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Revealed: Despite N625.43bn Derivation Windfall, Extreme Poverty Ravages Oil Producing States

  • Governors Live Large While The People Suffer
  • Infrastructural Development Not Commensurate With Available Resources
  • Federal Government, States Trade Blames
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When the Federal Government said a fortnight ago that 133 million of its citizens are currently living in poverty, it was hard to put a face to the statistics.

Speaking at the public presentation of the Multidimensional Poverty Index (MPI), calculated with five components of health, security, living standard, unemployment in Abuja, President Muhammadu Buhari, represented by the Chief of Staff, Prof Ibrahim Gambari, said the survey method was used because it helps government to know and solve poverty with policies.

The MPI was based on a survey by the National Bureau of Statistics (NBS), the National Social Safety-Nets Coordinating Office (NASSCO), the United Nations Development Programme (UNDP), the United Nations Children’s Fund (UNCF) and the Oxford Poverty and Human Development Initiative (OPHI).

The report shows that poverty is higher in the rural areas of the country “where 72 per cent of people in rural areas are poor, compared to 42 per cent living in the urban areas,” while “65 percent of poor people, about 86 million, live in the North. Also 35 per cent, nearly 47 million people, live in the South.

“In terms of the MPI value which captures the proportion of poor people, as well as the intensity of their poverty, the poorest states are Sokoto, Bayelsa, Jigawa, Kebbi, Gombe and Yobe, but we cannot say which of these is the poorest because statistically their confidence intervals (or the range within which the true value falls considering the sample) overlap.”

Just when Nigerians were digesting the information that appears to support previous indices by the World Clock, which described Nigeria as the headquarters of poverty with 90 per cent of its people living on less than three dollars per day, the Federal Government blamed state governors for failing to deploy remittances and policies to address poverty across the country.

Then on Friday, the Federal Government issued a statement that narrowed the perceived states to the nine oil producing states in the Niger Delta, namely Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers.

According to Presidential aide, Garba Shehu, in a statement titled: ‘Oil Derivation, Subsidy and SURE-P Refunds: Nine Oil Producing States Receive N625.43 Billion In Two Years; N1.1 Trn Still Outstanding,’ the total amount were refunds dating from 1999 to 2021, which the nine states received between October 2021, January 2022 and April and August and November 2022. The money was paid in three tranches of 13 percent derivation, Subsidy Reinvestment and Empowerment Programme (SURE-P) and withdrawals from oil subsidy.

The statement reads, “Under the 13 per cent derivation fund on withdrawal from ECA without deducting derivation from 2004 to 2019, Abia State received N4.8 billion with outstanding sum of N2.8 billion, Akwa-Ibom received N128 billion with an outstanding sum of N77 billion, Bayelsa with N92.2bn, leaving an outstanding of N55 billion.

“Cross River State got a refund of N1.3 billion with a balance N792 million, Delta State received N110 billion, leaving a balance of N66.2 billion, Edo State received N11.3billion, with a balance of N6.8billion, Imo State, N5.5 billion, with an outstanding sum of N3.3 billion, Ondo State, N19.4 billion with an outstanding sum of N11.7bn while Rivers State was paid 103.6 billion, with an outstanding balance of N62.3 billion.

“On the 13 per cent derivation fund on deductions made by NNPC without payment of derivation… Abia State received N1.1 billion, Akwa-Ibom got N15 billion, Bayelsa N11.6 billion, Cross River N432 million, Delta State N14.8 billion, Edo State N2.2 billion, Imo State N2.9, billion, Ondo State N3.7 billion and Rivers State N12.8 billion.

“Similarly, all the nine states received N4.7 billion each, totalling N42.34 billion, as refunds on withdrawals for subsidy and SURE-P between 2009 and 2015. The refund, which is for all the states and local government councils, was paid on November 10, 2022.

“The Federation Account also paid N3.52billion each as refund to local government councils on withdrawals for subsidy and SURE-P from 2009 to 2015 on the same date in November.”

ISSUES SURROUNDING THE REFUND

The politics and forthcoming general election in 2023 is said to be a major source of questionable spending with the refund. Governor Ifeanyi Okowa of Delta State is the vice presidential candidate of the Peoples Democratic Party (PDP). Governor Nyesom Wike of Rivers State, who leads the aggrieved G-5 governors in the PDP, has doled out almost a billion naira within the past three months, first in Lagos, where he donated N300 million to the Committee of Wives of Lagos State Officials (COWLSO), another N200 million to his Abia counterpart, Okezie Ikpeazu, during the funeral rites of the latter’s father, as well as the logistics he promised to assist the presidential candidates of Labour Party, Peter Obi and the New Nigeria Peoples Party (NNPP), Dr Rabiu Kwankwaso. He also appointed over 200,000 aides in one day.

Governor Hope Uzodinma announced the donation of N1 billion to the campaign fund of the presidential candidate of the governing All Progressives Congress (APC), Bola Tinubu. He however said the donation was made by a group of businessmen who are his kinsmen.

Other issues that have been raised, concerning the derivation refund, are accountability and transparency.

Bayelsa State, the fourth highest recipient of the funds with N92 billion, leaving an outstanding of N55 billion, for instance, is classified among the poorest states in the MPI survey, alongside Sokoto, Jigawa, Kebbi, Gombe and Yobe States. Other derivation states, such as Abia, Cross River, Imo and Akwa Ibom, have some of the highest unemployment rates in the country.

According to the NBS and Debt Management Office (DMO) report for September 2022, Imo has an unemployment rate of 56.6 per cent, Cross River 53.7 per cent, Akwa Ibom 51.0 per cent and Abia 50.1 per cent. Again, in external debt stock holding, some of the derivation states rank high among 36 states and Abuja at of June, 2022.

In the external debt stock recorded by the DMO, Edo State with $268,314,205.93 debt, Cross River with $215,754,975.33 and Rivers with $140,177,828.95 came fourth, fifth and sixth, respectively, after Lagos with $1,274,924,893.80, Kaduna with $586,776,219.18 and Bauchi with $172,762,304.16.

“There is no doubt that the Federal Government in publishing the derivation refund to the nine oil producing states can say it is a way of making them account for the money they generate, although I suspect the intention behind the action might be political as we are in the season,” Mr Nik Ogbulue, financial analyst and Publisher of Money Report, told THEWILL on Friday in his assessment of the matter.

“The focus on oil producing states is suspect. What about mineral producing states? What about other income generating interventions by the World Bank and international agencies,”Ogbulue added.

REACTIONS

Speaking for Delta State, the Commissioner for Information, Mr Charles Aniagwu, told THEWILL that it was laughable to suggest and even think that the refund would be diverted to campaigns. He said the derivation money received by the state was judiciously spent.

When told that the point at issue, as President Buhari pointed out, was not about building bridges and skyscrapers in urban areas, but in extending policy initiatives on health, education, employment and living standards to the rural areas according to the MPI survey, Aniagwu insisted on his premise.

He said, “I am not saying that states should not justify their expenditure. But if the Federal Government says that state governments should spend their money, Delta would be richer. They cannot take away 80 per cent of the state’s resources and give 20 per cent. When we prepare our budget, what do we use? Revenue projections based on what we are expecting as revenue, accruals and receipts. We had a budget of N200 billion, then N300 billion and now N400, billion.”

Insisting that the Federal Government missed the point by blaming the rising poverty in the country on the policies of state governments, Aniagwu blamed the centre for the hostile operating environment that has made many companies to fold up or relocate from Nigeria, the poor exchange rate of the Naira to the Dollar and the subsequent hyper-inflation that has reduced the purchasing power of the people.

“The impression that we concentrate development in the urban areas to the neglect of rural areas is untrue. Except for the Coker-interchange in Asaba, the state capital, built because there is no direct road leading into Asaba, other projects are rural-based. As I speak, 26 bridges are currently are under construction in the rural and riverine areas to link remote communities, enabling them to transport farm produce and interact with neighbouring communities. Youth and women empowerment programmes that equip our people with skill-sets are well known to most people,” he said.

The Media Assistant to Governor Hope Uzodinma of Imo state, Ogwuike Nwachukwu, did not respond to our calls or WhatsApp messages, just as his Rivers counterpart, Kevin Ebri.

In his own response, the Special Adviser to the Edo State Governor on Media Projects, Crusoe Osagie, said in a statement on Friday that the Federal Government and not the states is to blame for the ravaging poverty in the country, adding that the derivation refund was a smokescreen to play what he described as the politics of 2023 general election.

According to him, the Federal Government’s bad leadership, poor economic management and general insecurity have thrown over 133 million Nigerians into poverty.

He said, “It is rather unnerving that the Federal Government, which takes the lion share of the revenue accruing to the three tiers of government will turn around to accuse the two other tiers of failing the people. The Federal Government takes 56 percent from the Federal Accounts Allocation Committee (FAAC) and shares the balance of 44 percent between the states and local government councils.

“In a time when these revenues have continued to dwindle as a result of the poor management of the economy by the Federal Government, who now resorts to borrowing to pay its workers, it is laughable that Agba, (Clem Agba, Minister of State for Budget and National Planning) is casting aspersions on states as a pretext to hide their failures.

“How will it dare to absolve itself of blame when a report by the National Bureau of Statistics (NBS), which it commissioned, returned a verdict of failure in the wake of its parroting of an ineffective Social Investment Programme (SIP).”

Osagie maintained that the prudent management of the Edo State’s finances is the reason it was ranked in the National Bureau of Statistics (NBS) report, as one of the seven states that are least impacted by multidimensional poverty in Nigeria.

Governor Duoye Diri of Bayelsa State confirmed receipt of the money from the Federal Government. Although he disclosed that the state was underpaid, he said his administration was ready to answer any inquiry on due process in deploying the money.

“I do not play politics with this kind of thing. Anybody who wants to see how we use our money, the evidence of our monthly transparency briefing on our financial income and expenditure is available,” he said, adding, “One kilometre of road that we build in Yenagoa is costlier than three kilometres or four kilometres of road built elsewhere.’’

 

Written by Amos Esele and Sam Diala