Bailout: How To Utilise Proceed Of Bond Transactions
Victor Banjo is the Director General, Institute of Directors. In this interview with DAVID OGAH, he examines the move by the Federal Government to convert states’ loans into bonds. He urged relevant authorities to monitor the fund application to avoid diversion.
ONE thing we should demand for is effective governance, transition and transmission of effective governance and good dividend to the people, who have actually placed their trust in the elected officers of states. We have also noticed that over a period, a lot of state governments have actually not been able to meet their obligations to the people. To me this is a fundamental issue about the ability of states to actually generate income and be self-sustaining.
To me, it takes you back to a very fundamental issue, we need to actually hold states accountable for income generation as it used to be back in the 60s and 70s, where in those days regions at that time were focused on mining the resources they had within the regions to actually fund development.
The current situation where it is a monthly journey to Abuja to just collect and share revenue isn’t good for the country, and I am also aware that we have a lot of resources that have not been tapped. A lot of experts have commented that, may be, what we need to do is to shut the oil wells for a year, and see exactly what is going to happen.
Because what if we didn’t have oil, what would we have done as a country? I think part of what President Buhari should be doing is tasking the states to take Nigeria beyond oil, and in that sense we need to look at what should be done to ensure that the non-oil revenue sector are fully tapped, monitored and developed to full optimal benefit.
That is when we can start seeing all the benefit of all the values from what we have, because it also has an impact on the level of agitation we have in some parts of the country, where some people feel that their resources have been used for the benefit of others. If we have an overall tapping of resources all over the country, I think that would produce some dislodgement, but one thing we must actually state is this: no matter who we are or what we are as country, as citizens of this country, we must have a collective effort to look at how we can support any part of the country to build a sustainable economic base.
Until we do that, we are actually going to have major challenges in terms of achieving governance stability and also democratic dividend. So it is not so much about having a mono product economy, it is about investing in all the resources across this country and ensure employment, development and also societal growth in all parts of the country.
Effect of converting state’ loans to bonds
I think we should look at it from the context of governance, if government did not take that action, the short and intermittent effect on all Nigerian citizens in those states especially, would be huge. I have heard people saying it was not such a good move to have bailed them out, but look at it, who are the people affected by the non-payment of salary and non-delivery of services? They are the average citizens on the streets, not the people in government. So any government that is serious about giving value and has concern for citizens would have acted the same way President Buhari did, which is to ensure that the citizens of the country in those states affected are not left to suffer. So I think we should not be debating the propriety of whether or not President Buhari should have granted the bailout or not. If he did not, the suffering of the average Nigerian would have been too hard to bear.
On workability of the conversion
I am not a financial expert, but I am aware that when you convert to bonds, it is actually a security. The people that buy into them also see the fact that those states are investible concerns. They look at the portfolio; opportunities in those states, the resources they have and then believe that by investing in those bonds, they have the opportunity to get their dividend back in due course. I think it is not something we should shy away from; it has been done. There is need to make sure that accountability and transparency, which President Buhari is working on is maintained and sustained in the disbursement of those funds.
Giving the fund to states is one thing; we need to make sure that we track the disbursement of those funds to ensure that they are applied to the areas where they are meant. If they are not, that is when we have another problem on our hands, which is diversion of funds meant for a particular purpose, that is the importance of good governance. That is what we preach on a daily basis; if you have received this fund for a particular purpose, make sure it is applied for purpose for which it was intended, so that the people who elected you can feel the impact of your governance.
On fears of too much liquidity in States
They cannot flood the states with money because first of all, for each state they have actually done effective evaluation of what are they are to do, which they haven’t done. The issues are there, you are not solving the matters with money, the point is you have a big hole that you need to fill, and so if a discussion occurs, whereby, the government will start doling out bonuses or like we did in the time of Gowon and Udoji, this is not an Udoji declaration. You are not increasing people’s salaries, you are talking about a shortfall in funding, not being able to meet obligations for a number of months.
My good friend sir Aremu, the deputy vice president of the Nigeria Labour Congress (NLC), said even the Bible and the Koran states that it is a sin for you not to pay a man for the work he has done. In this situation, the people we are talking about in these states have worked, but have not been paid.
We are not debating how the states got into those situations and I don’t think President Buhari has taken that up as a separate discussion. As a president, is he going to close his eyes while Nigerians suffer? A caring president won’t do that. That is why we must commend president Buhari for taking that position ,that it is not so much about the governors, it is not so much about the people ruling the
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