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State Governments Revenue To Be Strained over High Debt-To-Revenue Ratio

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Eniola Olayemi

 
The revenue of the states in the country will be further strained in the coming months owing to their rising debt portfolio and cost of servicing those debts.

This is coming on the back of the latest report on the states’ internally generated revenue by the National Bureau of Statistics (NBS), tagged, “Internally Generated Revenue at State Level”, which showed a high debt to revenue ratio for the first half of 2018 (H1’18).

The report showed that total states’ Internally Generated Revenue, IGR, grew by 27.7 percent year-on-year (y/y) to N579.40 billion from N453.83 billion in H1’17.

Of the 36 states, 28 states grew their IGRs, while states such as Ebonyi, Anambra, Benue, Abia and Kebbi recorded declines in IGR by 21.79 percent to N2.46 billion, 21.62 percent to N7.07 billion, 18.86 percent to N6.06 billion, 12.29 percent to N6.98 billion and 10.85 percent to N2.03 trillion respectively in H1 2018.

Lagos retained its number one spot, with an IGR of N196.4 billion, up 16.9 percent y/y and Rivers State recorded N60.9 billion, the second largest state by IGR.

The report showed that not much changed in terms of revenue sources as federation account allocation inflows continued to account for more than 70 percent of the total revenue (FAAC + IGR) for most states. Net federation accounts allocation to states grew y/y by 65.14 percent to N1.23 trillion in H1 2018 from N0.74 trillion in H1 2017 amid increases in production and price of crude oil.

The states’ total debt stood at N4.78 trillion in the year under review, comprising of N1.30 trillion external debt and N3.38 trillion domestic debt.

The high debt to revenue ratio, according to economy watchers, will put more pressure on fiscal operation of the states and also make implementation of capital expenditure more difficult.

In his reaction, Mustapha Wahab, a research analyst at Cordros Capital Limited, explained that adding growing debt to servicing cost and to the already depressed state revenues will put pressure on their fiscal operation. He said: “Currently a number of states can’t cover their recurrent expenditures on the back of insufficient FAAC allocations despite gains from higher crude prices relative to last year and significantly low internally generated revenues.

“Adding growing debt service cost to the already depressed state revenues will further put pressure on fiscal operations of the federating units, the impact of which will not only make capital expenditure, CAPEX, implementation a tall order but overhead spending also.”

According to him, the situation would mean growing risk of default on interest and principle payment for the states. He urged the states to increase their IGR to reduce the impact of declining crude oil price. “With IGR to FAAC ratio remaining abysmally low, states government must ramp up internally generated revenues to reduce the impact of volatile oil earnings on fiscal performance by significantly expanding the tax base and considerably monitoring revenue generating state owned corporations to effectively block all loopholes,” he said.

Cowry Asset Management, a Lagos-based investment banking firm, said: “Given states’ IGR of N579 billion and net Federal Accounts Allocation of N1.23 trillion in H1 2018, ‘dependency multiple’, FAAC to IGR, was 2.13 times.

In spite of the y-o-y increases in IGR and net Federation Accounts Allocation to the states by 27.7 percent and 65.14 percent respectively, the states’ average total debt to gross revenue still remained high at 2.75 times in H1 2018.

“We opine that high debt to gross revenue ratios of the states would further increase their debt servicing costs which in turn would burden future generated income of the affected states going forward, given that most of the borrowed fund would have gone into recurrent expenses such as payment of salaries.”

In a report titled, “State of States IGR in H1’18: Creating more “Lagos” across Nigeria”, analysts at United Capital Plc, another investment banking firm, emphasised the need for the state to up their IGR in line with Lagos State while expressing concern at the underwhelming performance of other states.

They also pointed out the need to expand the revenue base across states, saying that it would reduce dependence on FAAC inflows, which is largely exposed to the vagaries of the oil market. Increasing the revenue base of the states, according to them, would limit future fiscal crisis. “In addition, this would boost the credit ratings of states and enhance their ability to finance developmental projects,” they said.

“Further analysis of the IGR report indicated that Pay As You Earn, PAYE, is two times the size of FAAC inflow in Lagos and 1.1 times in Ogun States, implying that both states are significantly benefiting from a dominant formal sector relative to other states. Hence, to create more “Lagos States” across the country, there is a need for a concerted effort to develop the formal sector in the rest of the country. Put differently, tax authorities in other states may need to find creative ways to boost revenue from the informal sector going forward,” they asserted.

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Overriding Public Interest: Delta warns against impeding govt projects

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Overriding Public Interest: Delta warns against impeding govt projects

DAN DENT (ASABA)

SPONSORED BY: H&H

Delta State Government has cautioned citizens against impeding projects meant to serve the general public, saying such actions were illegal and constituted an abuse of the law.

Commissioner for Works, Highways and Urban Roads, Comrade Reuben Izeze (middle)  discussing with the Chief Press Secretary to the Governor, Sir. Festus Ahon (right) shortly after Inspecting the maintaininers of Uti Road on Wednesday,  while the Project Manager Mr. Milad Boutros (left) look on. PIX: SAMUEL JIBUNOR.

The State Commissioner for Works (Highways and Urban Roads), Comrade Reuben Izeze, gave the warning in Effurun on Wednesday during an inspection of the DSC Roundabout Link Road to PTI Junction.

According to him, “no citizen is bigger than the state; I learnt that a citizen has said a particular portion of the road that has been approved cannot be constructed because that is his private property.

“I want to sound it to our people as a note of warning, that, to impede government project in the name of private property is an abuse of the law.

“If your property is on the right of way and we know it is not a road,  this administration has made it a point of duty to pay compensation for the use of such properties in the overriding public interest.

“This project has an overriding public interest; if your property is in the right of way and your property has approval, the best we can do, as we have always done, is to give you compensation.

“But to say you stop government officials from doing their job because you feel you are bigger than the government or you are bigger than the law is absolutely unacceptable.”

Commissioner for Works, Highways and Urban Roads, Comrade Reuben Izeze (right) taking the measurements of the Rod while the zonal Chief Engineer Uvwie and Opke local government Area, Engr. Kporon Ennah (left) look on. PIX: SAMUELm JIBUNOR.

Speaking further,  he said; “so, we are constructing a drainage that would discharge all the water on this road. If you look at this place, it was originally a swamp.

“Meanwhile, this place had all along been intended to be a road that should take traffic from the East-West Road to reduce the volume of traffic on DSC Roundabout and PTI Junction straight to the Eku highway.

“We have come to see what the contractors are doing and I must express my displeasure at the poor quality of engineering work that I have observed here in this drainage.

“In fact, as things stand, considering the volume of water that will be coming from the Julius Berger projects, the existing volume of water from the swamp.

“What is being done here, therefore, necessitates that this drain be done according to the engineering specifications because the volume of water we will be dealing with is enormous.

“However, on getting down here and measuring the distance between the reinforcements, we discovered that the contractor apparently did not pay attention to details.

“So, I have instructed them to remove everything, start afresh and we will come back. They should not put the reinforcement until I have come to inspect what they have done to be sure that they have complied with the spacing as provided for in the Bills of Engineering Measurement and Evaluation.”

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Brutality Victim: Anambra State Executive Council Approves Medical Expenses of Victim

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Brutality Victim: Anambra State Executive Council Approves Medical Expenses of Victim

AJAGBE ADEYEMI TESLIM

SPONSORED BY: H&H

Governor Chukwuma Charles Soludo undertakes the medical expenses of a victim of brutality by some contractors of the Anambra State Waste Management Authority (ASWAMA), Mr. Okechukwu Akaneme.

The governor took this humanitarian decision to relieve the victim while strongly denouncing such despicable conduct. In addition to the governor’s gesture, the contractor has been relieved of his engagement with the state agency (ASWAMA) immediately, to serve as a deterrent to others.

In a statement by the Commissioner for Information, Law Mefor, the victim who was assaulted is being hospitalised.

The Council has resolved to pick up his medical overheads, while sympathising with Akaneme ‘s family and prays for his quick recovery.

This profound empathy reflects Soludo’s sincere dedication to offering not just solutions but also a genuine commitment to providing helping hands, support, and hope to the people whenever and wherever required in the state.

                                                                    END

 Press Release

Anambra State Executive Council Awards More Road Contracts

The 37th Anambra State Executive Council (ANSEC) has awarded the contracts for the construction of new roads in the state in preparation for the yuletide season.

 This is aimed at ensuring a memorable Christmas for Ndi Anambra, who will be celebrating the season in the state, from across the country and other parts of the globe.

In a release by the Commissioner for Information, Law Mefor, ANSEC at its 37th Meeting, approved the construction of the 3.75 km Igwe Orizu Road, in Nnewi, to New Idea Construction Company Ltd, and to be completed within six months.

The 10.8 km Nkwor Nnewi to Nkwor Oraifite was awarded to Infratech Construction Ltd at N7.2 billion, with a 12-month completion timeline, while the Oraukwu-Abatete-Nimo bypass in Idemili North measuring 4.922km was awarded to GMG Global Construction and Development Company Ltd, with a delivery date of six months.

At the meeting, the Council observed that many roads awarded at the last executive council meeting, including the New Tarzan Road and the three roads whose contracts were revoked and re-awarded, have not been reported.

Recently, Governor Soludo kept his promise with the completion of the 12.5km Ezira-Umuomaku-Enugu Umuonyia-Achina Road, linking several communities, and the 11.9km Mmiata-Anam-Nzam road, linking the headquarters of Anambra West Local Government Area (LGA).

With the ongoing and completed road projects in the state, Governor Soludo has literally turned Anambra into a construction site in his pursuit of transforming the state into a country-wide destination brand.

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LAWMA HOLDS 2024 CHRISTMAS CAROL/END OF THE YEAR THANKS-GIVING

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LAWMA HOLDS 2024 CHRISTMAS CAROL/END OF THE YEAR THANKS-GIVING

AJAGBE ADEYEMI TESLIM

SPONSORED BY: H&H

The Lagos Waste Management Authority (LAWMA), has held its annual Christmas Carol and End of the year thanksgiving service, to appreciate God for his goodness and blessings in the out-going year.

The event took place at the authority’s headquarters, Ijora-Olopa, witnessed by LAWMA’s management team, staff, neighbours, friends and well-wishers.

In his welcome address, the Managing Director/CEO of LAWMA, Dr. Muyiwa Gbadegesin, thanked God for his mercies and blessings upon the workers of the authority in the out-going year despite challenges.

He said “Today is not a day for speeches but a day for praises and thanksgiving. I appreciate God for his mercies and blessings upon the staff of LAWMA, and I pray he will continue to preserve us as we dedicate our time to service.”

Also, he appreciated members of staff for their support, encouraging them to keep up the good work.

While wishing Lagos residents a merry Christmas and a prosperous new year, he urged residents to always carry out their own obligations towards the environment, and to support the efforts of the authority, in maintaining a clean and liveable Lagos city.

The Executive Director, Finance, Mr. Kunle Adebiyi, thanked God for preserving the lives of LAWMA staff, and for making them witness this year’s thanks-giving service, noting that it was important to keep praising God.

He acknowledged the efforts of Dr. Muyiwa Gbadegesin towards improving waste management operations in the state, to achieve a people-friendly environment.

Delivering a sermon on the event’s theme, “With a grateful heart”, the chapel’s president, Mr. Olawumi Oluwaseyi, urged people to always express gratitude to God, for consistent protection from danger, as he committed every member of the authority into God’s hands, seeking for his grace and mercy.

The first Bible reading of the day was by the LAWMA boss, taken from the book of Genesis 3:8-15, while the second reading was from Genesis 22:15-18,  by the executive director Finance.

Other management staff who read Bible passages included Mrs. Folashade Kadiri, head, Public Affairs; Mr. Adewumi Adetona, head, Advocacy; Dr. Essien Nsuabia, head, Waste Management Development Research; Mrs. Opayemi Abimbola,  head, Commercial Services; Mrs. Bola Adewumi, head, LAWMA Academy; Dr. Modupe Okoh, head, Medical Services, Health and Safety; among others.

The high point of the event was the special song ministration by the guest minister, Sarah Apekeola; rendition of hymns and songs by the Emmanuel Chapel choir, as well as choreographic ministration by the chapel’s children.

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