While awaiting accountability from state governors and legislators on how they applied their share of the savings from oil subsidy removal, some facts can be deduced about why citizens did not feel the positive impacts of the humongous allocations to lower levels of government. Emerging statements from federal government actors indicate what the federal government expected state governments to do with the shared funds. The federal government expected state governments to clear outstanding wages and salaries for workers, as well as retirees’ pensions. For many states, this was not to be.
The fuel subsidy removal and harmonisation of the exchange rates, or more appropriately, massive devaluation of the naira, led to the closure of many small and medium-scale industries and commercial businesses and the scaling down of operations of many big firms with concomitant job loss and zero incomes for many Nigerians. With the attendant inflation from the policies, the economy continued in recession, extending from the past administration. Expectedly, poverty in the land increased, and the need to bring succour to the people became imperative.
The government considered pumping money into the economy to ease hardship by encouraging consumption. Paying outstanding salaries and pensions was one policy initiated to increase the distribution of money. Definitely, following John Maynard Keynes, making money available would encourage consumption, and the resulting effective demand should lead to growth in production and incomes, with final implications for employment generation. Not all the governors executed the plans. Many did not pay outstanding salaries and pensions on time, and by the time they paid, inflation had eroded their value.
