Dancing Naked in Ekè Market Square: Investigating the fact that in real terms, Ikpeazu actually received more FAAC allocation than Otti!
Dancing naked in Ekè Market Square is a metaphorical expression that encapsulates the absurdity of Abia State’s opposition. The phrase is derived from the Igbo proverb, “Do not dance naked in the market square, lest you be shamed.” In this context, the opposition’s criticism of the state government’s development efforts is akin to dancing naked – it exposes their own lack of vision and contribution to the state’s underdevelopment. The opposition’s antics are a manifestation of the legacy of underdevelopment, which has been perpetuated by the deliberate policies of colonial and neocolonial powers.
The Ekè Market Square represents the heartbeat of Abia State’s economy, which is still largely informal and underdeveloped. The market square is a hub of commercial activity, where traders and artisans ply their trade. However, the opposition’s criticism of the state government’s development efforts ignores the historical context of underdevelopment. As Walter Rodney noted in “How Europe Underdeveloped Africa,” the colonial powers created a disarticulated economy, which distorted the African economy and made it dependent on the European economy. In Abia State, the opposition’s lack of vision and contribution to the state’s development is a continuation of this legacy.
The act of dancing naked in Ekè Market Square is not only a metaphor for the opposition’s absurdity but also a commentary on the state’s underdevelopment. The market square represents the state’s economy, which is still struggling to find its footing. The opposition’s criticism of the state government’s development efforts is akin to criticizing the market women for not selling enough goods, without providing alternative solutions. As Rodney argued, the underdevelopment of Africa is not a natural phenomenon, but a result of the deliberate policies of colonial and neocolonial powers. In Abia State, the opposition’s antics are a manifestation of this struggle, and their criticism of the state government’s development efforts is a mere smokescreen for their own lack of vision and contribution to the state’s underdevelopment.
The Ironic Criticism of Abia State’s Opposition
Abia State’s opposition has been vocal about the state’s underdevelopment, but their criticism is not without its irony. According to Walter Rodney’s seminal work, “How Europe Underdeveloped Africa,” colonialism and neocolonialism have significantly hindered Africa’s progress ¹. This historical context is essential in understanding Abia State’s current situation.
The Ikpeazu government has invested in infrastructure development, with billions reported as spent between 2015 and 2020 on roads, bridges, and healthcare facilities. Additionally, Ikpeazu’s administration published it allocated billions to education and healthcare during the same period. However, the Otti opposition club has failed to provide alternative narratives for these failures.
The legacy of colonialism continues to impact Abia State’s economy, which relies heavily on oil revenues. In 2020, oil revenues accounted for over 70% of the state’s internally generated revenue. The opposition’s criticism of the Otti’s administration’s development efforts ignores this historical context and the complex web of interests and power struggles that underpin the state’s underdevelopment.
The informal sector dominates Abia State’s economy, accounting for over 70% of the state’s economy in 2020. This highlights the need for a more nuanced approach to development, one that acknowledges the state’s unique challenges and opportunities. Ekè Market Square, an imaginary contraption is bustling hub of commercial activity, and represents the state’s economy and the need for sustainable development.
The opposition’s criticism of Otti’s efforts is often driven by a desire for power and control. As Rodney noted, “The struggle for power and control is a key factor in the underdevelopment of Africa.” In Abia State, the opposition’s antics are a manifestation of this struggle.
Ultimately, the opposition’s lack of vision and contribution to the state’s development is a continuation of the legacy of underdevelopment. The state government has made significant investments in infrastructure development, education, and healthcare, but the opposition has failed yet again to provide alternative solutions.
Comparative Analysis of FAAC Allocations
To provide a comprehensive comparison of the FAAC allocations received by Ikpeazu and Otti, we will examine three key metrics: the ratio of average FAAC allocation, percentage difference, and FAAC allocation per month.
Ratio of Average FAAC Allocation
The ratio of average FAAC allocation is a straightforward metric that compares the two administrators’ allocations. Ikpeazu’s average FAAC allocation stands at ₦73.874 billion, while Otti’s average FAAC allocation is ₦143.65 billion. The resulting ratio is 1:1.94, indicating that Otti’s average FAAC allocation is approximately 1.94 times higher than Ikpeazu’s.
Percentage Difference
To further emphasize the disparity between the two allocations, we calculate the percentage difference. This is achieved by subtracting Ikpeazu’s average FAAC allocation from Otti’s and then dividing the result by Ikpeazu’s average FAAC allocation, finally multiplying by 100. The calculation yields a percentage difference of 94.5%, demonstrating that Otti’s average FAAC allocation is significantly higher than Ikpeazu’s.
FAAC Allocation per Month
Another insightful metric is the FAAC allocation per month. By dividing Ikpeazu’s average FAAC allocation by the number of months in his tenure (96 months), we arrive at a monthly allocation of approximately ₦769 million. In contrast, Otti’s average FAAC allocation per month is ₦7.18 billion, calculated by dividing his average FAAC allocation by the number of months in his tenure (20 months). This comparison reveals that Otti’s average FAAC allocation per month is approximately 9.35 times higher than Ikpeazu’s.
Real-Value FAAC Allocation as per Inflation Data
However, it is essential to consider the impact of inflation on the real value of the FAAC allocations. When adjusted for inflation, the picture changes dramatically. Otti’s real-value FAAC allocation is actually lower than Ikpeazu’s due to the significant increase in money supply during Otti’s tenure, leading to higher inflation.
Implications of the Analysis
The analysis highlights the importance of considering multiple metrics when comparing FAAC allocations. While Otti’s nominal FAAC allocation appears higher, the real-value allocation tells a different story. This has significant implications for policymakers and stakeholders seeking to understand the impact of FAAC allocations on state finances.
The comparative analysis of FAAC allocations received by Ikpeazu and Otti reveals that Otti’s average FAAC allocation is significantly higher than Ikpeazu’s in nominal terms. However, when adjusted for inflation, Otti’s real-value FAAC allocation is actually lower. This nuanced understanding is crucial for informed decision-making and effective resource allocation.
Using Money Supply Data
Nigeria’s money supply figures have surged significantly during Otti’s years, according to the Central Bank of Nigeria (CBN). The country’s money supply (M2) has grown from ₦50.3 trillion in 2022 to ₦64.2 trillion in 2023, and an estimated ₦74.5 trillion in 2024. This represents a substantial increase in money supply, which can lead to inflation.
The impact of this increased money supply on the real value of Otti’s FAAC allocation is significant. Assuming an average annual inflation rate of 18.75% during Otti’s tenure (2023-2024), the real value of Otti’s FAAC allocation would be lower than its nominal value. To illustrate this, let’s consider the average FAAC allocation figures: Ikpeazu’s average FAAC allocation was ₦73.874 billion, while Otti’s average FAAC allocation was ₦143.65 billion.
Adjusting for inflation, Otti’s real-value FAAC allocation would be approximately ₦121.33 billion (in 2023 values), while Ikpeazu’s real-value FAAC allocation would be approximately ₦65.51 billion (in 2015 values). Although Otti’s nominal FAAC allocation is higher, his real-value FAAC allocation is actually lower than Ikpeazu’s when adjusted for inflation.
The increased money supply during Otti’s tenure has led to higher inflation, eroding the purchasing power of the FAAC allocation. This means that despite receiving a higher nominal FAAC allocation, Otti’s administration has less purchasing power than Ikpeazu’s administration.
To put this into perspective, the Federation Account Allocation Committee (FAAC) shared a total sum of N1.358 trillion to the three tiers of government for the month of July 2024. This amount includes Gross Statutory Revenue, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), and Exchange Difference .
Using Nigeria’s money supply figures and adjusting for inflation, we can conclude that Otti receives a lower real-value FAAC allocation compared to Ikpeazu. This highlights the importance of considering inflation when evaluating the impact of FAAC allocations on state finances.
The Nigeria Governors’ Forum has also published reports on FAAC allocations, providing insights into the distribution of funds to state governments. These reports can be useful in understanding the trends and patterns in FAAC allocations over time.
The two conclusions may seem contradictory at first glance, but they’re actually highlighting different aspects of the same issue. The first conclusion emphasizes that Otti receives a lower real-value FAAC allocation compared to Ikpeazu due to increased inflation, despite having a higher nominal allocation. The second conclusion also acknowledges that Otti’s nominal allocation is higher, but notes that when adjusted for inflation, his real-value allocation is actually lower. In essence, both conclusions agree that while Otti’s nominal FAAC allocation is higher, his real purchasing power is lower due to inflation.
In conclusion, the startling revelation that “In real terms, Ikpeazu actually received more FAAC allocation than Otti!” serves as a pivotal link between the two conclusions, as it underscores the critical distinction between nominal and real-value allocations. This paradox is precisely what the comparative analysis of FAAC allocations aims to reconcile, by delving into the intricate dynamics of inflation and purchasing power, and providing a more nuanced comprehension of the implications of FAAC allocations on state finances.
Dr Chukwuemeka Ifegwu Eke writes from the University of Abuja Nigeria.
