N23bn Bond: Our Critics Are Ignorant – Kwara State Gov

N23bn Bond: Our Critics Are Ignorant – Kwara State Gov

Friday, May 16, 2014 2:43 pm

Governor Adbdulfatah Ahmed

Governor Adbdulfatah Ahmed

Governor Adbdulfatah Ahmed of Kwara State, in an interview with select journalists in Ilorin during his monthly media programme titled, ‘The Governor Explains’, bares his mind on a variety of issues, STEPHEN ONI was there.

Give us an insight into the state’s infrastructural gap and what government intends to fill?

Infrastructural requirement by the people for growth and development is a thing that ordinarily government should not take for granted but unfortunately, infrastructure is something that we have not maintained in the past. This has resulted into the decay which we have today. In the past 20 to 30 years we’ve been building roads, constructing bridges, culverts but we’ve not been maintaining them. In the process they got spoilt and we have to start all over again.

The most critical part of it is that the infrastructural requirement in roads, water, energy, education, health, agriculture is huge. By time we did an assessment of the infrastructural requirement of Kwara State, to bring the state to a fully functional environment with all the needed infrastructure that will make a state go on normally, we found out that there is a huge gap. To put those things in place, it will cost us about N300 billion.

With what we have on ground, we know that we cannot raise N300 billion. But as a government that has a tenured time to stay to drive governance, we must see how much of the N300bn project we want to do in our own time. That prompted us into looking at the sources of funding. Where are the sources of funding?

Of course, we know that we get the federation allocation which comes in every month, from which we pay salaries and carry on other recurrent expenditure. Is this enough to do capital projects? Obviously, it is not. It therefore means that we have to look for other sources of funds that will enable us do our own portion of the capital projects, while other governments that will come will continue from where we stop until that day, through a successive well articulated transition, Kwara State will gain the benefit of not only getting full infrastructure but also the build-up of one infrastructure over another through successive governments.

For us here, we’ve decided to look at the capital market, which is the cheapest source of funds for government to raise money to do capital projects. If you go to any organisation that is desirous of improving the lives of its people, you will see that it must have access to a large sum of money where it can do capital projects and begin to pay back gradually. But those who don’t know will exhibit ignorance by saying that government is going to borrow money to execute projects. How do you want to do projects without borrowing? I don’t know how. Even the federal government, as it is, issues treasury bills. For your information, treasury bills are a way by which the federal government also borrows money to execute projects.

So the state on its own goes to the capital market to raise bond for capital projects. They are cheaper sources of funding because the interest rates are lower than when you borrow from commercial banks. I’ve heard a few people making comments, especially the opposition, saying that Kwara State is taking the bond to impoverish the people. People should talk about things they know. It demonstrates ignorance. If you say that the taking of a bond to execute well-articulated, well-marshalled-out projects is impoverishing the state, then you are demonstrating that you have no business in this business of governance.

Is it true that the next bond the state is going to take is N23bn?


Some of your opponents believe that some of the projects that you want to implement under this bond, such as the Ilorin water reticulation scheme, should have been carried out under the previous bonds. Can you explain what appears to be the duplication?

I will explain to you. When you have capital projects you cost them. The costing will give you a specific figure. For instance, the Ilorin metropolis water project was estimated at N7bn. There is no way we will be able to raise N7bn in one single bond, except we want to do only water and we don’t do anything else. But as long as we want to do water; we want to do electricity, we want to do agriculture, we want to do hospitals, then we take whatever we can take, but depending on what we can pay back at that time. And then we jumpstart the project and the project will now take us to 10 per cent, 20 per cent, 30 per cent, and 50 per cent or 60 per cent conclusion after which we now take additional money to complete the project.

If you have big projects, you need to execute them in phases; but definitely they will go beyond one or two bonds. If you take the Ilorin metropolis reticulation for instance, the first amount that was designated for that project in the bond was N4bn. That was in the first bond that was taken, the N17bn bond. When you take N4illion, how much do you have left out of seven? You have N3bn. When I came in I took a loan out of which I used N1bn to support the Ilorin metropolis reticulation project. That takes us to N5bn and we still have N2bn to go.

That is why we intend to raise another bond to take additional N2bn out of it to complete the project. When we raise money, it does not mean that the money will take the project from A to Z. It may take it from A to W or from A to X, then somebody else will take it from that level to completion. Projects are normally jump-started and completed as we are moving on. A typical example is the Kaiama-Kishi road. The road is going to cost us about N8bn. We cannot raise N8bn with our current repayment capacity; but what we can raise for that road is N2bn.

We therefore have to break the construction of the road into three sections. As soon as we take this bond we will start section one which will only construct 1/3 portion of the road. So, somebody comes in tomorrow for any reason and see that bond has been raised to jumpstart Kaiama road, then the next bond is coming in again, you want to take money for Kaiama road, he will say but you have taken money for Kaiama road before. Yes, just to start but not to complete it because completion will require large volume of money and large volume of money will require us to have a strong repayment capacity.

Repayment is limited to your inflow. There is a limit to which you can borrow money. You cannot borrow all the money you want.

If I can borrow all the money, I would have taken the N300billion and complete all the capital projects but it is not do-able. It is only a function of what you can pay back. So there is no way we are going to impoverish Kwara State. We will take money; execute projects that will be completed within specific time frame for the benefit of Kwarans. And when we finish we will still live here, because we will both enjoy the projects we are going to do.

There is also the concern about the period and the debt burden, given the fact that basically it is the federal allocation that provides much of the State revenues. Can you give us some enlightenment on the repayment profile and the time frame?

The sources of government funds are three: federation allocation, Value Added Tax, VAT, and Internally Generated Revenue (IGR). Most of the federation allocation inflows go into the servicing of salaries and wages and other monthly commitments. So our VAT and IGR are where we try to see how we can carry out capital projects, but they are too small on their own to continue to use them on the projects that we have.

I just told you of the Kaiama-Kishi road project which is about N8bn. My IGR is about N600 to N700 million while my VAT is about 400 to N500 million. How much of that can I use to do Kaiama-Kishi road alone. I’ve not talked about Share-Oke-Ode road, I have not talked about Ipetu-Rore road, and I’ve not looked at the Teaching Hospital road we are trying to expand. These are all roads that require huge funding.

Once we understand the benefit then what we are going to take, use and pay back will not be the problem. That is why we are going to take our time to advertise the projects we want to do so that people will see.

And of course, there are schools we want to renovate. There are hospitals we want to work on. These are projects that we can all see that we want to execute. There are options. One option is that we can wait and be putting the little money we are getting on monthly basis until the projects get completed, may be in 15 or 20 years. That is one option.

The second option is that we borrow money and then we keep paying back gradually and then we use the money to complete the project. It is a choice. For us as Kwarans, we feel that our choice should be accessing large sum of money to complete the projects in a record time and get the people to enjoy the benefits. That is exactly what we are doing, very transparent.

Some people have said that your administration’s Quick-Win job creation initiative is political propaganda; how do you react to this?

The taste of the pudding is in the eating. We don’t judge people by what they want to do, but by what they have done. As a state and as a government we look at the composition of Kwara and we recognised that we have a plethora of unemployed youths and it is a very critical situation for us. We are also happy to know that Kwara State has the least of unemployed youths when we checked the statistics nationwide. So, it tells you that the effort to get us there was deliberate and we want to improve on that.

So, if anybody under any guise tells you that our youth empowerment scheme is political, then the person is not serious. We cannot afford to take the destiny of our youths into an adventure. So we cannot afford to politicise it. It has nothing to do with politics. It has to do with stability and security of this country. Our youths are unemployed.

We must ensure that we get them empowered to move them away from disillusionment to hope. If a child leaves school, his focus will be getting a job to do. If he spends three to five years out of school and doesn’t get any job, obviously he becomes disillusioned. If anybody thinks that is politics then the person is not right. For us, these are very serious issues. We must begin to create hope in our youths and that hope is the essence of our empowerment schemes.

If you recall when we started in 2011, we started with Kwara Bridge Empowerment Scheme, KWABES, designed to move our youths from idleness to empowerment and ultimately job placements. When we started, we said this is a government that will focus on youths and the theme of the direction of this year’s budget would be youth empowerment. Our youths are seriously and truly idle. We need to engage them and that is why we have come up with a programme. We want to ensure that we recruit a minimum of 8,000 youths who will be moved from idleness to empowerment. So it has nothing to do with politics.

Some KWABES beneficiaries have accused the government of reneging on its pledge to transit them into permanent jobs. Is this true?

Firstly, we did not renege on any promise. We started a programme, Kwara Bridge Empowerment Scheme, designed to move our youths from idleness to empowerment. At the levels of empowerment, we intend to move more of them to regular paid jobs. When we started KWABES, we took some of them to the public sector and some of them to the private sector. We do not have the capacity to insist on the private sector to recruit people. However, we have the capacity of getting the private sector to be supported by the people and we pay them salaries. Along the line, those of them that are able to endear themselves into the heart of the private sector will now be absorbed. Those of them that we have attached to the public sector, over 2/3 of them have been absorbed into the civil service.

As a matter of policy, any absorption that has come in through the government, either through the Civil Service Commission, Teaching Service Commission, SUBEB or Local Government Service Commission we take cognisance of those in KWABES first. It is the KWABES recruits that will be first be converted before we look for other people. By and large, we have been able to move over 3,000 of the 5,000 we started with into the Civil service structure. Others have gone into the private sector. We have never reneged.

The Peoples Democratic Party, the major opposition in Kwara State, has vowed to recapture the state in 2015. What is your reaction?

Politics is not about noise. It is about action. We are in Kwara State. We are with our people and we know what our people want. We are giving our people what they want because the capacity to carry on what they want is flowing from them. It is a people’s government. We must recognise that when we have a people’s government you can’t take it from the people. When you take a people’s government from the people what do you want to give them?

Let us recognise the fact that Kwara State has come this far because of transparency; because of well-articulated and marshalled-out government process largely driven by strong political process engendered by APC. That is what will continue to sustain Kwara because there is strong leadership and that leadership has allowed programmes to be well articulated.

The state government recently approved the payment of severance for ex-councillors who served in the last administration but the opposition alleges that the federal government has already paid the money. How will you react to this allegation?

I don’t know how the federal government will take out of the Federal Government allocation to pay local government staff. Just like I don’t know how you can use local government money to pay somebody in the federal. I don’t understand it. If somebody understands this he should explain to me. For me, I know that Local Government staff can only be paid from local government funds. I cannot see the tie between the federal allocation going to Federal Government and that of the ex-councillors. I cannot tie them together.

What I know is that our ex-councillors have been given their severance allowances as we promised and we have since been ensuring that severance allowances are paid based on our funding capacity. It is purely a Local Government affair and it has always been sorted out purely as a Local Government affair. They are being funded from the Local Government money. Not even the state, talk less of the Federal.

What is happening with regards to the issue of local government pensioners’ gratuity?

The issue of local government pensioners’ gratuity has been a very tough one not because of anything but because the Local Governments do not have enough funds to pay these things immediately. I just explained that there has been a drop in the allocation for Local Governments as states and the Federal Government. So, as it is now, we are coming up with financial strategies that will see that the local governments are able to raise additional funds to clear the backlog. If you recall yesterday (at the 2014 Workers’ Day celebration), I said N50 million was being made available, which is not enough. We intend to increase it once the allocation to the local government improves.
As it is today, the allocation to local governments is barely able to cover the overhead and personnel cost, very little is left for capital projects. By the time we come out with the new funding window we are trying to work out for the local governments, there will be additional funding for them that will increase how much goes into pension and our pensioners will begin to see improved inflows into their pockets.

What accounts for the 40 per cent reduction in the federation allocation; what has actually gone wrong?

It is not unconnected with the assumption that there is theft of crude oil. We are told that crude oil is stolen and that is why the amount that is made available to state and federal and local governments had dropped. Maybe the amount will go up when they stop stealing crude oil.

Join The Conversation

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.