Replicating The Imo Formula In A’Ibom?


By: Alkali Tsoho

The adverse economic boomerang which sparked off rows in various sectors in the country forced the Federal Government to have introduced what was called Austerity Measures. This was done by the President Shehu Shagari-led National Party of Nigeria (NPN) administration in 1982. Soon the regime lost political power on December 31, 1983. Their import licence policy was abolished but counter-trade was introduced with the aim to exchange crude oil for essential commodities – a new addition to the lexicon in the life of Nigerians. Long queues emerged, which the National Supply Company could not cope with. Common commodities like soap, detergents, milk (powdered and liquid), toilet paper, toothpaste, among others were in short supply.

The new regime in power was led by Major-General Muhammadu Buhari with Dr. Mahmud Tukur as the Minister of Commerce and Industry, who was charged with making the essential commodities available under a price control regime while grappling with the scarcity of foreign exchange.

The General Buhari regime had inherited a backlog of salary arrears from several of the 19 states’ structure of government in various degrees. The states under him were governed by Military Governors from the various service arms – Army, Navy, and Air Force. They strove to contain and ameliorate the near-despondency of the people. The blames were squarely put on the politicians who were now called detractors, and several were thrown into prison detentions. Truly, the political class had become an endangered species.

Interestingly, the then Brigadier Ike Omar Sanda Nwachukwu, Military Governor of Imo State (1984-1985) sought a solution to the economic quagmire. He got a former Bretton Wood Institution agent, Dr. Kalu Idika Kalu to serve as his Commissioner of Finance. Together, they evolved what became known across Nigeria as The Imo Formula. The Imo State of that time was made up of the areas covering today’s Imo, Abia and parts of Ebonyi state (particularly Old Afikpo).

Simply put, The Imo Formula meant whatever was available to the state government from monthly Federal Accounts Allocation Committee in addition to any internal revenue less cost of administration would be paid out as workers salaries depending on what percentage of the wage that could afford. Generally, it varied between 70% and 90% with no story of arrears. What was to be paid was made available regularly but no questions as to the shortfall. Strange, as it was, life went on in Imo State. The story of Chief Sam Mbakwe, the legendary “crying governor” who was in prison detention could not help them. An interesting part of this was the later recognition of Dr. Kalu Idika Kalu by the succeeding regime of Major-General Ibrahim Badamasi Babangida, who requested that his help to midwife the national finance and economy as Minister of Finance. He subsequently introduced the IMF loan debate where it was said: “that only in Nigeria was a litre of Coca Cola’s Coke cheaper than a litre of bottled water.” The end result was the Second-Tier Foreign Exchange Market (SFEM) and Structural Adjustment Programme (SAP).

The Imo Formula was seen by many policy analysts as anti-labour. The government had broken social contract with the employees. The principle of utmost good faith (uberimae fide) was lost. Retrenchment was staring at the people in the face. Today, in modern millennial Akwa Ibom State, a state created in September 1987 alongside Katsina State, the government of the day led by a Deacon of the United Evangelical Church (also known as Qua Iboe Church) has proposed what looks a disingenuous approach to manage the COVID-19 and post-COVID-19 economic outlook of the state. He through his SSG is proposing a return to pre-new Minimum Wage salaries even in the face of obvious inflation since the announcement and implementation of the new minimum wage in the country. Not that the workers were genuinely paid the new minimum wage compared to their contemporaries in the oil-rich South-South region just as workers on Grade Level 07-14 were shortchanged. The population of the employed in Akwa Ibom is 90 per cent in government service. Labour figures about PAYE tax and other computations are not reliable but as in many states in the country, the large majority of the six million population of the state is engaged in subsistence agricultural practices.

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When the going was good picturesquely, little was done to show the workers that as co-contributors to the fortunes of the state they should have gotten commensurate compensation. The state in an even relatively peaceful atmosphere kept a huge expenditure profile on security matters running into several billions monthly. The state civil service has had several retirees in recent times composed of largely those that were inherited from the old Cross River State in 1987 and those who were recruited to fill necessary vacancies occasioned by the responsibility of the new-found status of state creation. No one seems to know the staffers’ strength on the payroll of the state. It sometimes looks like a voodoo process, the more you look, the less you see. The usual direct deductions of labour dues are now held under rather translucent processes, whereby the revenue of the organised labour (local NLC, etc) has been affected adversely since the contractors handling the payroll are mainly non-indigenes brought to the state, and they see and treat civil servants, union leaders and pensioners with disdain rather than as partners in progress.

In a harmonious setting, the powers that be would have honoured the principle of collective bargaining and should have engaged the labour unions in a transparent manner so as to mitigate against industrial relation conflicts. There is a saying, “Who will bell the cat?”

It can be argued that the initiators of The Imo Formula in 1984 used the cover of the military regime to implement it, but recent events in the Imo State of 2016 show that democracy can still offer something devoid of coercion. Why will the government workers in Akwa Ibom State that as recent as March 2020 were made to suffer unilateral, unexplained deductions from their wages be expected to acquiesce to the proposed additional sacrifices considering the number of dependents (direct and indirect) that they sustain? The capital flight from the Akwa Ibom economy is not propagated by the workers as there is no longer a motorable road between the state and the commercial city of Aba in Abia State, where many goods are bought on wholesale. The capital flight has been sustained by worrisome payments to certain contractors whose business interests are outside Akwa Ibom State and have been tainted with a shoddy performance of the projects they handle.

An altruistic economic dynamics would have informed the government to purge itself of the “them and us” argument. The people of the enclave named Akwa Ibom State have been known for decades to have an impoverished background on a wide scale, therefore nothing will be too much to be done by the present crop of rulers to show empathy and take steps to lift the people from the dungeon.

Can the present rulers act like King Zedekiah before the invasion from Babylon, whereby as recorded in the Holy Book as reported by Prophet Jeremiah in Jeremiah chapters 37 and 38. King Zedekiah visited Jeremiah in detention (Jer. 37v17) asking, “Is there any word from the LORD?” We run to prophets when seeking power or position but ignore the scriptures in the book of Hosea chapter 12 verse 13 saying, “And by a prophet, the LORD brought Israel out of Egypt, and by a prophet was he preserved.” Ezra 6v14 says, “And the elders of the Jews built, and they PROSPERED through the prophesying of Haggai the prophet and Zechariah the son of Iddo.”

Legal minds generally say, “He who comes to equity must come with clean clean hands.” Has the government declared the nominal roll of its new payroll system? How many workers have left for retirement? What new recruitments have been done? How many that ought to retire have had their tenure extended for unscrupulous reasons? Labour, this writer believes, if availed of the facts in transparency will be magnanimous to explain to its members.

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Why has the debt management profile for the state seemed to go the way of the infamous London-Paris Club debts of the pre-2005 Nigeria? For two decades, Nigeria had grappled with the controversy of her indebtedness to the London-Paris Club of creditors. The nation was maligned and blackmailed. Letters of Credit issued by Central bank of Nigeria were not honoured by Western nations’ banks. They insisted such be confirmed, but the CBN refused, saying as sovereign she had never defaulted in honouring her commitments. The international creditors who profited from the failure of CBN to keep track of some of her past transactions especially from1980-1983 created a window for the so-called “Confirmation Fee” of between two per cent and 5 per cent, subject to the prevailing political-economic atmosphere in a military regime. This refinancing cost was transferred to all Federal Government imports- fertilizers, steel raw materials, equipment and industrial machinery, commodities, and construction materials. The debt profile continued to snowball despite the huge yearly payout in the name of debt servicing until the agreements of 2005/2006 that saw Nigeria exited from the stranglehold.

How well managed is the Akwa Ibom debt portfolio that from about N60 billion in 2015 to early 2016, it has risen to about N300 billion, yet the state has coughed out in excess of N100 billion? When the state had the opportunity to request for, and obtain the FG bail-out fund that several states benefited, she shied away, even in the face of the fact that the FG had previously accepted about N140 billion liabilities for expenditure on federal roads construction. Even if all the state government did was to have invested such funds in credible, profitable joint venture projects in the model of the NLNG structure which so far has proven to be the only genuinely profitable government venture because of the sincerity and uprightness of the foundation managers that midwifed the project. The project (NLNG) was started at a time that oil price was hovering around $13 per barrel, and the project cost was reduced from a scandalous $4 billion proposal to a business case of $2.5 billion at the Final Investment Decision (FID). Since 1994 it has progressed to train 7 which FID was recently concluded. The long delay, a little over a decade, between train 6 and train 7 is part of the vagaries of government business in Nigeria. Such Joint Venture (JV) projects would have placed Akwa Ibom in better stead at this time of the COVID-19 pandemic. The proposed Petrochemical project whose foundation was laid in 2014 in Esit Eket near AccuGas would have been worthwhile.

The state government should have a rethink in her approach so as not to rock the boat. The civil service has helped to maintain the seeming social stability in the geographic expression called Akwa Ibom State for decades. The government should genuinely seek experts in public finance restructuring to help re-negotiate the debt profile of the state with her creditors using a mix of templates and instruments. Also, the government should implement the social contract covenant with its citizenry firmly entrenched in Chapter 11, section 14(a,b,c) of the 1999 Constitution of the Federal Republic of Nigeria (as amended).

Since the majority of workers in the oil-rich state are public servants, the state government should not replicate Imo Formula to avoid plunging the people, who depend largely on the monthly crumbs, into extreme poverty. This gesture would, no doubt, stem consequential socio-economic effects in the state.

 Tsoho is a Northern youth activist