Governors Protest Low FAAC Revenue
Low revenue accruing to state governments monthly from the Federation Account Allocation Committee (FAAC) is forcing the sub nationals to renew their calls for the removal of fuel subsidy.
They are also introducing strategies to increase their Internally Generated Revenue.
For instance, the Cross River State Government last week received only about 15 per cent of its statutory allocation from the Federation Account for March. Figures released showed that out of the state’s gross allocation of N2.22bn, only N34.9m was received as N2.18bn was deducted to service debts incurred by previous administrations.
It was revealed that the issue of low allocation was common to many of the states, making it difficult for them to continue to meet their financial obligations.
The state Commissioner for Finance and Economic Development, Mr Akintunde Oyebode, in an interview with one of our correspondents, disclosed that the state got N2.8bn, inclusive of Value Added Tax, from FAAC in March.
He admitted that the shortfall would have an impact on the state’s ability to embark on new projects.
When asked about the other avenues the state was looking into to generate more revenue, he said, “We are deepening the IGR, and we have digitised our tax system and are also ready to launch our long-awaited GIS solution for land administration.”
Oyebode justified the calls for the removal of fuel subsidy when asked if states would reopen the agitation for its removal.
He said, “The agitation was never rested. Our view is that it is against any sense of federalism for Ekiti, which consumes 0.55 per cent of trucked petrol, to pay over two per cent of the subsidy cost.
“We also believe that states should be given the right to determine if they want to participate in the subsidy of petrol products or not, depending on the fiscal position and priority of each state.”
The Imo State Government said it had introduced measures to increase the IGR as a way of increasing its revenue to meet its financial obligations.
The state Commissioner for Information, Declan Ewelumba, said that the state government had automated its revenue service to ensure that all funds due to the state get to the government’s purse, adding that “the target is that the state would have been able to increase its IGR with more than 50 per cent in the next six months.”
When asked if the state will support the removal of fuel subsidy as a way of increasing allocation to states, Ewelumba said the government would abide by the decision of the Federal Government on the matter provided that such would not increase the hardship of the people.
The Osun State Government admitted that its allocation was too meagre to pay salaries and pensions.
It, however, said because of the creativity it adopted, it had never defaulted in the payment of salaries and pensions.
The Chief Press Secretary to the Governor, Ismail Omipidan, disclosed this in an interview.
Omipidan disclosed that the state received N177,812,228.90 as allocation for March, describing it as “an improvement from the last one, which was negative N375m.”
The governor’s spokesman said, “Creativity is the word; we just look at where we are and where we want to be and look at the gaps and creatively plan things to take care of those gaps. I think that is the only way one can explain what we are trying to do.
“My principal has been able to block leakages, while setting our priorities right. We don’t spend frivolously. This is why even when the allocation is a far cry from what we need to pay salaries and pensions, we have never defaulted.”
Although Omipidan declined comment on whether states will revisit their call for the removal of subsidy to shore up allocations, a top government official who did not want his name in print, said, “Collectively, I am not sure their (governors’) position has changed on the issue of withdrawal of subsidy.”
The Kwara State Ministry of Finance said the government received a total inflow of N2,886,631,784.67 as federal allocation for March.
Though the March allocation figure is higher by N291,079,653.10 when compared with that of February, it still represents a downward trend in revenue.
The state Commissioner for Communication, Mr Olabode Towoju, said though the allocation was below expectation, the state had fulfilled its obligation by paying workers their full salaries even in March.
Benue State Governor, Samuel Ortom, said federal allocation to the state had shrunk, adding that states that received meagre allocations in March must borrow to meet their obligations.
Ortom, who was reacting to the low allocation for the month of March, said states of the federation had for some time now been experiencing a drop in allocations.
He said in some cases, his administration had to resort to borrowing to pay salaries, adding that his administration placed priority on the payment of salary.
“Since 2018, we have been paying salaries up to date and our intention is to continue to pay and to source for funds to carry out capital projects,” he said.
The Rivers State Commissioner for Finance, Isaac Kamalu, attributed the drop in allocation for March to poor economy.
“But everybody understands the nature of the economy; the allocation for the month of March was very low,” he said.
The Special Adviser to the Edo State Governor on Media, Crusoe Osagie, said although he did not know the exact allocation the state got in March, it would be low just like other states experienced.
He, however, said the state government did not rely on federal allocations to take care of expenditures.
“We manage our resources in such a way that we don’t have to rely on federal allocations. We make arrangements in such a way that our expenditure, like salaries and pension, are taken care of by the IGR,” he said.
It was also gathered that the Zamfara State Government currently did not have access to its accounts.
Sources attributed this to the ongoing legal tussle between the state government and ex-council chairmen and councillors over alleged unpaid accrued salaries and allowances.