States’ Fortunes Decrease As Governors Abandon Natural Resources For Abuja Cake

 

The finances of Nigerian states are deteriorating as governors fail to consider the revenue potential of naturally given resources in their domains and choose to beg for Federal Government bail-outs, such as those granted yesterday, to pay workers salaries.

Over 18 states owe workers salaries for periods ranging between three and ten months.

BusinessDay findings show that each of Nigeria’s 36 states is blessed with either or both arable land for agriculture and solid minerals capable of bringing in sufficient revenue in the form of taxes, if properly exploited.

But states, except Lagos and Ogun, have lazily abandoned the development of these resources, while
rushing monthly to Abuja to get their share of the oil slice, which has now become a ‘curse’ with dwindling revenue, leaving many broke and unable to meet obligations.

“What we are reaping now is the result of our warped federal structure,” Ben Osisioma, professor of accounting at Nnamdi Azikiwe University Awka, told BusinessDay.

“Many years ago, when Chukwuemeka Ezeife was governor of Anambra State, I was part of a committee called the Financial and Economic Advisory Council. We were given a mandate to move round the state and see how we would identify resources that would generate enough money and enable it stand on its own.

“We found out that each of the local governments had two natural resources that would be the goldmine. Some local governments in Anambra had clay, which is suitable for ceramics making. So also did other local governments have peculiar natural resources that could be exploited for industrialisation.

“The point is that our states have failed to exploit agriculture and manufacturing,” Osisioma said.

The Nigerian Investment Promotion Council (NIPC) says over 40 million tonnes of talc are in Niger, Osun, Kogi, Ogun and Kaduna states. Incidentally, the Raw Materials Research and Development Council (RMRDC)’s 3,000 tonnes per annum catalytic plant is the only talc plant in the country. With the right environment and laws, pharmaceuticals and cosmetic firms can exploit talc, which is an essential input.

There are over three billion metric tonnes of iron ore deposits in Kogi, Enugu, Niger states and the Federal Capital Territory. But the closure of Aladja and Ajaokuta steel complexes has made it difficult for this resource to be fully exploited.

Uburu and Okposi in Ebonyi State have large deposits of salt that is yet to be fully developed. Rock salt is also available in Benue State, says the NIPC.

Findings show that despite these deposits, the National Salt Company of Nigeria and Royal Salt are the only salt makers in the country.

Kaolin, used in making ceramics and chalk, is found in Edo, Plateau, Ogun and Nasarawa, among other states. Feldspar, silica and quartz, which are also used in ceramics production, are found in more than 20 states in Nigeria, according to Patrick Oaikhinan, CEO, Epina Technologies Limited and professor of ceramics engineering.

“The raw materials are here. But there is no appropriate strategy in place for the development of this industry that can create an estimated 1.2 million direct and indirect jobs. This is why we keep importing ceramics products of over $400 million from China and Europe every year,” Oaikhinan said.

Other minerals found in almost all parts of the country are gemstones, coal (over 600 million tonnes), bitumen (over 42 billion tonnes) and lead/zinc (over 10 million tonnes), NIPC says.

Currently, banks have refused to lend to state governments, as there is no guarantee that the latter can pay back. Even the Federal Government is reluctant to guarantee loans intended to be borrowed from banks by states, top echelon of commercial banks told BusinessDay.

Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry, told BusinessDay that there must be constitutional amendments that will put mining in the hands of states rather than the Federal Government.

Yusuf said the situation in states has continued, owing to the fact that the Federal Government gets all the taxes, leaving states with only Pay As You Earn.

Mathew Ibeabuchi, MD/CEO, MD Services Limited, told BusinessDay that states must begin to think out of the box by taking agriculture seriously, as is done in Malaysia.

“Some countries that do not have oil are robust today. They built agriculture and patiently allowed it to grow. Think of chickens imported from the USA. If USA is exporting one billion chickens, another one billion will be in reserve,” Ibeabuchi said.