After Paris Club refunds, what next for States?

By Kunle Sanyaolu

At long last, the federal government has reportedly disbursed the final tranche of the refund of the Paris Club loans to the states. As at the weekend, 27 states have received the money, amount of which is yet to be disclosed. Ten other states will be paid as soon as they complete some processes now going on, according to the director, Home Finance, Federal Ministry of Finance, Mrs. Shiyanbola Olubunmi who was speaking at the end of the Federation Account Allocation Committee meeting held at the ministry’s headquarters.

The significance of the payment is that it will bring an end to high level politicking that has surrounded the distribution of the Paris Club loan refund since it started early this year. It will also expose governors who mismanage or misapply the funds, as well as those who fail in the discharge of their financial responsibility to pay workers their wages.

Expectedly, the sensitivity of public funds disbursement, and the insatiable appetite of governors for free money combined to generate a lot of controversy on the Paris Club refund. From the public, the grouse was that it was not properly or formally informed that the Club had refunded money believed to have been overpayment of sort, to the government.

Indeed, the public got wind of the refund when it was about to be disbursed to the states; provoking another debate, this time mainly from the governors, about how the money should be spent. Since the money first went into the Federation Account before being distributed to the states and the federal government, how each state spends her allocation should ordinarily be nobody else’s business, under the federal system and states’ independent.

But the federal government strongly advocated that the money be used to offset outstanding salaries of workers in their respective domain. Incidentally, most, if not all the states, were owing salaries by various lengths of time. Some states have been paying some form of modulated salaries to their staff, by which certain categories of staff take home 50 percent or so of their salaries, with understanding that the arrangement would subsist until the economy improves. Sadly, the economy has not improved for almost the year round.

In order not to prolong an unnecessary constitutional debate, the federal government had no choice but to release the money to the states, some of which argued that they had different priorities and projects, which they claimed were more urgent than salaries. To be fair, many states used the funds to pay outstanding salaries, but it was difficult to verify immediately the use to which some of them put the money.

In July this year, the federal government released the second tranche of the refunds to the states, in the amount of N243.79 billion naira. The amount, added to the first tranche payment, showed that the states got a refund of N760.17 billion. As at the time, five states namely Akwa Ibom, Bayelsa, Delta, kano and Rivers received the highest amount of N10b each. Their joint take represents 20.5 percent of the entire amount released under the second tranche.

It is not absolutely certain if this last disbursement is the very final of the Paris Club refund, as the governors had contended Lately that even the tranches were paid them in instalments, suggesting that the current disbursement might be an outstanding instalment of the second tranche, rather than the disbursement of the final tranche.

What is certain is that sooner than later, there will be nothing more to disburse from the Paris Club loan refund. Even the 10 states engaged in the processing of the current payment will complete the processing and get their final disbursement. The question then will be what next. Will the states again accumulate unpaid salaries to their workers? Will they learn to live within their means, particularly how to cut their extravagance and reduce cost of governance?

Many states were so lost into politicking that they forgot their duty to pay workers’ salaries, often attributing their failure to non-release of the Paris Club funds; and easily forgetting that governments before them paid workers without the refund. Now that an era is closing, governors should not abdicate their responsibility to their staffers. They should account fully for what they received under the refunds.

Beyond this, it is time for the anti-corruption agencies of the federal government to go to town and fish out those governors that may have converted state funds, either from Paris Club or elsewhere, to personal fiefdom. Bringing a few of them to books, after they are divested of their immunity, will be a strong signal that government is indeed fighting corruption.