The administration of President Bola Ahmed Tinubu has faced severe criticism for its handling of the economy, but many Nigerians are beginning to question whether the real weak link in the chain of governance lies at the state level.

Nigeria is currently contending with a record high inflation rate at 34.19 percent in June 2024 due to the two-time devaluation of the naira and removal of petrol subsidy by the current administration.

The Inflationary trends have raised Nigeria’s interest rates by a combined 800 basis points from 18.75 percent last July to 26.75 percent as the central bank continues to deploy monetary tools to restore the battered economy.

Food inflation, which constitutes the largest percentage of the headline inflation, is currently 40.87. The cost of energy and transportation have skyrocketed in the last one year, making life difficult for the masses.

While Nigerians continue to lament the scorching economic conditions, it was a party for state governments due the cash windfall unlocked by the removal of petrol subsidy and the devaluation of the naira.

Last year, governors got the most cash in Federation Account Allocation Committee (FAAC) allocations in at least seven years after the petrol subsidy removal took away its burden on public coffers and a currency reform delivered a 40 percent boost to naira income.

FAAC shared a total of N16.04 trillion to the three tiers of government in 2023, a 37.3 percent increase from N11.7 trillion in 2022, according to data from the National Bureau of Statistics (NBS).

Data also showed that in a period of one year between June 2023 and May 2024, Delta State and its local governments got the highest FAAC share of ₦519.92Bn. Lagos is the second with ₦512.18Bn, while Rivers, Akwa Ibom and Kano received ₦475.09Bn, ₦391.76Bn, and ₦312.91Bn, respectively.

Nigeria’s system of fiscal federalism allows states to generate their own revenue while also receiving allocations from the federal government. Over the years, state governments have had access to significant funds through a combination of federal allocations, internally generated revenue (IGR), and other financial instruments such as bonds and loans.

But as the states got more cash, most of the people grew poorer.

According to the pcl State Performance Index (PSPI) released in December, Delta has a poverty rate of 13.10 percent, unemployment rate of 31.10 percent, and inflation rate of 24 percent, despite receiving the highest FAAC allocation in 2023.

Many Nigerians continue to grapple with poverty, as highlighted by the World Bank’s Nigeria Development Update report, released in December, indicating that 14.2 million Nigerians fell below the poverty line in 2023.

The report attributed this increase to sluggish economic growth and rising inflation, emphasising the challenges faced by Africa’s largest economy.

According to the 2023 State of Food Security and Nutrition World report, the number of Nigerians who are food insecure has increased by 133 percent in three years. It jumped from 63.8 million people between 2014 and 2016 to 148.7 million people between 2020 and 2022.

With unprecedented revenues at their disposal, state governors were expected to play a pivotal role in alleviating poverty, fostering development, and driving good governance across Nigeria’s diverse regions.

Instead, a growing number of voices suggest that these leaders have largely failed to meet their responsibilities, with some even accusing them of exacerbating the country’s economic woes.

FG lists increased FAAC, rice palliatives, other supports to states from July 2023

In a post on its X account on Tuesday, the Federal Ministry of Information and National Orientation listed the federal government’s major support to state governments to cushion the effects of the economic hardships faced by Nigerians.

The FG noted that money from the Federation Account Allocation Committee to states has increased, highlighting that “allocations to States and Local Governments from the Federation Account are up by almost 50 percent in the first half of 2024, when compared with H1 2023.”

The central government also stated that N5 billion was allocated to each state and the federal capital territory to cushion the effect of subsidy removal in August 2023.

The FG listed several food supports to states including the allocation of 42,000 metric tonnes of grains to all 36 States + FCT (April 2024), and the allocation of 20 trucks of rice to each State + FCT (July 2024).

It also noted that “CBN has donated 2.15 million X 50kg bags of various blends of fertilizers, valued at over N100 billion, to the Federal Ministry of Agriculture and Food Security, for onward free distribution to farmers, through the States.”

The Tinubu-led administration had recently announced the disbursement of N570 billion NG—CARES: Nigeria COVID-19 Action Recovery Economic Stimulus fund to state governments, sparking widespread debate.

White elephant projects over people-centered programmes

In Nigerian states, the question is not whether the governors have money to spend, but rather how they are choosing to spend it.

This infusion of funds was meant to provide the states with the necessary resources to tackle pressing issues such as poverty, infrastructure decay, and social services.

However, allegations have surfaced that instead of channeling these funds into projects that would directly benefit the people, many governors have chosen to embark on white elephant projects—grandiose ventures with little real impact on the lives of ordinary citizens.

White elephant projects have become synonymous with wasteful spending in Nigeria. These projects, often initiated without proper feasibility studies, are notorious for draining public resources while providing little in return. In many cases, these projects are abandoned midway, leaving behind incomplete structures that serve as a reminder of the mismanagement of public funds.

For instance, some governors have prioritised building airports in regions with low economic activity, arguing that such projects would spur development. However, without a corresponding increase in economic activities to justify the need for these airports, they often remain underutilized, serving more as vanity projects than catalysts for growth.

Zamfara, a state where more than half of its population lives below the poverty line and with a huge number of out-of-school children, has started the construction of an international airport.

A ₦42bn International airport built during David Umahi administration in Ebonyi State is yet to begin operation a year after commissioning.

Similarly, the construction of flyovers in towns with minimal traffic congestion has raised questions about the prioritisation of resources. While these projects may create temporary jobs during construction, their long-term impact on the local economy is often negligible.

Critics argue that these funds would be better spent on improving healthcare, agriculture, education, and other social services that have a direct impact on the lives of the people.

Most states’ revenue has doubled – Nasarawa governor

Abdullahi Sule, the governor of Nasarawa State, said that most states’ revenue has doubled under Tinubu’s administration.

The governor said this In reaction to the recent nationwide #EndBadGovernance protests, urging his colleagues to take concrete steps in responding to the demands of the masses.

Sule said this during his appearance on Channels Television’s Politics Today on Thursday evening.

Addressing concerns about the utilisation of funds allocated to state governments, Sule assured Nigerians that the money is being put to good use.

He attributed the increased revenue to President Tinubu’s administration and commended the federal government for sharing funds with states and the FCT.

He said, “No state will say that their revenue has not actually multiplied by two, sometimes doubled. In the past, the total amount of revenue shared monthly was around N600bn to maybe about N620bn max, sometimes even slightly lower. Today, you see the total amount being shared, N1.1trn, N1.2trn and the rest of that.

“Every state, as well as the Federal Government, is receiving improved revenue; thanks to Mr. President for allowing it to go like that.”

Tinubu’s policies not working, responsible for hardship – Bauchi governor

Bala Mohammed, the governor of Bauchi State, has blamed Tinubu for the economic hardships in the country, saying that is policies are not working.

Muhammed stated this at the flagging off of the PDP local government election campaign in the state at the Government House, Bauchi on Wednesday.

“There is hunger and anger. We have to address our problems of development. Unemployment is everywhere, our educational system is not working, and the new policies of the federal government are not working.

“They have to understand that. It’s their problem; it’s their programme that has caused all these problems. On your behalf, I am telling Mr President (Bola) Tinubu to change his policies because it’s not working.

“If he continues like this, in 2027, I will invite him to be our campaign director because everywhere would be PDP, and we are going to win because it’s self-inflicted injury,” the governor stated.

The governor also criticised the federal government regarding the distribution of palliatives and funds to state governors, arguing that while the federal government generates substantial revenue, the states receive only a meager portion.

“I have heard with regrettable attention some of the ministers of the federal government are saying that we have been given 70 trucks, given over N500 million, (but) how much is the federal government making? What have they done with it? Why should they bring a policy that is causing pain?” Muhammed said.

Similarly, Seyi Makinde, the governor of Oyo State, has clarified that the N570 billion disbursement from the federal government to state governments is not grant but loans from the World Bank.

The governor said this in a newsletter on Thursday titled “Taking a Break from the Norm,” stating that the federal government didn’t give money to the states.

“Let me state categorically that this is yet another case of misrepresentation of facts. The said funds were part of the World Bank-assisted NG-CARES project—a Programme for Results intervention.

“The World Bank facilitated an intervention to help States in Nigeria with COVID-19 Recovery. CARES means COVID-19 Action Recovery Economic Stimulus. It was called Programme for Results because States had to use their money in advance to implement the programme.

“After the World Bank verified the amount spent by the State, it reimbursed the States through the platform provided at the Federal level. The Federal Government did not give any State money; they were simply the conduit through which the reimbursements were made to States for money already spent.

“It is important to note that the World Bank fund is a loan to States, not a grant. So, States will need to repay this loan. Note also that NG-CARES, which we christened Oyo-CARES in our State, predates the present federal administration,” the newsletter reads in part. (BusinessDay)

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