No State Has Collected Bailout Fund: Governor Ahmed

Governor Abdulfatah Ahmed of Kwara State, in his “ Governor Explains” programme, spoke on the bail-out fund to states by the federal government, President Muhammadu Buhari’s administration and the crisis in the National Assembly

STEPHEN OLUFEMI ONI/Ilorin.

Q: There is a lot of controversy surrounding the issue of bailout fund for states that are owing salaries, what is really the issue?

A: I recall we had a meeting with the President and subsequently the Vice-President under the National Economic Council, NEC, platform where governors outlined critical issues facing their various states. One common platform was that states are under financial pressure and they require that the federal government should intervene in critical areas to help support the current financial crisis. The first one was the issue of our federal projects we have executed at state levels which we expect the federal government to kindly help defray those costs.

A typical example in Kwara is the Ilesha-Baruba-Kosubosu road where we executed the project some few years back. The federal government has started paying but over the last three, four years, no single remittances were made. Those are the kind of projects we are asking the federal government to pay back so that we can have some money.

The second one is the issue of all other moneys that have accrued into the federation allocation account in the name of the revenue either in form of excess crude or in form of dividends. However, it was generally agreed that the excess crude money should not be shared yet. What should be shared is the in-flow from the dividends accruable to the federal government, states and local governments.

Don’t forget that the federation allocation account is a revenue account, it is an account that receives revenue to be shared by the three tiers of government. So any money that comes in there automatically becomes available for sharing to the three tiers of government. So the money that came in as a result of NLNG dividends to Nigerian government was meant to be shared. It has always been meant to be shared, the only difference is that, in the past under the last PDP-led Federal administration, we never saw anything with respect to dividends. It was only this last time that it became notable to us that such accruals would come in. And when it came in, we requested that this money should be shared and that was what was shared in the last few months.

The third portion of it is the issue of bailout and the bailout has to do with restructuring of existing loans. Because if you look at it, states have not been able to pay salaries as a result of two things-the first one is that there has been a major drop in the federation allocation. The second one is that states have incurred debt that has made their cash flow to be under pressure because by the time they repay the loan, they would have little left to carry on with normal business and don’t forget that these loan repayments are usually first-line charges. So that is why a lot of states came under financial pressure.

However, the issue of bail-out that has been so much talked about, people were expecting that moneys were going to be sent to states to pay salaries and other financial commitments, that is not how bail-out is going to work. What we mean by bail-out and what the federal government truly means by bail-out is the restructure of existing loans that states are owing banks and other financial institutions in such a way and manner that the pressure on the monthly repayment is lessened.
In other words, this much-talked about bail-out is just being worked out, it has not gotten to any state yet because we are just submitting the level of debt that all states have incurred. In Kwara for instance, our loan profile is very small compared to all these states, that is why even when this loan is restructured, we would not benefit much from the much-talked about bail-out. It is those states that have heavy loan that would benefit.

The federal government is taking over the loan from the various banks and institutions that they are owing. So, that is what we mean by bail-out. Just like the word, ‘bail’, if you are bailed from the police counter, it does not mean that the case has been discharged. You are only allowed a temporary breathing space. It is to give states a temporary breathing space to restructure their loans. The same loans, it is not being over-written.

Nobody should imagine that any money would be given to states to pay out any outstanding debt. The money that has come to us which is the money that we called the dividends under the NLNG is the money that should have been shared whether there is a bail-out or there is no bail-out, whether there is financial pressure or there is no financial pressure. The money should have been paid to us anyway because it is a due money that is supposed to be paid to the three tiers of government. So that money is not part of bail-out, it is part of the normal share of any revenue that accrues into the federation allocation account.

So if anybody under any guise imagined that, that money that was shared was the bail-out for payment of salaries, it was wrong information. Now it depends on each state, some that have financial pressure could use it to offset their financial pressures and for us, we used part of it to defray some financial pressures in salaries and we met other financial obligations and why we did it was to enable our people celebrate the Eid l-fitri but don’t forget the money was not meant to be used to pay salaries as it were. It was our share of the NLNG money which we decided under our own wisdom to help our people have a peaceful and a joyous Sallah celebration.

Q: The PDP claimed you received and diverted N3bn bail-out fund, how true is that?

A: Well, firstly it is false and I am surprised, that at this level, having gone through the kind of electioneering that we went through and also gone through a successful election process, I think this type of information dissemination from the opposition should have stopped. Information that is available in the public domain should not be misinterpreted. It is not right. Kwarans do not deserve wrong information. Everybody heard that NLNG money had been credited into the federation account to the tune of about USD2.1billion and this is the same money that had been shared to the federal, states and local governments and it is by choice for any state to apply the money as it wishes. For us in Kwara State, we opted to use it to address salaries at both the local government and state levels as well as to meet other state exigencies. For anybody to have said we have collected a bail-out, he is either demonstrating ignorance or demonstrating mischief. Either way Kwara state indigenes do not deserve wrong information, they deserve to get constructive criticism in form of right information to make them understand what is going on.
When you say something that is not right, you are misinforming the public. The truth of the matter is that Kwara State collected N2.1bn and the local governments collected N1.4bn and this money has gone into payment of salaries at both levels which of course is not even enough because we had to meet other commitments. Don’t forget the job of governance is not just about salaries. There are other subventions that require to be paid.

Q: You recently said that Kwarans should be ready to sacrifice, what sacrifices should they make in this administration?

A: The sort of sacrifice we expect Kwarans to experience is not the sacrifice to the extent that we create any major burden on them. Rather, we want to see a high level of increased compliance for instance to contributions to the internally generated revenue efforts because one key issue that has come out is that unless we beef up our internally generated revenue, we are not likely going to come out of this current financial quagmire. It is very clear that the federal-allocated funds would not grow beyond the levels they are in now in the near future. The only option we have, as we are not going to be the major beneficiaries of this much-talked about bail-out because our loans are not too high, is that our own efforts in meeting with the much desired financial requirement would be in driving the internally generated revenue.

That is why we have sought to change the face and process and technology of driving internally generated revenue and I want to use this method to let people know that this is the only way the people of Kwara State can truly begin to live as Kwarans under the same comfort that we have always lived by ensuring that our civil servants are paid regularly and our projects are also carried on regularly because if we do not look for additional revenue and we sit on the federal revenue, it cannot take us to the promised land. For instance, at the beginning of 2011, we were collecting about N3.2bn, but today we are on about 1.5- N1.6bn. So where is the difference going to come from? Unless we look for external money and the only way external money can come in is only through internally generated revenue.

We must change the method with which we collect revenue. Revenues are being paid, it is the collection process that is being changed so that we allow these revenues to come into a consolidated account, from this account, we now know in clear terms how much is accruing to Kwara State as internally generated revenue. Don’t forget, it also has a double-edged sword because it would increase what we report to the federation allocation sharing committee that would see that Kwara State revenue drive has increased which would translate to increased federation allocation.

So, as Kwarans, the kind of sacrifice we expect from them is largely compliance to efforts in driving the revenue, otherwise there is no new pressure that would come on our people. Another area we expect to see some level of adjustment would be reduction in the cost of running government business, we would not see running government as business as usual, we have to reduce the cost, we might even likely kill some of the ministries, depending on how we see the efficiency of the ministries to the exigencies of the current government desires. I want to assure you that everything would be streamlined such that it would bring down the cost, improve efficiency, increase compliance level and also make more resources available for increased benefit of the people of Kwara state.