Mr. Dayo Ajayi is the Auditor-General of Ekiti State. In this interview with Kehinde Ajobiewe, he spoke on why State Governments are constantly clashing with the Federal Government over revenue sharing and the possible way out. Excerpts:
Your State has one of the poorest internally generated revenue base. Why is it so?
Thank you for that question. The low internal revenue generation can be attributed to the following broad factors: one, geographical factor. You see, Ekiti state is a landlocked state within the country and consequently it does not enjoy the attractiveness of places like Lagos, Ogun, Warri, Port-Harcourt etc. Moreover, it has small land mass that people just pass by.
Historically, we are peasant farmers; the introduction of free education by Obafemi Awolowo in 1955 accelerated our exposure to western education. However, the education tended to move towards the production of preponderance of teachers and technocrats while more exposed states like Ogun State were producing professionals e.g. lawyers, accountants etc.
If we had more of Afe Babalolas, who trained as a lawyer, and has been the highest tax payer since the creation of the state, Ekiti would have been better for it. But we thank God that we now have some budding professionals who are ready to compete and complement the singular efforts of Are Bamofin of YorubaLand, Afe Babalola.
On infrastructure, the infrastructural base of the State has been very low since the days of western region when there was only one tarred road in Ekiti Land. When others have railways, Ekiti land was deprived of such amenities. Even up till now some of our villages lack electricity despite the efforts of government.
Only three towns in Ekiti could boast of pipe borne water and telephone facilities then. Therefore, the area was closer to backwardness in industrial development. This accounted for the poor revenue generation in the state. Corrent governments are however, making frantic efforts to reverse the situation.
The low infrastructural base earlier mentioned has its adverse effect on the economic development of the state. As I have said earlier, most of the people were peasant farmers of low income earning and whose main cash crop was cocoa.
Cocoa actually generated income for old western region and unfortunately the revenue gathered from cocoa was annexed through Western Nigeria Marketing Board to develop Ibadan (Cocoa House) and Lagos (Ikeja Industrial Estate). It is sad to note now that Ekiti state farmers have deserted cocoa production, hence not much could be generated from it.
It is also sad to note that young generations have deserted farming for politics, Okada riding etc. The bulk of IGR of the State is generated from the PAYE (formal sector). Revenue from the informal sector is very low. The IGR has improved in recent time as a result of introduction of e-receipt system which has reduced leakages of IGR like non-payment to government coffers, double crossing etc.
This can be accredited to Governor Fayemi’s government. I am equally aware that efforts are on top gear by his administration to increase the revenue base of the state. Infact, I can tell you that presently the IGR of Ekiti state has increased to an average of N600,000 from N200,000 plus ( daily or monthly)
The state governments are constantly clashing with the federal government over revenue sharing formula and now on Sovereign Wealth Fund? What do you think is the way forward?
I want to believe that the sharing formula is long overdue for review. We have three tiers of government in the country Federal, State and Local Governments. The revenue sharing formula among these tiers should be seen as justifiable and not lopsided.
In a situation where the federal government alone takes 52 percent of the revenue leaving only 48 percent for others to share is not justifiable. While the federal government under military could take 52 percent, the democratic government ought to have reconsidered the situation.
Please don’t forget that there is only one Excellency at the federal level, whereas we have 36 Excellencies in the states and 774 Executive Chairmen (Local Excellencies) at the Local Governments level in Nigeria. It is note of fact that the government is about service delivery and the people at the grassroots ought to feel the impact of government. But the grassroots people are only given peanut.
As Concerning the Sovereign Wealth Fund, as lofty as the idea sounds, since the fund belongs to all tiers of government, they should have all been carried along when the decision was taken. And in this setup, at least there ought to be legislative act or memorandum of understanding involving all the governments; by that, the intension of setting up Sovereign WealthFund will be known and modalities for the operation of the fund will be clear to all.
So, to monitor the fund will be easy and that would have ensured transparency and instilling of confidence in the minds of the joint owners. You asked me about the way out; the Revenue Mobilization Allocation and Fiscal Commission should, as a matter of urgency, carry out an honest, objective, and transparent review of the revenue sharing formula. If that is done it will not unnecessarily make states and local governments go caps-in-hand, begging the Federal Government for fund.
What happens to Budgeted Funds that were not used at the end of financial year?
According to the law any unspent budgeted fund should go back to Consolidated Revenue Fund (CRF) at the end of the year. However, in my State funds are not even adequate to meet budgetary provisions.
The budgetary processes of most states are very poor which causes non- implementation of such budgets. Now in Ekiti state, do the communities get to make input into the process?
Emphatically, I want to say yes that the budget of Ekiti State incorporates community interest. During the 2012 budget preparation process in the State, the Governor and his Executive visited all the local government headquarters and each community in the respective local governments came with their requests both in written and unwritten form.
All their requests were collated by the Ministry of Economic Planning and Budget. In another dimension, the Ekiti State Community Development Agency mobilized all communities for community projects development, whereby the communities will contribute 10 percent of the project cost and which is augmented by the state and Wold Bank.
All these were captured in the budget. Those requests that could not be captured in the state budget for 2012, were included in the Medium Term Expenditure Framework (MTEF) which is like three or four-year development plan of the state.
Is there a feedback mechanism for the government of Ekiti to know if its programmes and projects are meeting the needs and expectations of the people?
Yes, the governor visits to various towns to hold town hall meetings in order to get feedback from the people on all communal issues and projects. There are various agencies that are saddled with the responsibility of monitoring government projects. e.g Planning Commission, Governor’s Monitoring Team and specifically my office carries out Money for Value Audit of the entire government projects and sends report to the House of Assembly which the governor is copied.
There are agencies in the state that people can report to about the progress of government projects in their community. Apart from all these, the Deputy governor, Mrs Funmilayo Olayinka and her team regularly go round the state to look at the local government projects and get feedback from primary source (the people).
Another forum is the monthly radio/television programme tagged: “Governor Explains” (Gomina Se Alaye) ,where people call the governor to inform him about what is happening in their communities.
Local governments in Ekiti and in other states do not have total control of their fund. As the Auditor-General, what percentage of their funds do you think actually gets to them?
That is not true; as far as I am concerned the local governments in Ekiti State collect 100 percent of their fund plus 10 percent from the State IGR in accordance with the provision of the constitution.
Do you think the National Assembly should out ightly give the local government financial autonomy and scrap the Joint Account operated in most states?
In all sincerity, let me emphatically say no to the scrapping of Joint Account Allocation Committee (JAAC). Experience in Ekiti shows that, if JAAC is not involved, most local governments will not pay their primary school teachers and their own staff salaries as we had between 2000 and 2003 .
The other reason is that since the State government pays 10 percent of its IGR into JAAC account for onward distribution to local governments, the distribution has to be monitored by the state government as FAAC at the Federal level. Then finally, the constitution empowers the state government to supervise the local government administration and the state House of Assembly is also empowered to make laws for good governance at the local government.
Regarding local government Financial autonomy, I am very sure that the present government in Ekiti State does not interfere on how local government fund is expended.
What percentage of this year’s budget is allocated to capital projects?
In all honesty, Dr Fayemi is really interested in the development of Ekiti State. 56.75 percent of the 2012 budget is allocated to capital projects which is 50.8billion of the total budget of 89.5billion.