‘Why Salaries Are Not Paid when Promised’ -Demola Banu, Kwara State Commission For Finance

+ Working Hard To Improve Allocation

Demola Banu, Kwara State Commissioner for Finance gives an insight to challenges of meeting deadline in paying worker’s salary and other interesting issues…

Que: It has been observed that the worker’s salaries were not being paid as at 25th of every month as promised by the government. What actually is responsible for this?

Ans:Thank you very much. I will like to tell you that the administration of Alhaji AbdulFatai Ahmed, the executive governor of Kwara State has been doing a lot to improve the standard of living of Kwarans and other stakeholders. It will be recalled that at my last press briefing I disclosed that the delay in the payment of salaries was caused by the late transfer of funds from the federation Demola Banu, Comm of Finance, Kwara State
account to the state. We have been trying our best because ordinarily we are supposed to be having Federal Allocation Appropriation Committee (FAAC) meeting earlier than we have it now, It supposed to hold on the 12th and 13th of every month but the last one was held on the 18th and 19th of June 2012. We got June allocation yesterday the 28th, I can assure you that we are trying our best to control this. You will also appreciate the fact that the state government, like many other states, largely depends on what we are getting from federal allocation, so it is very difficult for the State Government to pay salary before getting the allocation, the only way is to get loan from the bank and that will attract a huge cost which will be an additional burden to the state, and I want to assure Kwarans that before the end of the month they would receive their salary.

Que: With the dwindling revenue accruable to the state , what are the measures put in place to improve the Internally Generated Revenue (IGR)?

Ans: Like we all know, on the assumption of office of the Executive Governor , Alhaji Abdulfatai Ahmed the IGR was about N450million, but as I am speaking with you, it has increased to N750million, that is a commendable performance. But our target for the year is N1billion. We will ensure that before the end of the year we will meet the target. We are able to achieve this due to the personal support of the governor. There is a committee chaired by the governor which monitors the monthly performance of our IGR,furthermore, we are able to extend our taxable bracket to the informal sector, that is, by carrying out enumeration of the informal sector and dragging them into the tax net. We are also making efforts by collaborating with the Federal Government to ensure that the tax payers are well-identified and captured in order that the corporate organisations and individuals pay the appropriate tax . With these measures in place, proper advocacy and cooperation of the good people of Kwara we will be recording significant improvement in our IGR. The state government is also partnering with private sectors and creating conducive environment for business to thrive thereby increasing economic activities. You will appreciate the fact that the level of IGR is directly related to the economic activities . Recently the State Executive Council approved the consolidation of all the State’s investments in all economic generating companies like KIPDC, Kwara motel and Kwara Ethnix furniture under Harmony holding Limited, this will enable the investment of the State to be properly monitored and efficiently managed in order to generate optimal returns .

Que: What about the issue of oil affecting governance and if so, what is the way out?

Ans: The price of Crude Oil is crashing down. In March this year Crude was sold at $126 per barrel but it has dropped to about $92 per barrel now. The decline in Oil price is due to the fact that United State demand for Crude Oil is at 15- year low and also the Economic crises of the Europe-zone. The economy of European nations is not doing well. The industrial production is reducing and hence the demand for Energy. However, world oil production has risen steadily for more than a year largely because of the Organisation of Petroleum Exporting Countries (OPEC) which has been producing above agreed ceiling of 30m barrel per day. Meanwhile, Nigeria has not been able to meet her budget of 2.4m barrel per day as a result of vandalisation and Crude Oil theft in the Niger Delta region. As a result of this the impact on revenue accruable to the nation is drastic and is affecting governance adversely. The occasional withdrawal of fund from Excess Crude account maintained by the Federal Government has been suspended for now as a result of the fall in the reserve account and to cushion the potential effect of the economic crises in the Euro-zone. The States and Local Government usually utilise the Excess Crude fund to finance capital projects. The balance on the Excess crude account maintained by the Federal Government is about $5.8 billion and is expected to grow to $10 billion dollars in 3 months time. Pending that time no further transfer of fund from Excess Crude account to States and Local Governments, as a matter of fact this situation is affecting the Federal, States and Local Government. Infact, Some states and local governments do not have sufficient fund to pay their salaries, but in Kwara state we are doing everything humanly possible to ensure that we pay our workers as at when due. As a result of the dwindling revenue there was a significant shortfall in the allocation to all the States and 774 local governments in May and June. There was a shortfall of about N355m in the allocation due to the local governments in kwara State in June when compared to April. These are challenging times for states and local governments. That is why the recent conduct of the verification, audit and biometric carried out in all the local governments in kwara state is very timely and important. The envisaged savings discovered in the personnel cost is expected to offset the shortfall in the allocation. Like I said, most states of the federation depend largely on the federal allocation which comes from crude oil sales, and the crude oil accounts for about 90 per cent of our export. The only solution is that we need to diversify our economy by encouraging the exportation of other commodities apart from Crude oil , most especially now that many other African countries have discovered Oil. We are working hard to increase our IGR.

Que: What about the depreciating value of the naira? How does that affect governance?

Ans: You see, any nation that depends on importation will definitely have unfavourable balance of payment. And that means there will be pressure on your reserve because what you are paying for import is far more than what you are receiving for export. You will need more money to pay for goods and services and this does not help any nation at all. The only thing we can do is to ensure that we increase the level of goods and services we are exporting. Just like the Kwara State government is doing, we are the first state of the federation to initiate the exportation of 6000 tonnes of cassava chips to China. I know this is very commendable. So many people did not understand what the immediate past administration of Dr Bukola Saraki was doing then when he started the Commercial Agric revolution in Shonga. The opposition party that are fond of criticising any good programme of government insinuated so many negative things then. Now we can all see the wisdom in the initiation of Shonga Agric Project. It has put Kwara State on the World map.

Que: With the increase of the IGR by the state government, why is it difficult for government to meet up with some of its urgent financial obligations?

Ans: We need to understand the dynamics and be well informed. Like I mentioned earlier, we get our allocation towards the end of the month, so for us to meet the payment of salary by 25th of every month might be very challenging. Definitely we do not have any problem in meeting our obligations. To pay salary might be delayed but we pay our salary regularly, we are meeting all our obligations. The issue of IGR in respect of salary payment needs to be put in proper perspective. It is only after the end of the month that all banks that collect our IGR will now remit to a particular bank .So, if you are expecting us to use IGR to pay salary that means you are talking about the third or fourth day of the following month before the payment of salary, and besides It is not appropriate to use IGR for payment of salary. We use the IGR to meet other obligations, mostly funding of capital projects. I want to appeal to Kwarans and other stakeholders to pay their taxes as at when due so that government can continue with the execution of the laudable projects for the benefits of our people.

Que: What is the state government doing to improve its position on the allocation ladder?

Ans: There are parameters in which they measure each state on the allocation profile. They use criteria like population, landmark, contribution to the pool, among others. Some of the criteria are not within the control of the government. There is nothing one can do on the issue of population. As we are increasing in population other states too are increasing in population. But we are working hard to move up the ladder.

Que: Can you shed more light on the issue of Emission / Gaseous taxation?

Ans: People should understand that we are doing this for our benefits. Definitely, everywhere in the country, this emission taxes are being collected and for a long time, we were not collecting it in Kwara State because of one reason or the other. But I think we just started again around february 2012. I just want to appeal to our business community and institutions to pay their taxes promptly. The State Government is mindful of the impact of taxation and we do not want to saddle our people with burden.