Desmond Mgboh, Kano
The last may not have been heard on the Federal Government’s demand of repayment of N614 bn it offered to 35 states under the National Budget Support Loan Facility. Each state, with the exception of Lagos, which didn’t take the loan, is expected to pay back N17.5 billion, respectively, at the end of the day. Our correspondent reports that Kano which owes a lot of debts would be worse-hit if the directive is implemented to the letter.
When Mrs. Zainab Ahmed, Minister of Finance, Budget and National Planning, addressed the press, after a meeting of the National Economic Council, attended by state governors, in Abuja and presided over by Vice President, Prof. Yemi Osinbajo, she made it known that NEC has agreed to set up a team comprising the Nigerian Governors’ Forum (NGF) and her ministry, to meet with the Central Bank of Nigeria to work out the repayment modalities.
If the feelers coming from the states are anything to go by, when the chips are down, the Federal Government, rather than some of the states, may be the one to make some refunds. Take for instance, Ebonyi. The state is insisting that the Federal Government owes it N33 bn, emanating from contracts it executed on its behalf over the years. It argues that if modalities of repayment of its debts are going to be discussed, that too should come in for discussion. If all goes well, it means, at the end of the day, FG will be expected to subtract the N17.5 billion from the amount it owes the state and repay the balance which should be about N15.5 billion.
The Ebonyi State case and argument
Making this known during the week, Ebonyi State Governor, Chief David Umahi, speaking through his Chief Press Secretary, Mr. Emmanuel Uzor, said that his government is not disturbed by the federal government’s plan to recover the bailout fund as it owes the state too.
Secondly, he said, the fund was well-utilised for the purpose it was meant to serve. “The only thing is that it depends on the agreement on when to recover their money,” he said. “I think it is not something you will recover immediately. It is a loan facility that staggers up to a period of years. So, it won’t have any effect on Ebonyi State because what we have done is to channel the money towards the economic development of the state and, again, those sectors that we channelled the money to, we will not have need to revisit them.”
Uzor added: “Right now, we are focusing on the sectors of the economy that have not received priority attention. For instance, in the areas of infrastructure, agriculture and all that, we have done marvellously well.”
On the debt itself, he said if the federal government is serious about recovering its money, then it should be ready to do a reconciliation of account ledger with the state. “I think they will only remove a specified percentage from what is accruable to the concerned states,” he said. To start with, he argued, “it is not all the states that got that bailout funds completely. It came in phases. We are not indebted to the tune of N17.5 billion which they are saying. There are some tranches that we did not get.
“Secondly, we are also going to reach a truce with the federal government to balance us the money we have used to execute their projects like the federal roads. It is only in Ebonyi State that we have constructed all the federal roads. We don’t care whether it belongs to the state or federal government. So, the federal government owes us N33 billion. So, we are going to reconcile the accounts with the federal government. We are not the only ones who owe them; they owe us too. We are going to sit down with the federal government. We will tell them what we have executed and they will tell us what they are going to balance us. If the federal government wants to recover their money, five percent will be good for us. Even if you go to the bank to get loan, it is five percent because government is a continuum. It is not a must that an administration which gives out money must collect it. Another administration can inherit it,” he explained.
Bayelsa and Benue positions
Speaking on the issue, Bayelsa State Commissioner for Information and Orientation, Mr Daniel Iworiso-Markson, said that the state is not part of those affected by the refund of N614b bailout as we did not get any from the federal government. “We are not part of those states.” Although Benue State is one of those states, its governor, Samuel Ortom said he is not going to take a different position from that of the Nigerian Governors’ Forum (NGF) on the matter. Speaking through his Chief Press Secretary, Terver Akase, he said he wouldn’t want to make any further comments on the matter aside what was already agreed upon by the NGF. “Benue has no reaction different from that of Nigerian Governors’ Forum,” he said. “The position of NGF is also our stand. We don’t have a position different from that of NGF.”
The Imo backward integration conundrum
In Imo State, while the immediate past government claimed the fund was judiciously used, the present government is doubtful of the claim. Asked to speak on the issue, Special Adviser to the immediate past governor of the state, Sam Onwuemeodo insisted that the N17.5 billion pension granted to the state by the federal government was used for the payment of workers salary. He also maintained that N5 billion of the fund was left in the coffers of the state government for the payment of pensions of workers in the state by former governor, Rochas Okorocha. This was responsible for the clearance of all workers’ salary before Okorocha left office, he said.
But the new Senior Special Assistant to governor of the state, Steve Osuji admitted that while the state under Okorocha received the N17. 5 bn bailout fund, he is not too sure what the then government did with it. According to him, Governor Emeka Ihedioha would need to find out whether the money was used for the purpose it was granted. And, if not, the government would have to report to the Economic and Financial Crimes Commission (EFCC) to recover it for state’s use.
“The governor I suppose would first get the record of how the money was spent, if it was spent on what it was meant for, we can begin to structure repayment,” he said. “But if it was not spent on what it was meant for then we would ask them to pay back. We would simply tell them to go and collect it from who they gave it to. If it was embezzled, the state government would have to go to EFCC to recover it.”
Edo and Delta states chest-thumping
States like Edo and Delta said repayment of the loan, on whatever agreed terms would not affect governance in any way. Edo State Commissioner for Information and Culture, Paul Ohonbamu, told Saturday Sun that the state government had long prioritised payment of workers’ salaries. “I don’t think the refund will affect payment of salaries due to the kind of governor we have,” he said. “The governor is an investment banker and proactive man who has taken the issue of payment of salaries as a priority. Assuming he is sharing the money, there would have been no money to share with the demand for the refund of the bailout fund.” He explained that this is why Obaseki is against sharing money to politicians.
He admitted that although the demand for refund would affect projects execution in the state he is, however, optimistic that the governor would now have to do greater work by plugging all loopholes to ensure increased internally generated revenue. Commissioner for Finance in Delta State, Fidelis Tilije also assured that the demand for repayment will not adversely affect economic development in the state.
He said the state government knew ab initio that the bailout fund was not a gift but a loan that must be paid back when the economy stabilized, adding that Governor Ifeanyi Okowa had already factored it into consideration. According to him, the money will be deducted at source from the monthly federal allocations, pointing out that the Federal Government will not deduct the lump sum in one swoop. “What I know is that the Federal Government will not just wake up to demand this money at once because it does not want the states to collapse. There will be negotiations that the states will be part of,” he said. “Whatever is agreed at that level, Delta State will abide by it. Delta is a law-abiding state, and as a government we will always fulfill our own part of the bargain. Like I said earlier, if this is implemented it will not affect economic development in the state.”
The daunting task before Kano
Kano State will face a daunting task repaying the loan because it has one of the highest wage bills in the country. Secondly, it suffers from an unimpressive Internally Generated Revenue base. In addition, the state government is indebted to contractors at the moment. It is a well-known fact that the Ganduje’s administration inherited a debt of N350 billion. While it has succeeded in reducing this figure, at the same time, it has committed itself to fresh liabilities.
All the same, Ameen Yasser, the Director General, Media and Publicity, Kano State, admitted in a chat with Saturday Sun that, “a debt is a debt” and ought to be repaid by whoever commits himself to it. Asked if Kano State is in a position to repay the bailout fund, he answered: “The economic recession has affected each and every state. There are other contending issues to look at before you can arrive at an answer as to whether Kano can pay now or at a much later stage
“One of the contending issues is the issue of salary increment. We are now at a stage where the bottom line of payment in the state civil service is N30, 000 and if you have to grapple with this, and with the demands of infrastructure and other needs, you may not have the capacity of repay that fund. I am not saying that Kano State doesn’t have the capacity to pay, but that capacity which Kano has is likely to be undermined by certain new challenges that were not in the picture at the time of the commitment.
“If the federal government is increasing salaries of workers and enjoining states to comply, then the issues of the repayment of bailout fund should be kept on hold for now.”
Speaking further on the issue, he advised that the present demand notice by the federal government should serve as a reminder to the affected states to begin to think of how to diversify and earn the resources to repay their debts, without injuring the well-being of their people.
Lamentation from Oyo State
Contacted on the issue, the Commissioner for Finance, Oyo State, Mr. Akinola Ojo, said the state will be left with nothing if it were to be made to repay the said amount. Asked how much the state gets on monthly basis from the Federal Account Allocation Committee (FAAC), the current wage bill, the status of Internally Generated Revenue (IGR) and how the repayment will affect economic development in the state, if the directive is applied to the letter, he said:
“In the first instance, we have a debt portfolio of close to N150 billion that we met when we came on board. From revenue generating perspective, the state gets, on average, N4.8 billion and N4.9 billion as FAAC monthly from the Federal Government. Our own Internally Generated Revenue, on average, is between N2.2 billion and N2.4 billion monthly. So, in total, we generate about N7 billion on average monthly. We have a wage bill of about N5.2 billion and N5.3 billion every month. So, that brings us back to a surplus of N2.3billion. We pay commissions to the consultant who generates this IGR for us in the region of N400 million to N500 million. So, that brings us to a surplus of about N1.3 billion.
“What that tells you is that from a state’s perspective, what we have to play with to do our capital projects, and to make all our loan repayments, is only N1.3 billion to N1.4 billion. So, the implication of the Federal Government asking us to pay back N17.5 billion is that we will be left with nothing. We won’t even be able to pay salaries that we need to pay for our staff. So, there has to be a more dynamic way of recovering this money back from the state. I am not holding sway for the past regime in that I don’t know what the funds were used for, how they were judiciously used, but I think Federal Government has to be a little bit accommodating to the state so that the state don’t go under, trying to repay back the debt.”
•With reports from Tony Osauzo (Benin), Obinna Odogwu (Abakiliki), Rose Ejembi (Makurdi), Seye Ojo (Ibadan) and Paul Osuyi (Asaba).