Date: 2016-01-22

The current economic crisis facing Nigeria, which has led to a drastic shortfall in the revenue base of the country and subsequent decline in the allocations that accrue to states and local councils of the federation, has hampered the ability of many state and local governments to meet some of their obligations. States are finding it difficult to meet all of their recurrent expenditure, not to talk of executing capital projects for infrastructural development.

To bridge the infrastructural gap that has been created by the paucity of funds, it becomes imperative for states to seek alternative funding means to effectively run the states and execute developmental projects for the benefits of their people.

It is on this premise that the present administration in Kwara State is seeking to obtain a N20b bond from the capital market to revive stalled capital projects and also kick start new ones across the State.

Incidentally, the decision of the state government to access this bond has generated a lot of mixed reactions from within and outside the state, with many expressing fear over the ability of the state to repay the bond, while some expressed doubt over the sincerity of the government to use the bond for reasons it was sought for.

The main opposition party in the State, the PDP, has accused the state government of not being sincere with its spending over the years, including the N17b bond taken by previous administration of Dr. Bukola Saraki.

However, the Kwara State government has on various occasions offered explanation to the public on the necessity for the bond, which according to it, will be used for developmental projects that will have direct impacts on the people and also attract potential investors to the state. The State governor, Alhaji Abdulfatah Ahmed, during the last edition of his regular interactive session on radio, tagged "Governor Explains", noted that the state government is seeking the N20b bond from the capital market to finance developmental projects that have been stalled due to sustained shortfall in federal allocation accruing to the state.

Explaining further, the governor said that the current federal allocation to the State cannot adequately cover its recurrent expenditure, not to talk of executing capital projects, adding that no significant developmental projects could be done without recourse to the capital market for funding, in the face of the current financial crisis affecting both the federal, state and local governments in the country.

"Any system of government that intends to develop its people infrastructure must come out with a funding arrangement that will be able to firstly, develop human capital and of course, create infrastructure in the system.

"Infrastructure is usually funded after recurrent expenditure has been met. Now, we have inflow coming from the allocation that has dwindled such that it can only barely cover salaries, not even all recurrent expenditure. So, if we want to carry out capital projects, we must look for money elsewhere outside the federal allocation," Governor Ahmed stated.

On the repayment of the bond, the governor assured that state government was capable of servicing the bond, as it had taken measures to ensure its repayment without posing financial burden on the state government. He noted that one best way governments can access money to do capital projects is through the capital market, which he said, provides a soft window and long term for repayment with a very low rate.

In view of the consistent decline in federal allocation, Governor Ahmed said the state government had put in place measures to expand its internally generated revenue to augment its finances. He averred that the state revenue service is positioned to ensure that loopholes are blocked, taxes are properly collected and remitted, which will be channeled into provision of infrastructural development.

"We have reformed the revenue generating process by changing the people, process and technologies for the collection, management and distribution of internal revenue, and this is coming with a new target system that will ensure loopholes are bridged, taxes properly collected and remitted, which will be used for developmental projects.

"Within the first quarter of this year, we will witness a remarkable change in the inflow of our revenues. Our objective is to sustain the economic growth and development of the state while insulating her from the turbulence of global crude oil prices," the governor enthused.

The Governor assured that his administration will continue to put in place necessary infrastructure to attract potential investors and create employment opportunities for the teeming unemployed people, which according to him, will ensure economic growth and development.

Bolaji Alabi writes from Ilorin