Interview: Gov. Ahmed Speaks on the Economic Status of Kwara

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Following are excerpts from the live radio programme, “Governor explains” with Governor Abdulfatah Ahmed of Kwara State…

What is the current economic status of Kwara State and are you doing to increase viability?

The economy of Kwara State cannot be insulated from the Nigerian economy.  We’re all aware that the problems we are faced with have been with us over a long time.  We have over a long time depended on the crude oil driven economy. So any change in the price of crude oil will naturally affect the economy. In Kwara, things have been very tough as they been across the country but we’ve brought certain levels of intervention through the medium and small scale enterprise funding windows where entrepreneurs, small traders access funds either under associations groups or cooperatives.

Most importantly, we sought to change the ways in which we access revenues especially Internally Generated Revenue. We’ve since restructured our collection process and this has led to a major boost in available funds for our programs. That has helped in supporting the much desired funding for infrastructure because you see one of the challenges that our economy like ours is faced with is an infrastructure gap.

That is why we put efforts in place to raise revenue to support infrastructure.

We had quiet a lot on ground in terms of infrastructure when we came in 2011 and quite a lot has been done. God willing we still have a few we need to complete before the end of our tenure. So, by and large we have succeeded in reflecting the economy through selective funding of our infrastructural programme and of course making funds available for small entrepreneurs.

We have also ensured that salaries are paid regularly because for now we are still a mainly civil service driven environment. So salaries are paid regularly which also reflates the economy. One critical angle we took again to change the economic environment of Kwara is driving agriculture.

I am happy to let you know that quite a number of people have signified interest, some have accessed funds under the Commercial Agric Scheme of Central Bank. We have been able to get quite a few people interested in agriculture and am sure by the time we reflate the economy with the one billion naira loan we have gotten, we expect it to translate to probably N2b-N3b increase. So these are ways by which we’ve sought to reflate and drive the economy at the state level.

 

There are complaints from some manufacturers of multiple taxes and you are also picking on several capital projects in different sectors of the economy when they are complaining of unpaid salaries. How do you react to this question?

It is not true that manufacturers are complaining of taxes because what taxes do we ask manufacturers to pay? The first one, company tax, is not paid to Kwara State. It is paid to the federal government. The second one is ground rent. The ground rent is normal and expected to be paid. In the past, we have not been efficient in collecting ground rent. So, our introduction of efficiency is now being seen as a level of pressure. It is paid yearly and anywhere in the world where land is used, you pay to government.

The third one is probably income tax by workers which ordinarily should have been paid as salaries are paid.

So, there is no taxation in Kwara that is extra-ordinary that would push any investors to move away. If they move away, there is nowhere they will go and not have to pay the same type of taxes. So, it is likely to be untrue that people are moving away because they are asked to pay taxes they are supposed to pay.

You see the other one is the issue of local government unpaid salaries. At the state level, we don’t have unpaid salaries except in a few areas like tertiary institutions otherwise workers at state level are paid their salaries which is the major responsibility of the state government. Those are the ones that are captured under the state budgeting system.

The Local Government system is continuously been erroneously seen as being funded from the state government for salary payment. Local Government salaries are not paid at the state level. They are paid by the local governments who also receive allocations from the federation allocation. Exactly the ways the federal receives the state receives. Now, whether they are able to augment that allocation with additional funds to carry out their responsibility of paying salaries and meeting other obligations is a different kettle of fish. It is not the responsibility of the state government. The three tiers of government collect allocation on monthly basis from federation allocation.

The Federal government is able to pay salaries either through its own funding strategy, through borrowing or internal sourcing. The state government is able to pay salaries because we are able to increase IGR. That is what has augmented our ability to pay salaries. Now, the local governments get their revenue from federation allocation. They also get 10% of the state government IGR which is mandatory.

Now the local government is supposed to increase the allocation from its own IGR. That is where the problem lies now. It has not been able to augment that portion. That is why they keep running shortfall at different local government levels. If you look at certain local government, they may probably be owing 3 months. Those are the ones that worked well enough to augment a little. Some are owing five months, some are not even owing at all like Kaiama local government. They have been able to augment their own allocation and that is why they are able to pay salaries as at when due. So, I think the critical issue is not looking at local government workers as not been paid. Let us look at those who are not paying regularly. What is stopping them from paying regularly?

We need to look at those who have not exhausted their capacity in revenue generation. We will support them so that they too can also pay like the ones that are paying. So, I think that is the area we should continuously be concentrating and that is when we can truly address the inability of councils to pay salaries especially when allocation from the federal government is not likely to increase to what it used to be. In terms of infrastructure, these are necessary to ease movement of people and goods from one location to the other.

That is the way we can truly reflate the economy and improve economic life. We ensure that salaries are paid at the state level through augmentation from the IGR. Then whatever is left is now channelled to development which is expected. The bulk of what is generated internally must be seen to be going into infrastructure because that is what will benefit majority of the people in Kwara. Not everybody is a civil servant or is earning from the state government. In fact, the bulk of the people are not earning from the state government. So, how do they benefit from contribution to taxes?

The only way is to drive infrastructural development, that is when they can benefit and begin to feel the impact of government in their lives. That is why we ensure that after salaries, we begin to work on infrastructure and that is what led to the introduction of Infrastructure Fund Kwara(IFK) which was designed to fund all ongoing projects and new ones. Under IFK, we will take every project to completion.

 

Several capital projects by your administration embarked on seem to be generating some controversy. Some people feel these aren’t priority in view of salary arrears?

Salaries are not outstanding at the state level. What is outstanding at the state level is subvention for the forth-quarter to tertiary institutions. They are expected to also add their internally generated revenue to pay salaries. At State level, we aren’t owing salaries. However, you see, infrastructure is critical and as it is driven along side the growth of the population.

If you look at Kwara and Ilorin indeed, you will see that we have witnessed an influx of people and our roads are beginning to be under pressure, our water is beginning to be under pressure, the light is beginning to be under pressure.

If you look at the demand for transformers that we receive on regular basis, its not because there are no transformers in that environment. More often than not, the transformers have been over-powered by the number of additional people that have come to different environments.

So, it tells you, infrastructure would continuously be under pressure in a growing city. Vehicular movement is becoming difficult and the ease with which you get to your place of work or service delivery, the better the economic environment.

That is why we looked at the major entrance levels in Ilorin and we feel that it is very imperative that we put these places in proper shape so that people in and out of Ilorin town, so that economic activities can be improved upon.

If you look at the roads we are working on currently, Sango-Oke-Oyi, is being dualised because we have a teaching hospital there and its an exit point.  It is going to enable easy vehicular movement. The one in Geri Alimi has become necessary because, if you see the level of which development is going on as far as Eiyenkorin and other axis, there are universities in those axis. Very soon, it will become impassable at normal times. That is why we have taken the initiatives of creating a diamond underpass to allow for easy vehicular movement for the current and the future needs. Other feeder roads now will be attached to it.

You will see that it is running concurrently with another road we are doing around Egbejila to link up with the airport road. These are all to ease vehicular movements and movement of goods and services. So, by and large we have well articulated development programme which sees the need to support our workers on monthly basis and ensuring that they get paid; pensioners are paid and most importantly whatever is left is channelled to capital project.

That is the impact you are seeing today in the ongoing projects in Kwara.

 

People are saying local governments cannot pay salaries. Okay give us local government autonomy. Do you think there is actually a way out?

You see, I think we should try to understand when people use certain words for certain things in Nigeria, just like the much talked about restructuring. When you ask 10 people about restructuring they will give you 10 different answers. You see the word to me is too amorphous. When you talk of autonomy at the local government level, in Kwara I don’t know how much more they want to be autonomous because they are completely financially autonomous and I think that is the kind of autonomy they are talking about. The relationship between the state and local government is purely as guided by the constitution and the laws of Kwara State.

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Governor Abdulfatah Ahmed

Cuts-in: Your Excellency Sir, you run joint account.

No! The State runs its own account, the local government run its own account. Local government in Kwara are financially autonomous. Their allocation comes into what we call the joint allocation account of local governments. The joint is not between state and local. It is amongst the 16 local governments. I think a lot of people have been misconstruing the concept of joint account. They think that joint account is between the state and local government.

No! It is amongst the 16 local governments. They have one account where their money that is coming from Abuja or any federally allocated funds enter. And that is why they call it the Joint Account of all the 16 Local Governments not with the state government. It is from that account that monies are shared to the 16 local governments and that is how they are able to pay salaries to their workers and carry on their other recurrent expenditure. So, local governments in Kwara State are already autonomous.

I am sure where autonomy is relevant is in states where monies that come in enter into the state coffers first before they now begin to enter to the various local governments but we don’t have that practice in Kwara State.

We have never had it. Monies that come go into their Joint account as captured in the Nigerian Constitution. It is not a choice of Kwara State. In fact, when they are talking about abrogation of the joint account, it is not at the state level, it is a constitutional level.

It is the National Assembly issue. So, when you say you don’t want Joint Account, it is at the National Assembly issue, it is not at the state government level. So we should understand when we talk of Joint Accounts, it is among the 16 local governments, that is the account where their monies are shared from. The only thing they enjoy from the state government is the 10% internally generated revenue which is religiously made available to local governments on monthly basis. So, ordinarily, they are supposed to augment that with their own Internally Generated Revenue. There are so many lines that local governments can generate revenue from i.e. from garages, parks, environmental services, markets etc.

There are so many services they can render and these are revenue lines guided by bye-laws of the local government. So, the local governments are supposed to make bye-laws to ensure that they are able to complement their effort at the state and local government levels to drive revenue to get the necessary support to pay salaries and wages.

 

But KWIRS has taken over tax collection from the local government?

No! They can’t take over tax collections from the local government because the taxes that are collectable at the local government are clearly spelt out by law. The ones that are collectable by state government are spelt out by law. The ones that are collectable by the federal government is clearly spelt out by law except by agreement and consent between the local government and KWIRS. The KWIRS cannot collect taxes that are guided by bye-laws of local government.

 

Paris club refund issue generated a lot of issues in the past on whether to use it for salaries or infrastructure. The question is who exactly owns that Paris Club Refund?

I want to commend the administration of President Muhammadu Buhari for being able to bring the affairs of this country thus far. By the time the administration came in 2015, we met a dwindling economy.  We all saw price of crude oil tumble.  A lot of states could not pay salaries. Kwara state was able to just get-by. Our contractors were out of site because we couldn’t pay them and that put a lot of pressure on so many states.

FG looked at the whole thing with a strong sense of sympathy by going by and looking at ways to support states and the way they came out. Firstly, they helped the states to restructure their loans for longer terms, creating head room for states to operate. The Paris Club refund refer to loans obtained by the government in the past.

Some of these loans were in the 70s, 80s and 90s and were used to build things like the NTA, hospitals, and water projects and the funds were duly repaid by the state government through regular deductions at that time.

Unfortunately, when they were been paid by the states, the FG did not externalize it. So, by the time the FG wanted to pay, it now took from another source to pay on behalf of the states. So, the states now came and said look it is like you are doing a double payment for one loan on my behalf. So, we request for a refund. So that portion of the refund is what has been captioned in the Paris club refund and they are based on what the states had paid in the past. The local government expected to benefit from it.

We don’t have a problem with local government benefiting from that but it must be recognized that these are funds for the state government. The monies that are made available for local government would go through the local government allocation account. Local government money does not enter state government account, just the way state money would not enter local government account. However, when the monies came in, state governments have different problems. The first reason why the money was made available was states that were under pressure of salaries of which Kwara State was not one of them.

The pressure we had was at the local government. The only thing that can support unpaid salaries is Internally Generated Strategies.

What ever comes from outside is only going to help you temporarily. So, the Paris club thing, when it came, it was out of sympathy that the state supported the local government to off-set part of their arrears.

So it is not the local governments money, it is the state money and out of sympathy, we stepped down some of our capital projects and we used the money to support the local governments so that local governments can also reduce the burden they have. But between you and me, that is not the solution to local government problems. The permanent solution to local government problems must be, those local governments that are owing must do what those who are not owing are doing  i.e Kaiama local government is not owing.

What is it doing that is making it to pay its own salaries? Some local governments are owing just 2 months, what are they doing that is making them owe just 2 months? Why are others owing 9 months? So, it is not a flat rate. So we must look at it from case to case basis if we want them to get out of it. But if you lump them together, you will be looking at a solution from outside when the solution should come from inside. But if you want solution to the lingering local government problems, it is imperative that we look at local government on case by case basis. So, until we look at it on case by case basis and look at what they are not doing that is making them unable to pay salaries that is when we can get solution to that problem. The solution lies on internally generated funds.

 

Certain promises were made at specific time by some governors on the issue of Paris club and they were not living on that promise. Why?

I am not aware of any governor who has made a promise to his people and has not met it. I am not aware. You see not every state is able to pay salaries to its workers as at when due. Quite a number of states are not able to especially those who have very low Internally Generated Revenue. I am aware that for those who are owing they were advised that whatever is collected from Paris club, they should use minimum of 75% to off-set all those back-log of salaries.

But for those states that are not owing their workers, they will certainly use the money for capital projects or other use. So, am not aware that some states made commitments that they did not fulfil. But am aware that in Kwara, the commitment we made is to develop infrastructure with the money. However, we reneged on that and we made part of the money available to local government through agreements with the state assembly to ameliorate the pains that the local government workers are going through but that is the solutions to their problems.

 

We had the International Vocational Training Centre (IVTEC) at Ajasse-Ipo has been registered as an NGO. There seems to be a contradiction. How do you react to it sir?

Our plan to set up an International Vocational Training and Entrepreneurship College (IVTEC) in the first place is as a result of the need to create a training ground for middle man power need. And we don’t have such institution across the country.

Most importantly, if you look at the typical colleges that were introduced in the past, most of them have either gone moribund or largely being converted to regular secondary schools. It is reflective on the way and manner trade and activities are carried on across the country. If you look at where we require artisans to work, especially in construction, we rely heavily on people coming from West Africa Sub-region.

These are part of reasons why we set up the school. Now, how will the school run differently from what we used to have in the past? We looked at what government has done in the past. Where are the government technical colleges today? Where are the government owed institutions that are expected to drive entrepreneurship across the country? They are all gone, they are all dead. So, our desire was to set up a vocational training institution that will not go the same way as the ones in the past. Most of the problem they faced is largely recurrent expenditure. Government spent money every time, set up an institution equip it and that where is ended. How do they run from there, who provides the funding to run the day to day activities?

We’ve seen that state capacities to drive institution on day to day basis is becoming herculean either at the basic, at the secondary or tertiary levels.  We are even witnesses to what is happening to ASUU with FG today.

It tells you that capacity of government to continue to run institutions on recurrent levels is becoming a bit challenging and that is why we conceptualize the issue of setting up an International Vocational Centre that would run as an NGO. What is the advantage of running as an NGO? This first one is that it will run itself by latching on International Organisations and donor agencies that will give it enough funding to continue to run. It will get support from a lot of development partners who would see it as not being a normal government technical college and would just see it as just the normal other technical colleges are run.

So, the whole idea of registering it as an NGO is to create sustainability platform. We don’t want it to go the same way that others have gone. It will continue to be owned by government, but it is going to be as an NGO. And the reason why the registration of the NGO is necessary is, that is the only way it will become attractive to international agencies who will now donate funds or endow chairs in those institutions.

That is why you see the way we started those institutions, we started with partnering with schools in America who would expose that school as an NGO to institutions and organization that would either donate equipment or funds or other things that would support the schools.

If we rely on the state government to set up a school, run it normally the way it run every other school, we will have challenges. Even the current burden system we have in schools is not even sustainable. We are even struggling with Kwara State University. So, it will be fool hardy to assume that we will just set up and other institution under the same programme to be running under the same funding window, it will also die like the others in the past. So, the only way to make it sustainable is insulate the school and make it attractive to funding agencies from abroad and other development partners that is the reason why we set up an International Vocational Centre as an NGO.

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