLE 10: Sources of Gross Revenue by Categories
| Sources of Revenue (By Categories) |
|
|
|
| ||||
|
| 2011 | 2012 | 2013 | 2014 | 2014 | 2015 | ||
|
| May | May | May | May | December | January | April | May |
| Statutory | 582,973,394,204.74 | 626,179,350,304.21 | 621,070,005,420.24 | 584,151,441,115.57 | 427,653,288,130.04 | 474,400,333,215.42 | 314,516,366,140.03 | 282,061,780,540.35 |
| Excess Crude/SURE-P Total | 103,088,142,944.40 | 57,014,541,706.53 | 190,299,235,691.43 | 35,549,235,691.43 | 72,422,542,525.84 | 15,631,214,719.57 | - | - |
| NNPC Refund Total | 0 | 7,617,431,250.00 | 7,617,431,250.00 | - | 61,931,643,548.39 | 6,330,393,548.39 | 15,820,118,988.39 | 6,330,393,548.39 |
| Exch Gain Difference | 0 | 0 | 0 | 0 | 6,130,197,386.15 | 10,550,930,423.15 | 33,528,914,409.56 | 24,786,565,300.57 |
| VAT | 44,337,855,792.34 | 59,678,398,541.71 | 54,571,313,063.37 | 65,425,706,881.54 | 60,638,590,969.96 | 73,465,805,672.52 | 71,197,281,676.15 | 75,160,332,543.14 |
| Total | 730,399,392,941.48 | 750,489,721,802.45 | 873,557,985,425.04 | 685,126,383,688.54 | 628,776,262,560.38 | 580,378,677,579.05 | 435,062,681,214.13 | 388,339,071,932.45 |
PROLOGUE
I have been looking at data – big data, in fact, forty-eight months of data from May 2011 to date – on revenue allocations in Nigeria, to begin to explain why a number of our Excellent State Governors (of about 20 out of 36 states) have not been able to pay their workers' salaries and/or pension lately (see Table 1), and why we were recently told that the immediate past Federal Government had had to borrow about N400 billion to pay salaries.
FAAC MEETINGS
As we must know, every third Wednesday of the month, State Finance Commissioners, Accountant Generals and their aides troop to Abuja to meet with their Federal counterparts, including members of the RFMAC to divvy up certain defined revenue streams to the Federal Government of Nigeria (FGN), to States and to Local Governments Councils (LGCs) according to certain pre-defined formula…. See Figure 1, which gives a good diagrammatic summary of revenue streams and beneficiary flows in these Federal Account Allocation Committee meetings. In totality, the revenue can be broken up into oil (and gas) and non-oil sources, of which the latter typically constitutes 60% or more.
In my discussions here, rather than tediously provide month-to-month analysis, I have merely looked mostly at May 2011, May 2012, May 2013, May 2014 (including December 2014) and May 2015 (including January 2015 and April 2015) – that is the months at the beginning and (towards the) end of the previous Federal Administration.
We begin with Table 2 of TOTAL REVENUE declared for distribution in May 2011-2015, with May 2013 being a bumper month, and hence our "gold standard" for comparisons.
Compared, for example, with May 2013, the May 2015 total revenue declined by almost 56% - and in actual figures by almost N500 billion.
Table 3 (showing GROSS ALLOCATIONS to FGN and TOTAL to states) – and its bar graph equivalent Figure 2 (but which has further breakdowns) - depict how these variations in total revenue have impacted the stated beneficiaries. Compared with May 2013, for example, the May 2015 allocation to the FGN declined by 53% and N73.5 billion; to the States+LGC declined by 50.33% and N97.3 billion; to Excess Crude transfer declined by 88.35%.
Now what is the situation in individual states? I will discuss this in geopolitical zones, starting with Figure 3 of the six states in the SW zone – but first in graphical format, in terms of NET ALLOCATIONS, that is gross allocations less External Debts, Contractual Obligations (Irrevocable Standing Payment Orders ISPO) and other deductions. Our discussions will be for eight different times: May 2011, May 2012, May 2013, May 2014, December 2014, January 2015, April 2015, May 2015.
In these graphs – and the accompanying Table 4 - the difficult situations of Ondo and particularly Osun are to be outlined. In May 2011, the order of Net Revenue Allocation was Lagos, Ondo, Oyo, Ogun, Osun and Ekiti. These relative positions were maintained in May 2012, May 2013, until in May 2014, when Ondo switched with Oyo to become the third instead of the second most allocated, while Osun switched with Ekiti to become the least "allocated" state in the Southwest Oyo and Ekiti have been leading Ondo and Osun ever since. For example, in May 2013, Osun's net allocation was N4,294,238,308.58, but in May 2015, it had dropped by 67.45% to to N1,397,974,027.81, while Ondo had dropped by 67.59% from N8,052,501,257.24 to N2,609,729,015.66.
It is to be noted that in paying salaries, it is not merely the change by percentage in total revenue to a state that counts, but the QUANTUM of that change. For Osun and Ondo, it appears that the changes (say between 2013 and 2015) by about N3 billion and N5.4 billion have been devastating to their ability to pay their wages.
Similar information for the other political zones are shown in Tables 5-9 and Figures 4-8. In the South-South – and in fact in the nation – Rivers State is worst hit at (comparing 2013 and 2015) at 74.4% and almost N20 billion devastating drop. In the South-East, it is Imo State (55.02% and N3.2 billion drops); in the North-Central, it is Plateau State with 58.42% and N3 billion declines; in the North-West, it is Kaduna at 53.04% and N3.3 billion decline; and in the North-East, it is Gombe at 56.7% and N2.9 billion.
Collectively, the South-South zone was the most devastated: while the South-West had declines (between May 2013 and May 2015) of about 50.6% and N18.6 billion (from N23.5 billion to N18.4 billion), the South-South had declines of 66.4% and N69.4 billion (from N104.6 billion to N35.2 billion.)
SOURCE PROFILE OF REVENUE
Where have the total revenue come from? Table 10 shows this summary – Statutory, Excess Crude, NNPC Refund, Exchange Gain Difference and VAT. It shows that had there NOT been excess crude money available in 2011, 2012 etc., the situation in the country would have been more critical early. When this source dried up in 2015, there was little place to hide financially.
AND WHAT IS NOW TO BE DONE?
The rapid loss of oil revenue and the lack of internal generation mechanisms made it impossible for most of the states in the nation – and even the Federal Government itself – to adjust sufficiently to meet all its obligations, particularly the wages of workers, particularly in the presence of long-term capital commitments entered into during the "fat" years.
Since there is already high unemployment in the country, laying off workers is politically unpalatable. But there must be a wage and employment freeze, and the institution of "true federalism" where each state is free to set its own minimum wages and salary scale. Furthermore, conspicuous government overhead consumption MUST be decreased in favor of capital expenditure that enables the employment of more people in the PRIVATE sector. Most importantly, the establishment of true resource control, where each state is enabled to develop the resources within its borders and diversify its economy is now an imperative.
In the time being, the Federal Government, through plugging of leaks and recovery of loot, both internal and external, should give temporary relief to states both by cash stimulus to pay workers and by stretching out their debts over more years.
NOTE: Most tables and figures have been omitted from this Essay, but will be found in its Nigerianmuse.com version.
_____________________________________________________________
Listserv moderated by Toyin Falola, University of Texas at Austin
To post to this group, send an email to USAAfricaDialogue@googlegroups.com
To subscribe to this group, send an email to USAAfricaDialogue+subscribe@googlegroups.com
Current archives at http://groups.google.com/group/USAAfricaDialogue
Early archives at http://www.utexas.edu/conferences/africa/ads/index.html
---
You received this message because you are subscribed to the Google Groups "USA Africa Dialogue Series" group.
To unsubscribe from this group and stop receiving emails from it, send an email to usaafricadialogue+unsubscribe@googlegroups.com.
For more options, visit https://groups.google.com/d/optout.
No comments:
Post a Comment