States bankruptcy: A calamity foretold!
KAYODE KETEFE
On June 22, 2016 President Muhammadu Buhari made widely-publicised comments about the parlous state of the Nigeria's economy, in which he particularly berated 27 states (out of the nation's 36 states) for their inability to pay salaries of their own workers. The President described this strait condition the states have found themselves as shameful!
The President had lamented thus "This is a disgrace to Nigeria. It is a disgrace that up till now, most of the states cannot pay salaries. What happened to all we have gotten over the years? We look up and down, left, right and centre, what have we saved? There was nothing because we developed a consumption culture that we were not supposed to develop,"
It is no longer news that dwindling proceeds from oil as a result of crash of petroleum prices in the international oil market has inflicted monumental damage on the Nigerian economy, which at present is lying prostrate with recession haunting all the sectors.
But the reality the nation and her component states are grappling with now does not creep on us surreptitiously like a thief in the night (as it were), it is what every discerning Nigerian had envisaged all along. Right from the period of oil boom, down to the relative period of enduring oil wealth when the boom had subsided, the call for diversification of the economy has been strident and consistent, but our leaders over the years have turned deaf ears, preferring instead to wallow in the inordinate pleasure of the moment. "Evil days will take care of itself" was their indifferent refrain! Now welcome the evils days to our clime!
What can be more painful than for you to see a calamity gathering storm as you observed it from afar, and you had the means of averting it and yet did nothing until the woe comes upon you and surrounds you?
Nigeria, with a population of about 173 million people majority of whom are talented and able-bodied, boasting of largest economy on the African continent and recipient of trillions of petrodollars from her rent economy within the past few decades, should naturally be a strong nation.
Why should the present drop in the in the price of crude oil in the international market hurl the nation into such an economic strait that the states cannot pay workers' salaries.
Why should the present drop in the in the price of crude oil in the international market hurl the nation into such an economic strait that the states cannot pay workers' salaries.
This question will not elicit any other answer other than a two-word response – "Bad governance" The country has suffered unrelented and cumulative periods of mismanagement of resources, woeful planning, financial recklessness and deep-rooted corruption.
The present doleful situation is the price we have to pay for monumental failure to use trillions of dollars we had earned since the oil boom era started to lay foundation of inclusive growth and sustainable development.
Certainly, if the nation has systematically diversified away from dependency on oil in the past decades by developing other sectors of her economy, we would by now be immune to or at least be able to absorb the current shocks.
Even regarding the oil industry itself, have we done much to consolidate and strengthen it?
Saudi Arabia with just a population of 26 million people, ( about one-eighth of Nigeria) has 16 refineries that are fully functional, and what's more, two new ultra-modern will be added to these legion this year to make them 18. The state of California alone in the United States, has 26 refineries. Nigeria has a total of four refineries built in the 70s and these are no longer functional!
The United Arab Emirates has just claimed that its economy has not been affected negatively by the dwindled income from oil as she has a well-diversified economy with tourism alone bringing in stupendous income.
Nigeria, the sixth largest producer of oil in the world, till this very day, still embarks on massive importation of oil for local consumption. That is also a shame, it is not?
The way forward must entail procuring a paradigm shift that relegates the extant predominant rent system, and the one that enthrones a profit system where the prevailing culture would be working-to-earn through employment of factors of production to creatively add value. We must diversify our economy to get all the other neglected sectors working to their capacity; this would make many able-bodied Nigerian now idle to be productively engaged in his or area of ability. Enough of solitary reliance on oil.
Ketefe may be followed on twitter @Ketesco
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