David O. Kuranga; Ph.D.
Kuranga & Associates Limited
In the past several months both Fitch and Moodys downgraded Nigeria’s credit worthiness a significant notch, citing increased investor concern about the ability for the Federal Government to service its debt obligations. High on the list of concerns are cash-strapped Nigerian states who across the federation have issued large amounts of external debt and engaged in rampant borrowing with the backing of the Nigerian Federal Government. By virtue of the constitution each state receives a portion of the national oil revenues, that is paid out periodically to state governments and shared with the local governments in each respective state. Once the money leaves the federal treasury and is handed over to the state governments there is no accountability to the federal government whatsoever in what each states’ officials’ do with its share of the oil revenue. Further, when these same states make applications to issue bonds backed by the federal government, or borrow directly with federal government backing, they also provide little to no accountability to the federal government as to how those funds are used and spent.
Over the past year, under the leadership of President Buhari and his Finance Minister, Kemi Adeosun, the federal government has cleaned up mismanagement and waste in the federal bureaucracy by establishing a single account for the treasury (TSA) to track revenue generating agencies and the usage of funds by all ministries and agencies of the federal government. They also removed ghost workers and identified areas for consolidation of tasks to reduce the number of federal employees and other overhead expenses deemed wasteful. They have also phased-out cash allowances, forcing federal officials to use bank cards to track how money is spent. Despite this, given that much of the national treasury is handed over to states and …Read More
Source:: PM Newspaper