Broke but Running: The Untold Story of how Akwa Ibom State Government is battling to keep fit despite Cash cut

Akwa Ibom State Government says there is no much money in the state as touted in some quarters but that no project started by previous and present Governments of the state is abandoned by Gov Udom Emmanuel. The projects are ongoing and funded base on availability of resources and the need to meet other daily exigencies of the time.

Commissioner for Finance, Hon Linus Nkan who stated this in an interview with CitizensWatch during the week in Uyo said the outbreak of Covid-19 pandemic and the drop in revenue acruing to Akwa Ibom State has affected the pace of completion of ongoing projects and commencement of new ones within the period. Funds, according to the Finance Commissioner are directed to meeting first line charges of government before funding projects pending when the nation recovers from her “recession”.

He said: “…with the fall in the price of oil, we have suffered serious decline from our revenue because our country depends mainly on oil revenue. To that extent, what happened to the oil market, determines the health of the states.

“There is no need to over emphasize the fact that we have been battling, Nigeria has been battling with Covid-19. Before now we were battling with oil alternatives that reduced even demand for oil. At some point, we didn’t even have those who wanted to buy our oil.
So this affected the revenue acruing to the nation and consequently, affected the revenue available to the state governments.

“So the financial health of any state in Nigeria at the moment, depends on how much you get from Abuja. That’s the truth. Like in our state, couple with the impact of Covid-19 pandemic, what we come back with now from FAAC in terms of allocation, barely covers the first line charge of government expenditure. That is the state of things and there is nothing really that we can do about it at the moment.

“We all know that it is even within the lifetime of this administration that we have been able to jig up the internally generated revenue mechanisms leading to some improvements in our internally generated revenue. But then, the internally generated revenue of a state depends on the economic activities of that state. Akwa Ibom is nearly a civil service State. It is this Government that is trying to open up and boost the private sector of the state. If you don’t have a bouyant private sector, how will you improve the internally generated revenue of the state. So we generate revenue but it is crossly inadequate to support Government expenditure.

“What we have in Akwa Ibom State, what I feel we should boast of is the high Prudential financial management as put in place by Gov Udom Emmanuel. That we have so much money to do what we want to do is not true. We are only limited to what is given to us from the federation account and the little we are also able to generate internally”

Governor Udom Emmanuel looks unfortunate. He is running a battered economy made possible by falling revenue and a Pandemic that is ravaging the globe. His citizens expects the result of a state under economic bloom and boom. The expectation is actually base on the fact that Akwa Ibom State has always topped the allocation chart and cash was flowing in the state. That is not actually realistic factually speaking and critics of government may change their mind after reading Mr Linus Nkan’s explanation on state of affairs. He said: “…When I spoke with the Chairman of NLC “yesterday”, I said yes, my brother, people say oh Akwa Ibom, there is so much money, that is on paper or base on what used to be. People are not talking from fact because you see there is something about revenue even as a person. We call it Iron Law of Income.

HE, Udom Emmanuel, Governor, Akwa Ibom State

“Your expenditure pattern must outweigh your income. Take for instance you earn 100,000 today, your expenditure pattern is defined by that amount of money. If by tomorrow you are at where you are earning 1,000,000, give just one month, your expenditure pattern will move beyond that 1,000,000. That is what it is.

“Now this is Akwa Ibom State that used to recieve N30, 40b per month from FAAC. Even then, it was not sufficient for the government of the time. They went for loans some of which we are paying back today. Now this is the same state that is recieving 30% of that. Already, there is an established expenditure pattern, a pattern that was established when we had much money that is currently unavailable. Mind you, we have inherited more civil servants than what it was. Now some people still expect us to be at the level of development that we were when the oil price was very good and the state was getting a whole lot of money.

“Having dropped our revenue by almost 70% how the present administration is coping is a miracle made possible by the financial management expertise of His Excellency, Gov Udom Emmanuel. I told you that whenever we come back from FAAC, what the governor does is to say Accountant General, Commissioner for Finance, go and pay salaries and pension. And until that is done, the governor will not spend N1 of that money. The fear is always what if what comes now as monthly allocation is not sufficient to pay all the pensions and all the salaries? So it is until we successfully finish the payment of salaries, gratuities and other first line charges that the governor will now either pay money to contractors and so on.”

The Commissioner also addressed raging issues of Federal Government palliative, the state debt burden as released by Debt Management Office penultimate week. He has also added his voice to the EndSARS protest as well as calling for restructuring of the country to allow states more powers to bring development to their regions.
Read the full interview conducted by Solomon Johnny below.


CitizensWatch: Why is Akwa Ibom State debt burden so high?

HLN: Thank you very much for that question. Alot of people have been talking about the debt profile of Akwa Ibom State base on the publication of Debt Management Office few months ago. Your coming is quit timely because on Monday, we are going to host the Debt Management officials who will be here for a retreat and to train Akwa Ibom State officials who are involved in the various debt processes. I have a package for them which is the truth about what they put in the public domain. I belief that after their session in Akwa Ibom State, the feedback will enable them to change their reporting pattern because for the common man, debt simply means loan. For Akwa Ibom people, when they hear or read the amount of debt, they simply conclude that that’s the loan the government has obtained from commercial banks or other financiers without taking cognisance of other components of the loan so to say. But let me clear the air that the amount attributed to debts of Akwa Ibom State, over 200 billion, consists of three major components.

The first is the actual loan the state government contracted from money bankers. The second one consists of contractual obligations. These are monies owed contractors, some of which projects are ongoing, some which are even in disputes. But the total contractual obligations of the government to her contractors form a part of the state’s debts stock and I think they take the highest amount out of the total debt burden.
Then, the third one is unpaid gratuities, pension arrears, emblock pensions or what I will simply call unpaid entitlements to workers and pensioners of the state. That is the three major components of debt stock of Akwa Ibom State.

Clearly, not all that amount of money was contracted as loan. The loan itself, constitute the least portion of that amount. The bulk of it are those contractors money, some of which we inherited from previous administration like the Julius Berger contractors, that’s even from the inception of the state because the records are there including even the bad debts that will never be paid by the way. The bulk some has to do with gratuities. Everyone in Nigeria knows many states have not been able to pay…also because Akwa Ibom State has not joined other states to do contributory pension scheme. Because of this, workers that are retired are still entitled to those bulk gratuities which the state government from the revenue that acrues today, has not been able to clear all of them. But we are still paying as revenue comes but it has built over the years to a reasonable amount of money.
So totally, the debt burden of the state from the three components have been built over the years.

The various statements of account of the state which we publish occasionally states clearly the various amount for each of the components of the debt stock of the state. You can find these details in the financial statements of the state that we have been publishing as a matter of transparency. We have prepared, audited and published the state financial statement as at 2019. Those statements contain these information. The state also makes returns to Debt Management Office where all categories of all these loans are equally recorded.

CitizensWatch: From the explanation you have given, would you say that the state is financially healthy? I want you to bear in mind the ultimatum by NLC saying their entitlements must be paid within the next two weeks or an indefinite strike.

HLN: Well the financial health of a state or nation is very relative. State government is not even at liberty to borrow because we are sub national. Unlike the Federal Government of Nigeria and any other Federal Government, they have the liberty to borrow and execute government programs, projects and the rest. For states, your financial health is a function of how much you obtain from the Federal Government from FAAC, that is the major determinant of how healthy a state is. Every one knows that, not even today, the pre Covid-19 era, with the fall in the price of oil, we have suffer serious decline from our revenue because our country depends mainly on oil revenue. To that extent, what happened to the oil market, determines the health of the states.

There is no need to over emphasize the fact that we have been battling, Nigeria has been battling with Covid-19. Before now we were battling with oil alternatives that reduced even demand for oil. At some point, we didn’t even have those who wanted to buy our oil. So this affected the revenue acruing to the nation and consequently, affected the revenue available to the state governments. So the financial health of any state in Nigeria at the moment, depends on how much you get from Abuja. That’s the truth. Like in our state, couple with the impact of Covid-19 pandemic, what we come back with now from FAAC in terms of allocation, barely covers the first line charge of government expenditure. That is the state of things and there is nothing really that we can do about it. We all know that it is even within the lifetime of this administration that we have been able to jig up the internally generated revenue mechanisms leading to some improvements in our internally generated revenue. But then, the internally generated revenue of a state depends on the economic activities of that state. Akwa Ibom is nearly a civil service State. It is this Government that is trying to open up and boost the private sector of the state. If you don’t have a bouyant private sector, how will you improve the internally generated revenue of the state. So we generate revenue but it is crossly inadequate to support Government expenditure. What we have in Akwa Ibom State, what I feel we should boast of is the high Prudential financial management as put in place by Gov Udom Emmanuel. That we have so much money to do what we want to do is not true. We are only limited to what is given to us from the federation account and the little we are also able to generate internally

CitizensWatch: Commissioner we have alot of either abandoned projects or projects that are very slow started about five years ago by this present administration. What is responsible for this slow pace of work under Gov Udom Emmanuel? Is this as a result of the non availability of funds to pay contractors or failure of the supervising ministry, that is Ministry of Works to provide good supervision?

HLN: We wouldn’t say abandoned project because the administration is still ongoing. Those are not situations people would say it’s an abandoned project. And even then, why would a government abandon a project a privious Governments initiated? Government is a continum. So at any point in time Government identifies a project and embarks upon it, even if the project lived beyond the life of that administration, it is expected that successive administrations should continue to work and finish up the project especially when such project has social and economic benefits to the people of the state. So there is nothing wrong in a government starting a project. But if it cannot finish it, successive Government should finish it. For instance, today, Ikot Ekpene road which was like a flagship project of the last administration, a road that is, I think 60 kilometers was barely 10 kilometers completed. But when this government came in and discovered that that project is good for the people of Akwa Ibom State, His Excellency, Gov Udom Emmanuel continued with the project and we are about to complete it within the life of this administration.

The four point by Sharaton project that was uncompleted in the last administration, this Government saw that it was a very good project. We have spent a whole lot of money to take it to the level it is and very soon, we hope to commission and start operation of that project.

Therefore, at the level of our project development, no project should be seen as abandoned. If for any reason a government has not been able to complete a project it started, at where they have stopped, successive governments should continue because the project is being provided to bring benefit to the people of the state .

CitizensWatch: Let’s talk about one of the issues in the news at the moment, the Federal Government palliative to states of the federation. The Federal Government is saying that she gave palliative to states to cushion the effect of Covid-19 across the country. Gov Yahaya Bello of Kogi state few days ago said apart from the palliative, Federal Government gave N1b Naira to states and Central bank also gave similar amount. I want to find out from you as the Commissioner for Finance, has Akwa Ibom State recieve financial assistance from the Federal Government and other bodies be it Central bank, World bank to fight Covid-19?

HLN: Yes, we have. The first cash that Government recieved was N100m. The issue about this Covid-19 thing, there are specific things that the money should be used for. We received it, it came through Ministry of Health. We have also recieve ours from the N1b that was given to all the states by the Federal Government. I think those are the basic substantial monies we have received, N1b and then 100m and there are, when it comes to the fight against Covid-19 Pandemic, our state has made commendable effort.

The money we are talking about, when you look at the centre we have created at Ituk Mbang, the work that is done at Ituk Mbang, that is not even 1% of the amount of money we have spent to get that centre in place. But be that as it may, Akwa Ibom State has recieved N1b from the Federal Government and another N100m from Central Bank.

CitizensWatch: Commissioner, was the money given before or after the governor said no money was given by the Federal Government?

HLN: I think it came after the governor made the remark. It came very recently. But you know then, the money was to be used for Health, in fact they sent it through the Ministry of Health where they were monitoring and they tell you what to do with the money and they also have their assessment people that assess the expenditure of the money

CitizensWatch:

Commissioner what is your opinion about the recent EndSARS protests across the country asking for good governance? What could you recommend to Government to cushion the effect of unemployment, youth restiveness in the country? It looks like even the rich and powerful are not safe in the midst of this legion of poor unemployed youths.

HLN:
My brother, I’m also a youth o (laughs). So I feel the same pains. (Laughter) You see, there is no gain overemphasizing the fact that Government has failed not only the youths but all Nigerians. Nigerian government has failed Nigerians. In other climes, in other countries, even the elders are well taken care of by the government. We don’t have that in Nigeria for the elders. The youths, Government has left them to be frustrated.

For me, I have identified one major problem that has led to where we are today and that is simply bad Leadership at the centre. You see we are practicing a federal system of government which the bulk of policy making in the entire nation is done at the centre, that is the Federal Government and the leadership has alot to do for what happens in the country. So I personally would submit that successive past Governments lacked what it takes to have put Nigeria in perspective that today, every Nigerian, be it the youths, the elders, the women, should be benefiting from the nation. That has been the problem.

Now it is quit right and apt that the youths rise up to protest against their deplorable condition and ask for change. That’s quit necessary. I support the youths and their peaceful protest earnestly asking for what should be given to them. But I think the negative actions of some segment of the youth that are being described as hoodlums, miscreants and all that taking to robbery, looting, unnecessary harassment, violence, that is condemnable in all aspects. I am even ashamed that what the youths started very well and aimed at a very positive results ended up in such a miserable and condemnable way.
But having said that, this is the panacea to improving the situation in the country for the youth and other Nigerians. We need good governance in place. Good governance should start from those we elect to be in charge of managing Nigeria. Honestly we have had Nigerian managers- the Presidents and all that. We all know that our woes could really stem from the long reigns of military rule in the country. Now when God help us to stabilise democratic government, I think the youths have not taken their responsibility squarely the way they should have. We have leaders that really don’t suppose to be in charge of certain positions but it’s the same youths that were used to rig election, the same youths were used to cause election violence and mayhem. That is why those who are not supposed to be in those Leadership positions are leading us today. When you have people who are not competent holding positions in government, what do you expect?

So my advise to the youth is that now that we have discovered the youths have the strength, the population strength and they also have the networking strength too, the youths in this country can put themselves together and network properly and become a major force of determining who is elected to be in which position and all that. That is the truth. Even if the youth throw up one of them who by their assessment, has the competency politically, economically and socially and file behind such person, that will be fine.

We must understand that the problem of Nigeria will not be solved by aliens, would not be solved by Americans or UK. It won’t even be solved by the Chinese who are today our creditors. We have credible, competent people in Nigeria, some among the youths, some among the elders. We have what it takes to hold this country and transform it to be a better place for all Nigerians. So the youths, 2023 is around the corner. The youths needs to come together taking advantage of their population to decide who should be the President of Nigeria and other political offices. That is what should be done. As it is now, there is nothing the Federal Government can really do.

You see Nigeria is so rusted to the level that everyone cries. Our income generating mechanism is so weak, is really, really weak that the Federal Government now depends on loans to be able to execute or even payment of salaries. A situation that the country depended on mono product, crude oil for over the years without somebody thinking that there will be a time certain things will happen that will affect the crude oil in the market and that anything that happens can collapse this country. It has been a long time we would have started preparing for today where crude oil cannot really sustain our economy. But clearly, we didn’t do or take the appropriate action at the time we ought to have done so.

CitizensWatch:
Honorable Commissioner, does the state and Local Government not have a role to play in restructuring, repositioning our state to serve the citizens better?

HLN:
My brother, under the present system we are operating, to me states and Local Governments are just like appendices of the Federal Government. That is the truth. Who does the policy formulation? It’s the Federal Government and that is why alot of people are calling for restructuring and I join to subscribe to it where more power and resources are given to states and even the local government where they can also formulate their policies and enhance the development of their regions. Restructuring will make the regions utilise the resources from their region to develop their regions. Where that is done, Nigeria will be wholistically developed. But under the present setting, states and Local Governments are mere appendices of the Federal Government. So without restructuring, states would not be able to do much. No matter how sound a governor is, he is limited to how much he can get from Abuja. Now that we don’t have the money, what do we do?

Let me go back to the issue of labour. When I spoke with the Chairman of NLC “yesterday”, I said yes, my brother, people say oh Akwa Ibom, there is so much money, that is on paper or base on what used to be. People are not talking from fact because you see there is something about revenue even as a person. We call it Iron Law of Income. Your expenditure pattern must outweigh your income. Take for instance you earn 100,000 today, your expenditure pattern is defined by that amount of money. If by tomorrow you are at where you are earning 1,000,000, give just one month, your expenditure pattern will move beyond that 1,000,000. That is what it is.

Now this is Akwa Ibom State that used to recieve N30, 40b per month from FAAC. Even then, it was not sufficient for the government of the time. They went for loans some of which we are paying back today. Now this is the same state that is recieving 30% of that. Already, there is an established expenditure pattern, a pattern that was established when we had much money that is currently available. Mind you, we have inherited more civil servants than what it was. Now some people still expect us to be at the level of development that we were when the oil price was very good and the state was getting a whole lot of money. Having dropped our revenue by almost 70% how the present administration is coping is a miracle made possible by the financial management expertise of His Excellency,Gov Udom Emmanuel. I told you that whenever we come back from FAAC, what the governor does is to say Accountant General, Commissioner for Finance, go and pay salaries and pension. And until that is done, the governor will not spend N1 of that money. The fear is always what if what comes now as monthly allocation is not sufficient to pay all the pensions and all the salaries? So until we auccessfully finish the payment of salaries, gratuities and other first line charges before the governor will now either pay money to contractors and so on.

Why we have slow pace of work at some of the sites is that we do not have money remainjng after payment of pension and gratuities to pay contractors to run at a faster pace. But we hope that things will improve. When things improve, we hope to keep working as we used to work and get contractors back to site.

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