The Centre for the Promotion of Private Enterprise, CPPE, has raised the alarm that the majority of states in Nigeria are at risk of insolvency amid the raging economic hardship.
Muda Yusuf, the director of CPPE, disclosed this while reacting to the report that 31 states owed the Central Bank of Nigeria N330 billion in Salary Bailout Funds.
The economic think tank group said that the report indicated that most states were not financially sustainable and were at risk of insolvency if there was no boost in investment.
According to him, for states to survive, they must do more to attract investments and reduce their dependence on the Federation Allocation Accounts Committee.
CPPE added that the issue of restructuring needs to be revisited to enable states to have more control over their resources, especially in the area of mining.
“This issue is a fiscal sustainability problem, showing that many states are not fiscally sustainable and need to work towards it; and that the states need to do a lot more to attract more investments to their states so that their level of dependence on the Federal Allocation Accounts Committee would reduce.
“Even as we speak, many of them are also in debt, and by the time they pay salaries and service their debts, there is not much left to improve on infrastructure.
“It’s in the interest of the sustainability of the states for them to be more creative in generating more revenue and attracting more investment to their states so that they can generate more revenue.
“Secondly, we also need to address the issue of fiscal federalism because some states don’t have power over some resources in their domain and can’t bring investors into it.
*For instance, mining is controlled mainly by the Federal Government; you get permission from them, and revenue is remitted to them. So we need to revisit the issue of restructuring to help states have more control over resources within their domain.”
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