Minister of Finance, Dr. Ngozi Okonjo-Iweala

Many states of the federation are focussing more on taxes and other levies as sources of increasing their Internally Generated Revenue following the decline from the Federal Government allocation.

The Federal Government, in response to the slump in oil prices, has reduced monthly allocation to the 36 states of the federation in line with newly introduced austerity measures.

The states have also adopted other measures such as prioritising essential services and suspension of some capital expenditures so as to meet the basic needs of governance.

For example, the decline in the allocation has affected the ability of the Kwara State Government to execute capital projects and the 2014 budget.

The state Commissioner for Information, Mr. Tunji Moronfoye, told one of our correspondents in Ilorin that the state had dropped from its former 33rd position on the federal revenue allocation ladder to the last position.

Moronfoye said the dwindling revenue which resulted from the slump in oil prices that made the Federal Government to introduce austerity measures was already biting hard on the state.

According to him, the development has prevented the state government from executing capital projects such as road, renovation of schools and rehabilitation of hospitals across the state.

The commissioner added that the state had to reschedule the payments of its contractors as a result of the financial squeeze.

He said, “We have been managing our resources all this while, we just need to tighten our belt more unlike some other rich states in the federation.

“A lot of projects that we need to execute have been affected too.”

The fall in oil prices has affected the economy of Nasarawa State.

The Nasarawa State Chairman, Association of Local Governments of Nigeria, Mr. Ahmed Wambai, told Saturday PUNCH in Lafia that the development had affected the payment of council workers’ salaries.

Wambai said, “The drop in oil prices has made the local government to be in bad shape; it has affected all sectors of our economy because we cannot pay salary.”

Asked if he has been able to award contracts, he said, “How can we award contracts when we are unable to pay salaries and allowances?”

The state President, Nigeria Union of Local Government Employees, Mr. Abdullahi Abubakar, also expressed concern over the decline in the federal allocation to the states and the austerity measures introduced by President Goodluck Jonathan as a result of the fall in the oil prices.

Abubakar, however, called on government at all levels to invest in agriculture as the only way out of the current financial challenge.

Though the Ogun State Governor, Senator Ibikunle Amosun, had presented N210.354bn budget for 2015 to the state House of Assembly, N99.35bn, which represents 47.3 per cent of the estimate, is to be funded by the Internally Generated Revenue.

The implication of this development is that many more residents will be brought into the tax net.

It was also learnt that the state government wants to sustain its homeowners’ charter, which is one of the sources through which the state generates revenue.

Saturday PUNCH learnt that in spite of the revenue accruing to the state through the homeowners’ charter, it has not been able to pay its workers as at when due unlike before when civil servants got their salaries on the 24th of the month.

Also, contractors working on the capital projects, especially roads, have deserted some of them due to lack of fund.

Lecturers and teachers are still being owed arrears of salaries.

Lecturers of Tai Solarin College of Education gave the government a 21-day ultimatum last week to pay them their salaries and allowances.

But the state Commissioner for Information and Strategy, Mr. Yusuph Olaniyonu, denied that contractors had deserted construction sites.

According to him, the contractors only leave sites because of prolonged rainy season.

Olaniyonu said, “It is not true that contractors left sites due to lack of funds. You know the rains are still here even in November. They may incur losses if they defy the rain.

“If they mix concrete and the rain spoils it, it is a loss on their side. So, they need to leave the sites and commence construction after the rain must have subsided.”

The commissioner also dismissed claims that the state is broke. He said the state government still pays salaries on the 24th of every month.

The Abia State Government urged its people to tighten their belt against hard times and avoid frivolous expenses.

The state government suspended all official travels by public officials except where the trip are absolutely necessary.

The state Commissioner for Finance, Dr. Philip Ntoo, told one of our correspondents that Governor Theodore Orji had directed that all frivolous expenses should be suspended as part of the strategies to cushion the effect of the drop in allocation.

Ntoo added that the government also stopped all programmes that had no direct bearing on governance, including pilgrimages.

The commissioner said, “It means that if you have been taking tea and milk before, you can now use only Lipton with warm water and drink it until the situation improves.”

He enjoined the people of the state to tighten their belt against hard times and avoid all frivolous expenses as there is yet no end in sight to the global economic down turn.

He, however, said that the government was not contemplating increase in taxation or multiple taxation as that would only aggravate the plight of the people.

The drop in the oil prices is also biting harder in Rivers State as workers are still waiting to be paid their October salary.

The state Commissioner for Finance, Mr. Chamberlain Peterside, said that the government decided to fall back on its N1bn monthly savings to cushion the effects of the drop in the state’s monthly federal allocation.

He said, “The drop in oil prices will affect everything across board. But before you talk about projects, you have to talk about survival first. So, the minimum that we need for survival is paying our salaries, overheads and pensions; that is where our focus is.

“As for projects, you have to realise that some of them have got to very advanced stages and there are some that are of very high tickets. For the sake of continuity, those ones might have to go beyond this administration.”

According to him, the internally generated revenue, which currently stands at a little over N5bn, is used to augment the monthly allocation from the Federal Government.

In Ondo State, the government is seeking new revenue channels as it is planning to tighten the noose on banks and other companies that have yet to remit their dues to the government.

It is also poised to review its 2014 budget to reflect the current financial situation and a realistic oil price benchmark.

The situation is already biting hard, with the state yet to pay October salaries of workers across the sectors.

The state Commissioner for Information, Kayode Akinmade, told one of our correspondents that although the situation threatened the finances of the state, the government had fared better than other states, which currently owe several months in salary arrears.

He said, “The October salary will be paid. We have fared better than other states which owe for several months.

“Certainly the budget which is based on oil benchmark will be reviewed to reflect the realities of the time.

“We are also looking inwards to ensure that we remove all the debts owed the government by banks, parastatals and other organisations.”

The Oyo State Governor, Senator Abiola Ajimobi, did not hide the financial difficulty confronting the state when he said during the week that “the financial position of the state as of now is not too good.”

Ajimobi, who stressed that borrowing would not put the state in healthy financial situation, said concerted efforts would be made to manage what was coming to the state from the Federal Government and internally generated revenues.

“Unless the Federal Government addresses this situation with all the seriousness it deserves, most states may not be able to pay workers’ salaries let alone carry out other development programmes,’’ the governor had said.

Though the Edo State Government is not planning to introduce new taxes, it has limited foreign trips for its officials as well as planning to fix identified loopholes in its revenue drive.

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