Avoid Debts, Pay Salaries Or Fail, Okonjo-Iweala Tells Governors

Avoid Debts, Pay Salaries Or Fail, Okonjo-Iweala Tells Governors
Ngozi Okonjo-Iweala (right), Board Chair of Gavi, moments before the start of the UN High-Level Meeting on Universal Health Coverage (UHC).

Director-general of the World Trade Organisation (WTO), Dr Ngozi Okonjo-Iweala, has advised Nigerian governors to avoid piling up debts on their states and to prioritise citizens’ welfare if they want to have successful tenures as governors.

In an address at the Nigeria Governors’ Forum (NGF) induction ceremony yesterday at the Presidential Villa, Abuja,  Okonjo-Iweala emphasised the importance of prudent financial management for state governments and the need to sustain payment of workers’ salaries.

The former finance minister and minister of finance during the Obasanjo and Jonathan administrations urged governors to prioritize the payment of teachers, healthcare workers, and pensioners, while investing in infrastructure, education, and basic healthcare.

Highlighting the need for increased internally generated revenue (IGR), Okonjo-Iweala suggested that governors should focus on transparency and efficiency in their financial practices.

She encouraged them to publish information about the federation revenue allocation and IGR, to enable citizens to have a clear understanding of their state’s financial situation.

She said, “Nigeria is a country with no social contract, meaning that Nigerian political leaders have never been able to agree with each other to stick to a common set of principles, values, and policies that consistently deliver for their citizens regardless of ethnic group or political persuasion.

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You have a lot of healing to do – within your states, and between them. Through your words, deeds, and policies, you need to demonstrate to Nigerians that they are equally loved; that they can settle and do business in any part of the country without fear,” he said.

Moreover, Okonjo-Iweala emphasized the importance of monitoring debt profiles and controlling expenditure. According to her, while investing in critical sectors such as infrastructure, education, and basic healthcare, governors should prioritize the timely payment of teachers and healthcare workers.

Citing data analysis from the National Bureau of Statistics and Budgit, an organisation dedicated to providing financial reports on country budgets, Okonjo-Iweala revealed that a majority of states rely heavily on federal allocations for revenue.

 In fact, for 33 states, federal allocations account for the majority of their revenue, with 13 of those states depending on monthly impact allocations for approximately 70 percent of their revenue.

While state governments experienced a slight increase in IGR, rising from N1.2 trillion in 2020 to N1.61 trillion in 2021, these figures pale in comparison to the Federal Account Allocation Committee (FAAC) allocations of N2.23 trillion in 2020 and N3.16 trillion in 2021.

“While I commend those states that have made additional efforts, governors need to do much more. States must figure out ways to increase IGR. This goes hand in hand with using your 48 percent share of federal allocations more transparently, efficiently and effectively.

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“You must share with your state citizens how much FAAC allocation you receive each month, how much IGR you collect, and how you spend it.

“We used to publish this information routinely during my time as finance minister under Presidents Obasanjo and Jonathan. We must resume this practice so your citizens can hold you accountable.

Excellencies, please watch your debt profiles, and keep careful control of expenditures, even as you invest in infrastructure, education, and basic health systems. Please endeavour to pay teachers, health workers, and others their salaries, and retirees their pensions,” Okonjo-Iweala told the governors.

The WTO chief executive pointed out that the COVID-19 pandemic severely impacted Nigeria, leading to a rise in poverty rates, as according to the World Bank, an estimated 95 million Nigerians fell below the national poverty line in 2022, accounting for 43 percent of the population.

She also highlighted the potential of Nigeria’s youthful population, stating that the country has an opportunity to attract investment in labour-intensive production processes.

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She encouraged governors to create business-friendly environments to attract both domestic and foreign investment, stressing the importance of Nigeria positioning itself as a platform for producing goods and services to meet regional and global demand.

Speaking on youths’ craving to relocate from Nigeria, she said:  “Excellencies, you must make your states and all Nigeria a hospitable, encouraging place where young people want to stay and thrive, not leave. Much as we appreciate remittances sent home by these migrants, Nigeria will not develop and prosper if its youthful, tech-savvy population leaves. Without them, our demographic dividend disappears.

“Turning to the fashion space, people across the continent want to dress like us. Nigerian fashion is taking Africa and the world by storm. Our leather industry is moving up the value chain: we used to send tanned leather to Milan, now we are developing shoes, bags, and carpets ourselves of good quality, fit for consumption at home and abroad.”

In addition, Okonjo-Iweala acknowledged Nigeria’s achievements in the creative industries, particularly music, film (Nollywood), and fashion. She urged the government to capitalise on these sectors’ potential for growth and explore opportunities for cultural tourism and export of digitally-delivered services.

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