NIGERIA’S 37 governors cannot have expected cheers when they declared late in 2015 that they could no longer pay a minimum wage of just $3 per day to their employees. Politicians are seldom brave enough to cut civil servants’ pay but Nigeria’s governors are desperate.
Low oil prices have slashed government revenues. Nigeria, which nowadays is comprised of 36 states and Abuja, the capital territory, operates as a federation in which most decisions over spending take place in the various state capitals. Every month the central government collects money from oil sales (which still account for more than 50% of its total revenues) and hands over just under half to the states. But that sum has plummeted since the price of crude declined. BudgIT, a Lagos-based analysis group, reckons that the states got a bit less than $7 billion between January and September 2015 compared with almost $14 billion over the same period in 2013. That led to a crisis in June when, having not paid their workers for months, 27 state governments begged President Muhammadu Buhari for a bail-out.
By December 2015 several states were again failing to pay civil servants on time, provoking strikes. Although the fiscal crisis came to a head when the oil price collapsed, its origins are much older.
At independence in 1960 the country was made up of just three regions. Since then it has been divided and subdivided. There are perhaps 250 ethnic groups in Nigeria. The big ones all want states where they are in a majority, so they can divvy up oil money and government jobs among their kin. “Some states were created by military leaders just to look after friends and businesses partners,” says Adigun Agbaje, a professor at the University of Ibadan.
This balkanisation of Nigeria has spawned a poisonous kind of politics. At the ballot box, religion and ethnicity matter far more than a candidate’s ideas. Politicians often win votes by stirring up animosity against the ethnic group next door. This can turn violent. More than 8,000 people were killed in ethnic or religious clashes in 2015.
Few states gather much revenue themselves. Borno, a state in the north-east, collected about $3 per head from its 5m people in the whole of 2014. To be fair, it is besieged by Boko Haram insurgents. Still, other more peaceful states such as Osun are scarcely doing better yet hire civil servants by the busload.
Some financiers think the federal government should provide conditional lending to troubled states. It probably won’t, given its own ballooning budget deficit. States could cut wages, but workers will howl. Some governors have hit on the original idea of trying to collect more tax. Lagos, the nation’s most self-sufficient state, thinks it can tax another 4m people, doubling the number who pay. Many states, however, are simply “hoping that future residents will pay off today’s costs”, says BudgIT’s Oluseun Onigbinde.
From the print edition: Middle East and Africa