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With Dwindling Allocations, Nigerian States Initiate Cost-cutting Measures

With the dwindling allocations from the Federation Accounts Allocation Committee (FAAC), state governments nationwide have planned a raft of measures to earn more revenues and enthrone frugality in public spending,

With the dwindling allocations from the Federation Accounts Allocation Committee (FAAC), state governments nationwide have planned a raft of measures to earn more revenues and enthrone frugality in public spending, THISDAY has learnt.

Investigations showed that many of the states are in dire financial straits and could hardly pay salaries as and when due as well as meet other contractual obligations in the wake of the double whammy of the COVID-19 pandemic, which disrupted socio-economic activities, and the low price of crude oil, the major source of foreign exchange for the federation, in the global market.

The worrisome financial state of the federation was accentuated last week via a letter by the Nigerian National Petroleum Corporation (NNPC) to the Accountant-General of the Federation warning  that it would be unable to make any remittance to the Federation Account in April for distribution to the federal, state and local governments in May because it needed to defray around N112 billion cost of February’s subsidy on petrol.

However, it was gathered that to stave off the financial crisis the NNPC’s letter portends, despite their reservations about the corporation’s claim, the states, while responding to THISDAY inquiry, listed some of the measures being taken to cope with the tough times ahead.

Some states like Taraba and Plateau pledged to continue to implement measures already initiated, such as sustaining 50 per cent cuts in the salaries of political office holders, and emplacing other cost-saving measures.

Nasarawa said it planned to create a Single Treasury Account (TSA) and introduce property tax, while Plateau has hired tax consultants.

To reduce the state’s wage bill, Kano State has reverted to the old N18,000 minimum wage, while Kaduna State is also considering the old wage after retrenching about 7,000 workers.

The Ekiti State government said it had set up a committee to advise it on measures to adopt to survive the dwindling FACC allocations.

Akwa Ibom and Gombe States are looking at measures to reduce wage bills by using biometrics to eliminate ghost workers.

Also, the Anambra State government said it was fighting the revenue “thieves” as part of the efforts to block leakages and shore up internal revenue.

The Plateau State Commissioner for Information, Mr. Dan Manjang, told THISDAY that the state government was not contemplating sacking any worker but would focus on growing its IGR to bridge the gap arising from the dwindling FAAC allocations.

He said: “Mechanisms have been put in place, including hiring a consultant that is helping the state to raise its IGR to about N3 billion monthly. We have also put laws in place to ensure that organisations and individuals pay their taxes; we are appealing to the consciences of people to pay their taxes.

“Cost of governance has been cut by 40 per cent, while all political office holders have had their remuneration cut by 50 per cent. We are also looking outwards; by paying our counterpart funding to enable us to run some of our programmes. We pay counterpart funding for SUBEB, CSDA, PLASMEDA, and so many other social intervention programmes.

“We are re-scoping our projects; for instance, the Lalong legacy projects that were N59 billion have been re-scoped to N29 billion, to a level that we would be able to pay and do them. Some projects that were earlier envisaged that have not started have been put on hold.”

The Ekiti State government has constituted a committee to examine the implications of the dwindling FAAC allocations and advise the state government appropriately.

The Commissioner for Information, Hon. Akin Omole, told THISDAY that all the states of the federation would be affected by the inability of the NNPC to remit revenues to the FAAC.

Omole, however, ruled out pruning the civil service workforce as part of the cost-saving measures.

 He said: “The government has constituted a committee. The committee is at work and we will come up with our position soon. But let me say this, Governor Kayode Fayemi is running a workers-friendly government and we won’t sack any worker under any guise. Our position will soon be made public and I know it will be in the interest of the workers and the state in general.”

When asked whether the government might return to the old N18,000 minimum wage instead of the N30,000 that had been operational in the state, Omole said that would be for the committee to decide.

In Kano, the state government had since reverted to the old minimum wage of N18,000.

It has also resorted to arbitrary deductions from workers’ salaries, which it blamed on the sudden drop in FAAC allocations to the state and a drastic reduction in IGR.

The dwindling revenue, it added, has made it difficult for the state to pay its over N1.5 billion monthly wage bill.

Chairman of NLC in Kano, Mr. Kabiru Mingibir, told THISDAY that labour unions frowned upon the government’s unilateral decision to return workers’ salaries to the old minimum wage without due consultations.

Executive Chairman, Kwara State Internal Revenue Service (KWIRS), Mrs. Shade Omoniyi, said various revenue generation and cost-cutting initiatives were being implemented to shore up the internal revenue generation and address the effects of the dwindling FAAC allocations to the state.

She said the agency had worked to automate its revenue through online and tax administration processes unlike in the past when manual process was adopted in the collection of revenue from all taxable payers.

According to her, the agency has set a strategic plan to recruit workers from all the local offices of the agency in the 16 local government council areas of the state and embark on harmonised bill system to assist the revenue agency to have close contact with the taxpayers.

The Ondo State government said it would continue to cut cost in view of the dwindling FAAC allocations by blocking leakages and discouraging frivolous expenditures.

The state Commissioner for Information and Orientation, Mr. Donald Ojogoh, said the issue of revenue generation had become a complex one for every state, especially during these perilous economic times.

He said: “For one, every government, whether national or subnational, requires a stable environment in terms of security to earn the confidence of the government to buy into tax compliance.

“How do you expect people daily battered and threatened by insecurity to continue to pay tax? Honestly, it has affected tax operations to the extent that there is a culture of complacency on the part of the people.

“For us in Ondo State, we have devised ingenious means of curbing or stemming to an extent, the spate of insecurity through the instrumentality of Amotekun.

“Right now, we are striving to ensure that we do not fall below the N2 billion average per month.”

The Bauchi State government said it had  put in place measures to ensure stabilisation of salaries and pensions payment, to block leakages, improve cash flow management and cut spending in government.

Special Adviser on Media and Communication, to the governor, Mr.  Mukhtar Gidado, said the state government was not planning any reduction in civil service workforce at the moment, adding that there is also no plan for any salary cut either for political appointees or public servants.

The Delta State government said it was intensifying efforts at expanding its tax net to capture taxable individuals, groups and organisations, especially those that had hidden their books from scrutiny by tax officials from the state internal revenue agency.

The Delta State Internal Revenue Service (DIRS) said it was targeting at least N10 billion from the whistle-blowing mechanism it adopted in its tax drive in 2020.

The Chairman of the Board of the State Revenue Service, Mr. Monday Onyeme, said the state IGR in 2015 was about N40 billion, but the DIRS moved it up to N44 billion in 2016.

“In 2017, the IGR moved up to N51 billion, it moved to N58 billion in 2018 and N64 billion in 2019.

“However, due to the pandemic in 2020, the IGR dropped to N59 billion after a steady rise from 2015 to 2019. We are, however, very optimistic that at the end of this year, the state IGR will hit N70 billion and above,” he said.

In Ogun State, the state government got an approval of the state’s House of Assembly, late last year, to float N250 billion bond, to bridge the gap in revenue shortfalls.

THISDAY learnt that there have been deductions in the salaries of civil servants, as a consequence of the strains on the state’s finances.

It was also gathered that the state government had increased company taxes, as a way of shoring up its dwindling revenue base.

The Gombe State government said yesterday it was able to save over N37 million after running its biometric capture of all civil servants in April.

The biometric capture will be a continuous exercise, the Commissioner of Finance, Alhaji Gambo Magaji, said during a press briefing organised yesterday in conjunction with the office of the Head of Civil Service, Alhaji Bappayo Yahaya, who is also the chairman of the committee.

Magaji stated that no fewer than 668 workers described as ghost workers were uncovered.

Magaji also told THISDAY that the state executive council only recently approved a new biometric data that would ensure workers’ details were captured for improved productivity.

However, the Abia State government said it was still reviewing the present financial situation with a view to adopting appropriate measures to cope with the fiscal crisis.

Commissioner for Information, Mr. John Kalu, told THISDAY that the state government had been feeling the pains of dwindling resources, adding that cost-saving measures would only be announced after the ongoing review.

However, Okiyi stated that the initial cost-saving measures announced by Governor Okezie Ikpeazu, such as 50 per cent cut in the salaries and allowances of the governor and his cabinet members were still in place.

The Taraba State government has set up a committee to work out modalities to boost its IGR and block loopholes in government expenditure.

The state government had earlier reduced the salaries of political appointees by almost 50 per cent while embargo has been placed on fresh recruitment into the civil service.

Part of the mandate of the committee, headed by the state Commissioner for Budget and Planning, Mr. Solomon Elisha, is to reactivate all tax laws in the state including a Geographic Information System (GIS) through which the state intends to have a data of houses in the state to enable it to introduce property tax as well as commence utilisation of redundant markets across the state.

 The Senior Special Assistant on Media to the Governor, Mr. Darius Ishaku, Mr. Bala Dan Abu, however, told THISDAY that the governor had no plan to reduce the state workforce.

The Sokoto State Government said it had taken steps to improve internally generated revenue and curb waste.

The Special Adviser to Governor Aminu Waziri Tambuwal  on Media and Publicity, Mr. Muhammad Bello, told THISDAY that the state government had no plan to downsize the workforce or reduce workers’ salaries.

The Director of Media in Zamfara State Government House, Mr. Yusuf Gusau, also told THISDAY that the state Governor, Mr. Bello Matawalle, had given marching orders to revenue agencies to increase the IGR.

Also, the Anambra State Commissioner for Information and Public Enlightenment, Mr. C.Don Adinuba, told THISDAY that the state government would focus on fighting the revenue “thieves” to boost the state’s IGR.

He admitted that the cash crunch had prevented the state from meeting its deadline on the construction of roads.

He, however, promised that Governor Willie Obiano would not sack workers.

“What His Excellency is doing is to recover a lot of other revenue windows by fighting revenue thieves. You know we have illegal revenue collectors, but the governor has declared war against them, and the more illegal revenue windows that he blocks, the more money that is coming into government coffers.

“There is no plan to lay off workers or reduce their salaries, rather, the governor is concentrating on blocking the collection of illegal revenue, which will now create more for our government,”  he stated.

To eliminate ‘ghost’ workers and reduce the state’s wage bill, the Adamawa State Government has embarked on staff screening in a bid to reduce the workforce by eliminating suspected ghost workers and those above retirement age from the civil service.

The state government has also screened out those employed towards the end of the tenure of the previous administration in the state.

According to the Director-General on Media and Communications to the governor, Mr. Solomon Kumangar,  the state government has no plan to sack workers  but has planned to increase its IGR to augment whatever comes from FAAC.

He said the state government might increase the tax paid by civil servants, private individuals and businesses as well as  cut down some allowances and running cost.

In Nasarawa State, the state government said it had streamlined all IGR into Treasury Single Account (TSA) to cope with the dwindling allocations.

The state Commissioner for Information, Culture and Tourism, Mr. Dogo Shama, told THISDAY in Lafia that the state was not planning a reduction in its workforce.

In Kaduna, the state government has adopted measures to address its dwindling finances and high wage bill.

The state government recently sacked workers.

Explaining the state’s precarious financial situation, the spokesman of Governor Nasir el-Rufai, Mr. Muyiwa Adekeye,  said increased  wages and pensions had  drained the funds of many local government areas.

He said the government therefore had no choice but to shed some weight and reduce the size of the public service.

Chairman of the Kaduna State chapter of the  Nigeria Labour Congress (NLC), Mr. Ayuba Suleiman, alleged that about 4,000  local government workers and about 3,000 state workers had been disengaged.

It was also feared that the state government may revert to the N18,000 minimum wage.

In Osun State, Commissioner for Information and Orientation, Mrs. Funke Egbemode, told THISDAY that the state government would not sack workers but had initiated some cost-cutting measures to ensure blockage of all loopholes in the service.

Also, Akwa Ibom State Commissioner for Information and Strategy, Mr.  Ini Ememobong, told THISDAY that Governor Udom Emmanuel was still studying the development and would not rush into making any decisions.

He said the issue of reducing the workforce in the state civil service, salary cut for both political appointees and public servants had not come up to the table for consideration.

He added that the biometric capturing just concluded by the state government had reduced the wage bill of the state.



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