Kwara State Governor, Abdulfatah Ahmed, recently held his monthly personality programme tagged, ‘Governor Explains’ in Ilorin. He spoke on wide range of issues like the Paris Club Refund, local government autonomy and state revenue agency among others. Hammed Shittu in Ilorin was there. Excerpts:
The Paris Club Refund issue generated a controversy in the past on whether to use it for salaries or infrastructure. Who exactly owns that Paris Club Refund?Â
By the time the administration assumed power 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 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 looking at ways to support states. Firstly, they helped the states to restructure their loans for longer terms, creating head room for them 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 hospitals, and water projects and the funds were duly repaid by the state government through regular deductions at that time. Unfortunately, when they were being paid by the states, the FG did not externalise it. So, by the time the FG wanted to pay, it now took money from another source to pay on behalf of the states. So, the states now came and said ‘It is like you are doing a double payment for one loan on my behalf.’ So, we requested a refund. So, that portion of the refund is what has been captioned the Paris club refund and they are based on what the states had paid in the past. The local governments are expected to benefit from it.
We don’t have a problem with local government benefiting from that but it must be recognised that these are funds for the state governments. The monies that are made available for local governments 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 level. The only thing that can support unpaid salaries is internally generated strategies.
Whatever 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 governments to offset part of their arrears.
So it is not local government 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 local government owing must do what those that do not owe are doing. For example, Kaiama local government does not owe.
What is Kaiama doing that is helping it to pay its own salaries? Some local governments owe just two months, what are they doing that is making them owe just two months? Why do others owe nine 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 in internally generated funds.
Certain promises were made by some governors on the refund. Why are they not living up to that promise.Â
 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 regularly especially those who have very low internally generated revenue. I am aware that those who owed were advised that whatever is collected from Paris club, they should use minimum of 75% to offset all those backlog of salaries.
But for those states that do not owe their workers, they will certainly use the money for capital projects or other things. So, I am not aware that some states made commitments that they did not fulfil. But I 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 governments 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.
What is the current economic status of Kwara State
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 quite 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 I am sure by the time we reflate the economy with the N1 billion loan we have gotten, we expect it to translate to probably N2 billion to N3 billion. So these are ways by which we’ve sought to reflate and drive the economy at the state level.
 Some manufacturers are complaining of multiple taxation. 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 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.
