Governors are seeking an amendment of the revenue allocation formula to increase their revenue base.
This, they believe, is the way out of the states’ financial crisis.
The states share 26 per cent of the revenue in the Federation Account. The Federal Government takes 52 per cent.
Yesterday at a meeting with President Muhammadu Buhari at the Villa, the proposal was tabled.
But the President was concerned that that nearly two-thirds of states are still having difficulties with salary payments despite the bailout funds provided to them by the Federal Government.
The President made the remark in his speech at the meeting, according to a statement by his Senior Special Assistant on Media and Publicity, Mallam Garba Shehu.
The statement added that to ameliorate the hardship being faced by workers, the President said that the Federal Government will make more funds available to the states by expediting action on refunds due to them for the maintenance of federal roads and other expenses incurred on behalf of the Federal Government.
He also said he will establish an inter-ministerial committee to study the Fiscal Restructuring Plan for the Federation, which was presented to him by the governors.
The committee will review the plan to improve the finances of state governments and make recommendations on how proposals in the plan should be dealt with by the Presidency, the Federal Executive Council and the National Assembly through legislation.
President Buhari urged the governors, however, to understand that while he was ready to do all within his powers to help the states overcome their current financial challenges, the Federal Government also has funding problems to contend with.
“You all know the problems we have found ourselves in. You have to bear with us,” he told them.
Nigerian Governors Forum (NGF) Chairman Abdulaziz Yari (Zamfara) and Nasir El-Rufai (Kaduna), who chaired the committee that worked on the Fiscal Restructuring Plan, asked the Federal Government to do more to help the states financially.
The governors told the President that while they had resolved to take other measures to boost their internally-generated revenue, the implementation of the Fiscal Restructuring Plan will help them to deal with their funding problems on short, medium and long-term bases.
They said that if the plan was adopted and implemented by the Federal Government, states will become more financially empowered to fulfill their constitutional responsibilities.
Speaking with State House correspondents at the end of the meeting, Yari called for an amendment of the sharing formula to increase revenue to state.
According to him, it is impossible for state governments to save for the rainy day, with the current 26% allocation to states and 52% to the Federal Government.
On the allegation that Finance Minister Kemi Adeosun blamed state governments for their current financial crisis due to their inability to save, Yari said: “The states are only taking 26 per cent, whereas the Federal Government is taking 52 per cent and you are asking us to save?
“Anyway, I doubt if the Minister made that statement or it is coming from the media. The truth remains that the states are taking 26 per cent and the Federal Government 52 per cent; what are they doing with the money?
“We are not sovereign; so, how can we save? We are dealing with our different states’ economy, which we are trying our best to fix. Most times, we are busy shouting that what is supposed to be given to us has not been given. For the past three years, we have been asking them to show us if the excess crude has been used judiciously or not.
“So, the question of saving or not does not arise.”
Noting that the meeting is about the economy, Yari said the governors passed state-by-state demands to the Federal Government.
He said: “You will agree with me that states are the landlords; we own the land
and the people. So, therefore, the economy of this country lies in the state. Everything comes from the state, the oil, agricultural produce, mining and people are in the states while the Federal Government is in Abuja.
“So if any state has any issues and is known to Mr President, I doubt very much if he will be able to sleep with his two eyes closed.
“We are closer to the people and have many challenges in the states. Today, we have received support from the Federal Government in terms of bailout, restructured our debts, given us 15% of the Excess Crude Account for development.
“All these are temporal measures. Each state has a programme right from
short to mid and long term, which we presented to Mr. President and he graciously accepted and he plans to put a committee in place that would look at the matter starting with short term.
“For the short term, we are looking at a situation whereby our refunds that are hanging since 2005, right from Obasanjo’s exit of the Paris Club, some of the monies that were not paid, so that the states that are having difficulties can get money from there.
“Loan restructuring, bailout and ECA; we are asking for 18 months moratorium before we can start paying, so that we would be able to strategise.
“To develop IGR is not overnight; it is a long term programme that one has to plan for. And also, our workforce has increased and there is nothing we can do about it because people are getting their daily bread from there and we cannot say we are going to cut salaries and wages.
“We have to find a solution, otherwise, we would keep going back and forth because you will not achieve anything as oil been sold for $100 per barrel is now selling for $28 and $31.”
“So we have devised a plan for short term, medium term and long term. These are part of short term.”