Magaji: Our Target is Financial Independence for Gombe

The Commissioner for Finance and Economic Development Gombe State, Muhammad Gambo Magaji spoke extensively on his state’s debt profile and plans towards increasing its Internally Generated Revenue. Nume Ekeghe presents the excepts:

Can you speak on the current state of Gombe finances?

This administration came into being almost two and a half years ago on the 29th of May 2019 and we came into office and inherited liabilities. Government is a continuum, so we are not blaming but we are only bringing in to fore what we inherited on assumption of office.

We inherited N124 billion of liabilities, it is not a hidden figure as that has been reported many times, which included, you know, contractor arrears, pension and gratuity arrears, and also debts, loans, bank loans and bonds which were accrued over the years by past administrations. But that does not stop us from ensuring that we continue to move forward. The first thing we did was to ensure that salaries and pensions are paid monthly. And what we discovered at the inception of the administration was that the state government was able to pay salaries but the local governments were not able to pay their salaries until they borrow N1.3 billion a month to pay salaries.

But with the focus and tenacity of His Excellency, by the fourth month of the administration, we were able to stop borrowing that N1.3 billion to pay local governments salaries and pensions. So it meant that the local governments were able to now pay salaries on their own without borrowing from the bank. And local governments cumulatively put together had a debt profile of over N2 billion, aside the fact that they were collecting overdrafts monthly in the tune of N1.3 to pay salaries. Now two years down the line today, local governments in Gombe state pay their salaries without borrowing from banks. And they have a cumulative balance credit balance of N2.5 to N3 billion as of today.

And aside from that, there is a joint development agency, which was created by this administration. Wherein any local government that has any project that wants to undertake but does not have the financial wherewithal to do so will contribute 40 per cent of that project amount and the state government will contribute 60 per cent to ensure that that is done.

How are you able to avoid leakages in the system?

First and foremost, we decided to do some reforms. The first was to ensure that the Treasury Single Account (TSA) was adopted. They had started in the last administration, but just on paper, there was no implementation, and we needed to take it further. To ensure that we trap and lock all leakages by ensuring that we have a treasury single account for the government of Gombe. We have been able to ensure that any fund that comes in is identified and spent only for reasons of expenditure that government supports and of course budgeted expenditure.

What has your administration done differently from its predecessor?

One the difference between this administration and other administrations is that we don’t spend a Kobo unless it is budgeted for and of course an expenditure that is backed by law that is budgeted and passed by the State Assembly. So we do not spend monies out outside legislation.

And the second thing is, we have not borrowed a single Kobo for recurrent expenditure. If Gombe state government goes to the bank or takes a loan, it is specifically for a project and that project is also budgeted or captured in our project development plan. And, of course, the funds will go specifically for that project without diverting any kobo to any other government expenditure.

Can you speak on the state of Gombe IGRs?

Last year Gombe state recorded the highest ever internally generated revenues in the history of the state. And we are poised to continue to move our IGR to levels that will ensure that Gombe becomes independent economically.

What I mean is that we should be able to pay our salaries, our recurrent with our IGR. That is the dream of the governor at the moment, and that is what he has given us the mandate to ensure that at the end of his administration, Gombe is independent in terms of paying all recurrent expenditures, rather than waiting for Abuja to send us monies through the Federation account to meet our recurrent expenditures.

Still on IGRs, how much was your predecessor generating and how much is your administration generating?

Before the inception of this administration, we had ideas about N5 billion to N6 billion and we were able to do over N8 billion last year.

How were you able to grow the state’s IGRs?

We had to promulgate a new law; we had to enhance the activities we had to give more strength to the IRS for them to perform their duties. There were incentives given and then we structured the place appointed new people. The laws helped us to look at all the leakages because there are a lot of tax areas that were not being looked at by the former administration, and we felt we needed to enhance that.

And don’t forget, we are also doing reforms in the land registry that will also allow us to take in more revenues that were not available for past government to access.

You have seen a lot of road projects going around the state, and you cannot do this road projects without funds. And what we discovered when we came in was that we had these three loans, three bonds that were running and we were paying over N300 million on those bonds alone. We had other facilities that were running, which we were also paying. In fact, cumulatively this government inherited almost N900 million monthly of loan repayments.

This is information that most people don’t know. First of all, they felt probably government just came and we had monies to do projects. But the truth of the matter is, if you take out N900 million from the statutory allocation of any state, especially a state that is number 35 or 36 in terms of revenue allocation from the Federation account every month, not much is left. We also inherited a wage bill of about N1.2 billion and right now we are only one of the very few states paying the minimum wage and that was an additional addition of about N237 million to our wage bill. And we have consistently paid the minimum wage in the state every month till today.

Monthly what we get is about N3 billion from the Federation account. So take out loans, take out the salaries, what do you have?

Can you give an overview of your state loans and facilities?

So during the course of this government, of course, we took facilities and the first we took was a N1 billion infrastructure facility from GT Bank, for which at the moment we’ve paid more than half of it and we want to be responsible to ensure that we do not take loans, which repayment will not exceed the tenure of the administration.

The N10 billion we took from GT Bank will expire in February 2023, which means that any loans taken from them would have been paid before the end of the first tenure of this administration.

Along the line, the there was a N2 billion health care facility, which was given during the COVID-19 as COVID-19 affected all finances everybody. But Gombe did not go out to cry or stop government mandates and payments of salaries or whatever. That did not affect us. All we did was to try to see how we can reduce our recurrent expenditures that were not necessary. And I can tell you that last year; our recurrent expenditures were very low. In fact, government spending was minimum. All the costs associated with government travels, tours and all of them came down very low. It was sacrifice that the government had to make. And that is the reason why we kept our projects going. And we didn’t have to borrow a lot to do what we’re doing.

I would say that at the moment, what we have borrowed as a government under the Muhammad Inuwa Yahaya administration is N20.5 billion and it would all be paid within the first tenure of this administration, except for one facility, which we inherited and concluded that it was the third bond. And we shall run that into the second term of the Governor’s administration, if re-elected.

I am sure most of you would have read that Gombe state should not borrow. There has been news around that stated that we should not be allowed to borrow. Now, governance cannot move without money. Projects cannot be delivered without money and borrowing is not the problem, but utilisation of the proceeds that you borrow. Now if you are able to borrow any amount, and people benefit from what you have borrowed in terms of infrastructure, in terms of project in terms of appeasement of their livelihoods, then the reason for that borrowing has been met. But anytime you borrow funds and you don’t see them, then it means that there is a disconnect and that is where the problem is and that is why we are not happy with what we had inherited. We inherited federal government loans, facilities. These include the bailouts. You know that there was a bailout granted during the last administration? There were bailouts to state and local governments that rose to N11 billion, which we inherited.

What is this administration doing to alleviate people from poverty?

For poverty alleviation, as you know, I mentioned the industrial part, that itself is a source of ensuring that we engage our people by providing jobs for them, provide jobs for the youths and also provide revenue for the state.

There is a small mini-industrial area within the state capital, which has been provided with all the facilities and when you find a lot of groundnut millers, they are doing businesses, making ground nut oil and also small rice mills there that are also helping, you know, that place is a government incentivized area.

Last year, we had a training for all our small, medium scale enterprise industries to provide them with information and knowledge about how to go about their businesses, how to grow their businesses, and also government is going to provide funding for different categories for this particular group of people, the N10, 000, N50, 000, depending on your businesses. All of that data have been collected and it is our hope that between this end of this year and the first quarter of next year, these payments will also be done.