Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM

BAILOUT FOR STATES: Can They Really Bail Working People Out?

BAILOUT FOR STATES: Can They Really Bail Working People Out?

By Kola Ibrahim

When the federal government announced a bailout plan for embattled state governments, there was a kind of relief for workers and pensioners, who have been made the sacrificial lamb of the gross mismanagement of the funds that have accrued to these state governments. According to the Nigerian Labour Congress (NLC), as at June 2015, 23 states owed workers’ salaries for more than three months. However, by September, 2015, 27 states had applied for federal bailout to pay salaries. This shows that within four months, more states have joined the list of debtors’ list. More than this, the ability of the state governments to sustainably pay salaries is greatly in doubt, as prices of crude oil in the international markets is not showing any sign of upward movement, at least, in the short term.

While this bailout may provide some relief for workers, pensioners and their dependants, it also shows the debilitating condition that the Nigerian capitalist political class has put the economy. Furthermore, it shows the direction of things to come. Nigerian ruling class is not prepared to move the society forward; on the contrary, they are bound, on the basis of the current manner they are running the economy, to further plunge the economy and the working people into more crises.

Even, in some states like Osun, Kwara, Oyo, etc., the pro-big business governments are trying to divert the bailout fund to other uses aside payment of salaries and pensions. In many states, governments are withholding salaries for months, thus putting workers into serious crisis. In the real sense, the aim of the bailout, as alluded to by President Buhari in his Independence Day Speech, is to prevent ‘social unrest’ arising from unmitigated suffering the non-payment of salaries has caused the working people.

According to Guardian newspaper, nineteen of the twenty seven states have collected N222 billion as bailout fund as at 30th September, 2015. However, the nature of the bailout implies that the working people and future generation will still bear the brunt of the mismanagement of fund by the state governments. According to the Central Bank of Nigeria (CBN), which administers the money on behalf of the federal government, the bailout is a ‘soft’ loan with 20-year tenure and with 9 percent interest rate. This means that in the next eleven years, the states will have paid a double of what is supposed to be a bailout. Despite the low interest rate, this is still a usurious bailout that will be a future burden seriously affecting the working people and the youth. It will give new excuse for the state governments to shirk their responsibilities and place more burden on the working and already poor people, under the guise of prudency.

The reality on ground is that state and federal governments, especially the Jonathan/PDP, plunged the economy into current crisis it is. While agreeing that Nigeria’s revenue has dwindled due to fall in price of crude oil (the main source of government’s revenue), since early 2014, the reality is that the gamut of Nigerian political elites of all shade and hues, based on their neo-colonial capitalist orientation, put the country into this immediate mess.

At period of improved oil revenue, the Nigerian capitalist ruling politicians across party lines wasted the resources in the service of the rich few, while working and poor people hardly benefited from this largesse. For instance, in the last 5 years, all the state governments, in collusion with the Jonathan-led federal government ensured that the Excess Crude Account was depleted by more than 80 percent, even when the revenue from oil was at historic height since 2008 economic meltdown. According to Guardian newspaper, federal, state and local governments shared N29 trillion between 2011 and early 2015.

While Jonathan met N47.7 billion in external reserve in January 2010, his government depleted same to less than N38 billion as at December 2014, while external debt profile increased to $9.3 billion from $3.94 billion in 2010, with federal government accounting for $6.3 and state governments owing $3 billion. While the country had N12.3 trillion as excess crude money between 2011 and 2015, by the mid-2015, this has depleted to less than $3 billion, with little or nothing to show for this depletion of resources and huge debt by the governments.

As much as the Jonathan/PDP government is a major culprit, the state governments were part and parcel of this gross bleeding of the country resources. Between late 2011 to early 2013, when the states got their highest allocations, there was about 31 percent rise in states’ debt profile. Yet, just less than 18, 000 political office holders in power corner over N1.1 trillion as emoluments every year. This in 4 years will give a whopping 15.1 percent of what the federating units earned. What the country earned in 15 years, about $700 billion, can lay the basis for development of the country, save for our neocolonial capitalist system and capitalist class.

On the other hand, the period Nigeria earned this huge wealth was also the period more attacks were launched on the working people. Fees were hiked in various tertiary institutions, while the state of health sector worsened. Many state governments refused to properly implement the N18, 000-minimum wage, while public sector retirees were dying over unpaid pensions. Unemployment rose to 23 percent in 2013 as against 11 percent in 2006, just as three million job seekers are added to the labour market every year according to official sources, with most of them unable to find job. More than this, public infrastructures like roads continue to collapse due to neglect. Electricity supply not only continue its erratic nature, but the tariffs, before and after the Power Holding Company of Nigeria (PHCN) was auctioned at rock-bottom prices to private undertakers, have been hiked more than 200 percentages in the past three years. Nigerian refineries remain in terrible conditions in spite of billions of dollars committed to their turn around, leading to the financial hemorrhaging of the country under the guise of subsidy payment.

Aside this is the gamut of corrupt practices by politicians and their big business partners. While the Jonathan government was embroiled in serial corrupt practices, the state governments, including those led by then opposition parties (ACN, APGA, CPC and LP) and subsequently APC diverted public funds to private ends through various guises. Aside the huge emoluments awarded to politicians as emoluments and the billions diverted through the fraudulent Security Votes, many elite but highly inflated projects that had little bearing on the wellbeing of the people were undertaken. For instance, in Oyo State, a less than 400-meter overhead bridge was awarded for over N1 billion, while several local roads are lying in decrepit state.

In Osun State, while the state got nothing less than N250 billion as allocation between 2011 and 2014, its debt profile climbed to up to N90 billion from around N25 billion. The question is: what fundamental improvement had happened in the social and economic situations of the state in four years to have warranted a state that got around N250 billion as allocation, increasing its debt profile by more than N60 billion, and yet owed workers and retirees up to seven-month salaries and pensions before the bailout? In the real sense, the government, just like many other APC, PDP and LP governments, had squandered the resources. For instance, N1.1 billion was spent on just 300 caretaker committee members of local governments while a graduate employee in the state civil service is paid less than N45, 000 monthly.

Therefore, if the Buhari government is to really bailout the states in the interests of the working people and their dependants, it should have unconditionally paid salaries and pensions of workers and retirees without putting a usurious burden of interest rates that these state governments will use to further overburden the people. For instance, in Osun State, among several others, the government is using the issue of the interest rates to drastically limit what is paid to workers, while also introducing and enforcing new tax regime. Moreover, the Buhari government, with its anti-corruption posture, should have undertaken full probe of the accounts of these state governments with the aim of recovering the billions diverted to private ends by these state governments. But can a Buhari government that belongs to the same party with some of these profligate state governments carry out this task.

Moreover, the labour leadership need to get its priorities right. Rather than blindly support the bailout, the labour leaders should have also demanded that the bailout should attract no interests, while ensuring that salaries and pensions are fully paid from the bailout. Rather than doing newspaper “tiger-ism”, labour leaders should organize national mass actions to compel state governments to pay all the salaries. Furthermore, the labour leaders should lead the campaign for full probe and prosecution of all corrupt practices, at all levels, and recovery of all looted funds. Also, labour movement should reject any attempt to offload the burden of the economic crisis caused by the capitalist governments, on the working class and their dependants.

The current economic crisis has shown that Nigeria’s capitalist rulers cannot move the country forward politically, economically, socially and technically. They have stolen and wasted the revenue from the recent high oil price years and now expect the mass of Nigerians to suffer because the oil export price has sharply fallen. And, so long as capitalism remains, this will only get worse. By 2030, i.e. fifteen years to come, Nigeria’s populations is expected to have reached 260 million and 440 million by 2050, expectedly the third largest population in the world, with young people constituting over 65 percent of this population rise. This will mean more resources are needed to expand facilities, infrastructures and build a productive economy. But can the current set of capitalist politicians and capitalist big business undertake the task of building such a society that will cater for the expected population, when in 2015, they are borrowing money to pay salaries of workers.

This means that unless the working people and the oppressed build a revolutionary political alternative, aimed at redirecting the enormous resources of the country, which are being wasted and looted by the capitalist class, towards improving the lots of the majority, the country, will degenerate further. Only socialist programmes of public ownership of the economic under the democratic ownership, control and management of the working and oppressed people, organized from grassroots to the national level, can effectively carry these tasks out. Building a working people’s political platform with clear socialist programmes is important now than ever.