State governments must brace up for harder times – Okigbo III

A Policy analyst and social entrepreneur, Patrick O. Okigbo III, says with Nigeria’s crude trading at about $11, many states government will become insolvent if adequate action is not taken now to develop their internally generated revenue.

The analyst in a post argued that despite the fall in price, Nigeria has tens of millions of barrels of crude oil in scores of vessels cruising the seas looking for customers. “Nigeria is offering a $5 discount per barrel but who will buy when U.S. shale oil is selling for $2 (and no one is buying that either). Nigeria has other bigger challenges because it does not have onshore crude oil storage so she has to put her oil on vessels. In the last week, the cost of renting the vessels doubled to $350,000 per day.”

“Many analysts are saying that the world may not get back on its feet for a few more months. In reality, we may be stuck in this new world until a vaccine is found for the novel Coronavirus and a major percentage of the global population vaccinated.  Unknot your tie, we may be in this new world for a while.

According to him, all state governments except Lagos depend on allocations from the sale of Nigeria’s crude oil for most of their revenue, coupled with the fact that allocations from the federal government have been dwindling, things would only get worse, if they don’t put their acts together.

“About a month ago, I had a chat with one of the State Commissioners for Budget and Economic Planning. At that time, he was already petrified by what he was seeing. The cheque from the federal government was getting lighter. Sadly, he couldn’t get his principal and colleagues to understand that what they saw moving in the distance were not clouds but a Tsunami that is gathering speed. Many of the state governors still can’t see it.

“This is the time to get into emergency mode and plan for the worst. What will you do when it becomes obvious to you, in a few weeks, that you can’t pay salaries and provide the basic minimum public services required in your state?  What are the economic choices you have to make today?  What things do you have to cut off today to be able to tide over tomorrow?

Okigbo III advised state governments to plug the leakages in their system starting with the “security votes”. “Call on the illustrious sons and daughters of the state and convince them to join you in planning for and in funding palliatives for the poor and vulnerable.

“This is the time to plan and act. Act as if you are convinced that the dam will break. It is more than likely that it would. If it doesn’t, you are still ahead. If it does, you will be ready. Don’t be caught napping. It won’t be pretty,” he added.