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Cargo Terminal – We Have No Hand In Managing Local Government Allocations

🔥Posted by: On: June 12, 2017. In: News

We Have No Hand in Managing LG Allocations

Excerpts from my recent parley with journalists in Ilorin.

What is the situation of things at the Cargo Terminal?

The Cargo Terminal as you are aware is a federal government thing and unless it is made like a concurrent thing then we will not be able to have a critical role to play.

I have had several investors who have come to me and said we want to use your cargo terminal, let us partner. But we cannot give that go ahead, it has to be done from the federal government. Aviation is not on the concurrent list, so it becomes a big challenging for us.

When we were doing the cargo terminal it was with the understanding that it is going to serve as a platform for export of Agriculture produce which our farmers would naturally be expected to produce from Shonga and other areas. But the dwindling level of our economy and capacities has made us a net importer of goods as against what we planned for net exportation. That is part of the challenge.

As it is now, we are still talking to a few individuals and companies who are willing to partner with us and who can help through whatever means to get concession from the federal government; but that is part of the challenge we have because it is still not at the level when state government can take decisions on their own on what to do.

You said something about Shonga Farms and there have been rumors that Shonga is owned by a private company. Can we know the level of Kwara State’s investment in the farm?
On Shonga farms, I am wondering why people know where the obvious is and yet we don’t want to go there to confirm. There is Corporate Affairs Commission (CAC) there, where all registered companies have who owns them and to what tune. It is there at CAC.

Why do you always want to hear from my mouth?

This question has been asked over 30 or 40 times and nobody has gone to CAC. I want somebody to say I have gone to CAC this is what I have seen in CAC and then we can talk about it. This same question has been asked over 30 times in the last 10 or 15 years.


So, it tells you that there is mischief. We have answered this mischievous issue for many times, the last governor did so much explanation on it. I came in and I did so much explanation on it. It keeps popping up because people see it as a platform for mischief and as long as you want to continue to take that path, you will never see anything good in whatever people are doing and that is the problem we have as Africans and indeed as Nigerians.

We must learn to appreciate what is good and criticize constructively. When you do constructive criticism people can learn more. Each time, you say who owns Shonga Farms, who owns Shonga Farms? We have done features, we have written everything. When Shonga Farms came in when those white men came to Kwara, they also went to Nassarawa State. Senator Adamu came here with the Senate President. He asked how we are able to keep the farmers here. He said that the ones that came to Nassarawa had left. I said they would go because the Nasarawa State government was the one that funded them and once your administration goes, they will go.

But in Kwara, we created a Public Private Partnership (PPP) arrangement and we funded them under a Debt Equity Structure. We created a financial vehicle that was put in place through financial ingenuity that is why they are still there.
Even when I go, for the next 30 years they will still be there because of the financial vehicle we created. What the state government did was we gave them land, provided infrastructure, gave them loans to build houses, then we went to commercial banks.

Now, don’t forget central bank had directed that every commercial bank must put some money aside for SME, 10% of their annual profit. So, some of them had accrued this money but they’ve not been investing them and most people don’t even know. It is only few of us that have worked in the banking industry that know that those funds were there. So, we went to meet each of these banks and got them to invest their equity funds into Shonga Farms Holding and the funds were used to buy equipment.

The banks are now part owners in that business because the money they have invested is equity. That equity was now used to buy equipment; we use the equipment that was bought as security to secure loans from the banks. That is why we call it Debt Equity Funding arrangement.

A lot of people are not too familiar with this financial arrangement. They are used to government funding things. It requires you to have a good understanding of funding in a venture capital business or in commercial banks or you are familiar with corporate finance before you see how to put structures like that in place.
So, the equipment now secured the facility from the same banks that gave them equity. Whatever the state government puts there, the farmers said look, they are not comfortable with only them and the banks working, they don’t know the banks, it is the state government that introduced them to the banks. They say if this business must survive, at least the state should own something to be part of it.

Then the state said no problem the roads that I have done, the energy that I have done capitalize them. Let it be our own share of that business which ordinarily we would have given to any business anyway, and that is how we’ve been able to set up Shonga Farms Holding, as a company that is holding to 13 other companies there broken down to three major consortiums: dairy, poultry and mixed cropping. Today, it is a huge success story.

Those who don’t know about Agriculture would tell you that we don’t know what is happening in Shonga, but those people who followed us there saw a success story. You have one of the best hatcheries in sub-sahara Africa here today. Sub-sahara Africa, mark my choice of words.

And you have just very few farms like that that have a complete value chain, starting from the parent stock to the hatchery, to the day old, to the broilers and then to the dressed chickens. It is a complete value chain and what does that tell you? It tells you that it is a de-risked business. Potential funding agencies can put their money there. It was after we did that, that companies came from South Africa and injected about $40million. That hatchery you saw, where do you think it came from? Investors that came to put money there, they put about $40million, why do they put money there if it is not viable?

So, forget about whatever anybody is saying. Go there and see for yourselves. I feel very proud to be part of the success story. That is the truth. Those who don’t know about Agriculture, those who are used to seeing subsistence farming, each time you talk about Shonga Farms, they want to see grains on the road, you see Agriculture is beyond that.

That is why we are still importing food. That is why we have 200 million Nigerians who cannot grow what they want to eat. If you go to America, less than 10% of the population feed the whole of America but here 70% are farmers and yet we are still importing food.

So, what does that tell you? One word: efficiency. There is no efficiency, and efficiency can only happen when you take the bull by the horn, recognize the chain, de-risk it, fund it and you will see the business growing. That is what we have done in Shonga Farms. As a pilot for other Nigerians to see how a true value chain can be put in place to drive Agric business.
Those who don’t understand should go there and understand. I keep hearing people saying things about Shonga Farms. They didn’t even understand the Debt Equity Scheme Structure. So let us understand this scheme.

Still on Agriculture, some people are saying they don’t have access to tractors.
I like all the questions you brought up. Agriculture had been wrongly perceived by people as a government programme but it is a business and it has to be treated as such. That is why we introduced the Off-Taker Demand Driven Agriculture Scheme. It is designed to make the man who is starting primary level to be linked up with the person who is going to Off-take whatever he is producing for value addition. In other words, the man who is producing maize is already linked up to a feed mill and the feed mill is already linked up to a poultry farm. That is the kind of scheme we have put in place.

We have an Agric Mall designed to be a one stop shop where intending farmers can access input requirements. The first thing one you can access there is tractor hiring. You are expected to hire tractor. Government is not giving tractors free-of-charge and there are a thousand and one individuals that have tractors for hiring. Anybody who says he has not seen tractors, maybe he doesn’t have money to hire tractor but tractors are available for hire.

Currently my farm is being done and they have hired tractors to do it. That is Agriculture because as a business. To make funding easy, we have gone to Central Bank and arranged for a credit scheme, Commercial Agric Credit Scheme (CACS) which is coming at 9%. We have designed it to be made available to intending farmers to borrow, use and pay back. And that is why you see so much has been going on about this CACS and ODDA scheme.

It is a scheme designed for intending farmers to key-in to and the Agric Mall was designed to link you with where you are going to get seeds, herbicides and chemicals; we have asked those who sell herbicides and chemicals to also register with the Agric Mall. So the Agric Mall is like a go-between the tractor owner and the person who wants to hire tractor; between the chemical seller and farmer who needs to buy chemicals; between the seed seller and the farmer who need to access seeds. That is how Agriculture is run.

But the government’s responsibility is to continue to create subsidy and how do we create subsidy? By accessing a loan at 9% per annum and this loan would now be made available to farmers. Any serious farmer will take advantage of that and begin to transmit our farming from subsistence level to commercial level and we also have extension work system tied to it at the Agric Mall so there is no excuse.

In the past, people were used to situation where federal government and state governments will just buy tractors and everybody will just come and pick the one he wants. What has it translated into in the past? Have you moved from ten thousand hectares to twenty thousand hectares? No! Because Agriculture was seen in the past as a social program. Now it is seen as a commercial business. Those who want to key into it are those who want to create wealth from Agriculture. They can recognize the input levels, they see the output and they can measure the impact. That is what we are doing.

The issue of herdsmen and farmers, one of the institutions in this state took some of them to court because of some allegations…
The herdsmen issue has been reviewed very critically. We had a very extensive meeting with representatives of the herdsmen, representatives of traditional rulers, representatives of other community farmers and we have all agreed that we need to cooperate between ourselves for us to get a peaceful environment.

Part of the areas of cooperation is ensuring that we have a Maiyeti-Allah which is like a body that houses the herdsmen. It is agreed that anytime there is encroachment on any farm compensation will be extended and their members will ensure that compensation is paid as at when due.

On the strength of that, you will see very little areas of differences if you know that if your cow destroys a farm you will pay compensation. The only challenge here is that it will be applicable to those herdsmen that are within our environment, cattle herdsmen who are coming from probably Mali, would not know that we have any compensation arrangement.

And that is where the Maiyeti-Allah’s role come in. it is their responsibility to help identify those of them that are our own herdsmen and ones that are not here because some of us cannot distinguished one from the other. So, on the strength of that they have promised to ensure that stray herdsmen are highly discouraged and the ones that are within will rear their cattle in ways and manners that they would not encroach on anybody’s farms.

In the unlikely scenario where there is an encroachment, it will be followed with a compensation. So that is the arrangement we have in Kwara. I want to thank God that there is very little noise on farmers/herdsmen clash vis-à-vis what we have across the country.

The issue of revenue generation is causing problems among factory owners, they are complaining of multiple taxations. Some companies have left Kwara already, some are planning to leave.

What are you doing about the issue of multiple taxations?

On the issue of multiple taxation, there is no multiple taxation. What you must recognize in Kwara is that in the past people were not used to paying taxes. Fees were highly compromised, commissions were hardly charged.

We said we moved our revenues from N500million per month to N1.5billion per month. Not that we brought new taxes, not that we brought new laws but what we did was just to increase efficiency. In other words, those who were not paying before now are made to begin to pay.

Most factories, you see are owing ground rents, by the time you look at their ground rent payment some are owing up to 7,8,9,10 years. How can you be using premises and you will not pay for it? So by the time you ask them to calculate and begin to pay they say you are putting them under pressure, but the truth about it is that we are asking them to pay what they are owing.

They are not new, some of them have come to me personally and we have given them waivers. Okay, you are owing 10 years, pay 3 years and then you move on, even the 3 years they are still complaining about it. Those are the challenges I am telling you because they come to me for waiver, I still have some waivers on my table now.
On the issue of new taxes that are supposed to be introduced, it was taken to the House of Assembly and it is currently undergoing public hearing, so there is no noise about it.

What do you mean by public hearing?

It is giving everybody the opportunity to go and say your bit. So that it will guide the House of Assembly on what to do and what not to do.
Whether you believe it or refuse to believe it, Kwara State has a lot more enabling environment for businesses for manufacturing than most states you see in the south-west especially Lagos. Lagos has more taxation than we have here and their drive for those taxes is uncompromising.

How do you think they raise about N26billion every month?

Those people that tell you that they are going to Lagos, they know they can’t go to Lagos because if they go there they will pay. We are a bit subtle here and we allow them to enjoy some tax holiday. Only some few days ago we said we are giving tax holidays to some pioneer Small and Medium Enterprises (SMEs). We ensure that they get those holidays until when they get to stability levels then they can begin to pay what they ought to pay.
I am not aware of any manufacturing company that has left Kwara because of taxes, there is none, and there would be none, because everything we do we draw comparisons to what is obtainable in other areas. None has left and non will leave on the basis of tax. Coca-Cola that left was strategic for them. Most people don’t know, the biggest challenge that they faced was energy. Rather than manufacture in Ilorin, they concentrated on Ibadan and Ilorin serving as a depot for distribution.

It is their business, you cannot tell them how to run their business. They are the ones that would know where the shoe pinches them the most. So, they are not leaving here because of taxes, they are leaving here because it is not strategic for them to continue to spend on energy to manufacture in Kwara.

So, let people understand that very very well. No business has left and none would leave as a result of tax because we have given platforms of agreement, negotiations, waivers, deferrers, they all exist where necessary. Those who come to us know that they’ve been enjoying it.

At the level of local governments, what can be done to turn their current challenges around?
If you look into the criteria that are required before Local Governments are put in place, and don’t forget we have gone through prolonged military administrations in Nigeria, our Local Governments will continue to be at this level until there is a restructuring to improve on their capacity to access resources.

Currently, they are heavily reliant on federal allocation and the federal allocation is droping as a result of the dwindling prices of crude oil.
So, you cannot expect to see much from Local Governments outside a place like Lagos. Lagos is a commercial environment, Kano is also a commercial environment but for some of the Local Governments in Kwara, what commercial activity is going on there? What resources can you raise from those environments?

The same apply to most of the local governments in most states that are not commercial environments. So, it is a huge challenge and that is why even payment of salaries is not doable hundred percent because their capacity to raise revenue is weak and they are only reliant on the federation account funds. The allocation from federation accounts is currently dwindling and that is where local government workers are serviced from; that is where teachers at basic levels are serviced from and that is where pensioners at local government levels are serviced from.

So, it is difficult to see them getting hundred percent of their emoluments. Their emolument is a function of the allocation that comes in. So, it will continue to be a challenge until there is a reform either through an increase in federation allocation or there is a level of flexibility that allows a stronger synergy with states in such a way and manner that they can also tap into part of what the state are doing to improve their revenues.
This is part of the challenges local governments are faced with.

And you see, a place to draw comparison with is not likely Lagos. Draw comparison with Niger State, Ekiti State, Osun State then you are talking. You can’t go to Lagos that used to be a federal capital. Everything had been done in Lagos, so their environment had been made a lot more enabling for things to thrive.

On the payment of the local government workers especially the retirees, what is the situation now?
We need to recognize how the federal, state and local governments are run. The local governments have their allocation sent to them from the federation allocation and when it gets in, it comes into a joint allocation account, jointly owned by the 16 local governments.

Within the platform of the joint allocation committee, they decide based on laws put together by the House of Assembly to guide them on how to allocate their resources. This is what the constitution stipulates. Each time the issue of shortfalls come in, the ball is thrown back to the state government. But the state government does not share in that joint allocation.

They jointly fund SUBEB, they jointly fund traditional rulers, they jointly fund local government service commission after then the funds are now appropriated to local government workers, pensioners and of course SUBEB. So, each time you hear that there is a shortfall in allocation, there is no way what goes to any of these areas would not be short changed.
That is why in the last one year, it has been difficult for them to get hundred percent of their salaries because allocations have dropped significantly and the local governments as you know do not have capacity to increase what comes in from the federation allocation unlike state that has other ways of increasing their allocation through revenue generating strategies.

You know what we have done to the internal revenue of the state which has significantly increased our revenues from N500m per month to about N1.5billion per month. That is a significant increase for us at the state level. Now, it is not the same at the local government level. The local governments don’t have the latitude to do this.

The reason is that their environments are not robust enough to create this kind of revenue base. So, it is a major challenge. Each time the local governments talk, they say they want autonomy. The problem is not autonomy. If you give them autonomy, what would they do? The major challenge is for them to be reformed in such a way and manner that their capacity to increase their revenue is enhanced. That is what the local governments need and as long as that is not done every other institution that is dependent on the allocation that comes through the local government joint account would continue to face the same challenge as the local governments.
You see, if it were a situation where when their allocations come, the state allocation come, then we mix the two together, I can now take full responsibility for everything that goes everywhere. But as it is today there are laws, processes and procedures for collection of federation allocation, for meeting and agreeing on what to be shared amongst the 16 local governments and then distribution of that money as such. So where does the state come in here? So, each time you hear people blaming the state that they have not collected salary, they have not collected pension, it is out of mischief.

Let us face the facts. The fact is that the local government allocation is getting smaller and smaller and it cannot service the local government as it were. The state allocation is also short but we have ways and means of augmenting. They don’t have those ways and means and usually it is not going to be easy for me to take out of the state allocation and say I am adding up to the local government. Those of you who checked the 2017 appropriation law and budget, will not see any line, any code or sub-code that is designed for us to take money and make available to local governments.

But if they are prepared to face the facts the way they are, we need to alert the federal government that there is an imminent collapse of administrative structures at the local government level if the allocation continues to come in the way it is coming in.

It is either the federal government increases the ratio that comes to the local government or creates a window where they can access some more money in addition to what comes in as the federation allocation. Short of those two, it will be difficult for them to be reliant on the federation allocation which is also reliant on the price of crude oil which we have all seen today as dwindling, for us to be able to meet up with the monthly obligations. It will continue like this for a while until that reform is done. The state cannot reform the local governments. It has to be a federally directed reform and requires even constitutional amendments. So, let us understand where the problems are because all the bickering, passing the buck to the state government, that state government is not paying local government workers, pensioners, we are failing to face the facts as they are. We are being very miserly with the truth and we are not helping ourselves.
A few political individuals are using it as a platform to make the government look bad, as if the state government owes the local governments. We do not owe local governments and we have never owed them.

At the state level, we have been able to meet our own obligations as at when due. So, that is why each time I come out and I say look Kwara State government is not owing its own workers, I keep repeating it every time, our pensioners, our workers and all those who draw remuneration from the state government are paid as at when due.

But if your remuneration is tied to the local government I cannot say the same because I don’t generate the allocation, it comes in from the federal level, and it will be difficult for me to defend payment or insufficiency of that money when I don’t dictate what allocation comes to the local governments from the federal level. That is what dictates whether their money will be sufficient or insufficient.

On the grading of some Obas in the State, those that were graded truly deserved it but some were left behind.

What is your administration doing to review it?

The issue of grading of Obas has been done largely to help support governance at the grassroots level. We have on the strength of that sought to upgrade some of the traditional rulers.
You will recall towards the end of my first tenure, we upgraded some traditional rulers. We set up a committee that reviewed the issue of traditional rulers and some were upgraded between 3rd class and 2nd class. However, don’t forget that this class of traditional rulers is usually remunerated from the local governments and the drop in the allocation of local governments has not made it easy for us to increase the pressure on the local government allocations. That is why even those that have been graded have not been fully given their entitlement in terms of staff of office and remuneration.

But the ones that are remunerated at the state level which is the first class level, those are the ones we have been able to give the staff of office and of course support.

What is government doing to address the issue of water supply?

The population is increasing, it is not decreasing. The number of people that were in Kwara yesterday would not be the same number of those that are in Kwara today. So, as much as we are meeting the needs of people in water, it is a continuous thing, we will continue to grow.
For instance, we’ve completed about 25million gallons of water expansion at the water works, we are still getting the reticulation done, which is almost about 95% completed, but between you and me the need is growing and it is bigger than the 25million gallons that was done because more people are coming in and that is how it is everywhere in the world.

As long as people are growing, population is increasing, there would be continuous pressure on infrastructures. So, government would require to put machinery in place not only to expand new ones but also to begin to rehabilitate the old ones.
This is part of the challenges that government business is faced with. So for water, as much as it is desirable for us to expand to new areas, there is the need to continue to manage the old ones which are being put under pressure.

Is education free in Kwara?

Education is free in Kwara. When you say education is free, what is free? It is tuition that is free. The transportation from your house to the school is not free. The uniform you have to wear, you have to make them yourself. What government is supplying you is what you are supposed to pay for learning, the tuition fees, we have made it free but that does not fore-close that every other thing required have to be paid. This varies from one school to the other.

The only two things that I know will be free would be tuition fees and the free meal that the federal government is working on. Those are the things that are meant to be free; it is not everything that is free. It is tuition fee that is free. The tuition fees you are supposed to pay, government says no, don’t pay anything.

But the teachers and parents and administration of the school, can now agree amongst themselves through the Parent Teachers Association (PTA), on what they also will contribute to augment the education of their wards, so let it be understood from that angle.

Scholarship has not been given for quite a period of time because of our dwindling allocation. It has not been easy to make scholarship available to deserving students rather what we have been making available is bursary with a paltry sum of about N5,000 each to just encourage our youths.
But when our allocation improves, hopefully we will set some money aside and support scholarship in some critical human capital need areas. For now it is not doable because of dwindling allocation and because of the pressing issues attendant on the federation allocation i.e things like Salaries and other critical funding needs.

Recently the Kaiama-Kishi and Michael Imoudu- Amoyo Roads were taken over by the Federal Government.

Why did the Federal Government take over the construction of these roads from the state government?

In the first place, they are federal roads. The state government wanted to rehabilitate federal roads to make life easier for our people but federal government has now decided to do its own work by taking over.
They are federal roads where the state thought that we needed to intervene to improve on movement of people along that axis but co-incidentally the federal government have also awarded the same contract to contractors to rehabilitate those roads. So that is what is going on now.

But our roads are on-going and they will continue to go on even till the day I will leave office. Don’t forget that when I came in here I inherited quite a number of roads. I have the list here. Of all the roads that I inherited they are not less than 20 roads that we inherited and completed in our time. So, road construction, just like I said road, water, energy they are like consumables. We will continue to rehabilitate, continue to do new ones, it is a continuous thing.

No contractor must leave site now because I have arranged a funding window for them. On no account should any contractors, under any guise leave site now. We have the Kwara Infrastructure Fund (IFK) which is a funding window I put in place that is funded from my Internally Generated Revenue (IGR) and on quarterly basis we make monies available to all on-going roads, all on-going water projects, all on-going health projects and we are also jump-starting new ones from there.

We sat down, we did the calculation one by one it is not something we are doing by accident. We have calculated what is required to start the road and complete the road. So, every programme that you see that is funded from the Infrastructure Fund is designed and destined for completion. It becomes auto-run.
For every on-going project today a steady amount is released to contractors on a quarterly basis, so that on no account or under any guise should any contractor leave site. I hope it is clear.

Opposition in the state takes delight in condemning your government particularly your achievements.

What do you think could be responsible for this?

Firstly, we have this ‘bring him down’ syndrome inbuilt in our political system. We fail to look at things from objective perspectives and some of us are not too disturbed with it because we know that the fact will always remain whether you like it or not. No matter how the administration of George Innih was criticized for instance, you can see what he has done.

So, what people say largely in terms of condemnation, especially when driven by political interest, we don’t get too perturbed with such things, we keep focused, if we get perturbed replying so many things that would have changed our focus and changed the direction in which we expect to deliver service.
It is not unexpected that people would come out to castigate us, say things that are not correct, but we know the fact will always be there for you to check for those who are interested in facts.
It is not a big deal but one thing is clear: we will always listen to constructive criticisms because we feel that they are necessary ingredients for us to make checks and balances and correct what we are doing for the better.

What should we expect in the next 2 years?

Yes! The next two years we will see significant improvement in the area of human capital development. We will see significant increase in support for tertiary institutions, secondary institutions and of course primary institutions. We will also see significant rehabilitation of roads to link up communities.
Don’t forget that we have acquired an asphalt plant. We are working on a funding window that will see to adequate procurement of materials which will continue to see rehabilitation of old roads and of course, building of new ones.
We will see significant improvements in the areas of health care. We have hospitals which are already slated for rehabilitation. Quite a number of them will also be brought to completion levels especially at the basic levels. We will see significant improvement in the areas of water supply in addition to reticulation that is currently going on.
More environments will have access to water either from underground or surface water.

Of course, in terms of energy, we will also see a major shift from the current deployment of transformers to link the national grid. We will be able to see a lot more use of solar options for lighting up of our communities because it is becoming increasingly clear that reliance on the national grid for energy supply is not completely going to give us what we want to see and it is very unlikely that it will get to the rural communities.
Now with pockets of solar solutions coming in, we will begin to see deployment in a lot of our rural environments. We have started with Light Up Kwara. And also, our vocational institution will take-off to the extent that it will begin to serve as an institution that would drive growth of entrepreneurship especially hands-on trainings in the area of automobile, construction, electrification, electrical works, welding and other works that we expect to improve manpower development.

These are all the areas we expect to see as we move on towards 2019. It will largely be upscaling on what we are doing currently either through expansion or through new projects. We also expect to see a fully rehabilitated in-door sports hall. These are some of the things we want to see.
But most importantly, you will see that the state would have moved into a major Agriculture hub. We are looking at a level that would see our youths truly embracing agriculture and key into an off-taker demand driven scheme.

Those of you who followed us to Shonga, you will see that Shonga business has moved from where it was to a fully integrated Agricultural scheme which has created room for backward integration and significantly created a platform for our youths to key into that chain.

These are part of the areas we want to drive to significant levels in the next two years that will see this place serve as a major Agriculture hub.

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