Business

Local contractors’ burden amid low revenue

Local contractors in their large numbers recently protested against Federal Government’s inability to pay them, years after they completed supplies to the Federal Ministry of Finance, Abuja. Abdulwahab Isa reports

The Federal Government is the largest spender. With trillions of expenditure outlay every fiscal year, the policy plan is a revolving chain that drives business and economy at large. As the biggest reservoir of resources, government’s fund is a major valve, which supplies liquidity to the system. Local contractors handling p rocurements across ministries, departments and agencies (MDAs), pensioners, civil servants with pending promotion allowances in arrears and other interested parties with pending bill to pick from government coffer all have a common establishment to lodge their complaints – the Federal Ministry of Finance. Federal Ministry of Finance’s core functions include, but not limited to managing, controlling and monitoring federal revenue and expenditures.

Thus, when procurements run through a procedural chain, the contractor is given a clean bill of supply acceptance and payment approved. Sadly, payment approval marks the beginning of contractors’ trauma. Payment process is not only cumbersome, it’s characterised by prolonged delay due to bureaucratic bottlenecks. On several occasions, angry protesters (pensioners, local contractors; aggrieved civil servants) took their angst over delayed payments to the major entrance of the Federal Ministry of Finance, Budget and National Planning.

On a number of occasions too, the protesters are armed with placards. A month ago, Nigeria’s local contractors, unable to endure hardship, which delay by government to offset their bills is inflicting on them, took the protest to the door step of the Ministry of Finance, Budget and National Planning.

Contractor’s angst

over payment default Over 500 in number, local contractors barricaded the main entrance to the complex of the ministry in Abuja a month ago to press for payment. In their frustration, they cried out to the Minister of Finance Budget and National Planning, Mrs. Zainab Ahmed. They claimed they executed various contracts across MDAs and had yet to be paid for many years. Among other claims, they alleged billions of naira had been approved and released by the Presidency to settle the liabilities but the minister refused to settle the indebtedness.

The Publicity Secretary of the Local Contractors of Nigeria, Prince Dandy Rowland, told journalists that interacted with him that over 5,000 local contractors affected by non-payment of executed contracts were passing through severe life threatening situations and hunger. He said some died in the process due to their inability to secure payment while their families are still going through anguish. He added that government needed to release the payment to enable these contractors liquidated their debts. According to him, “we are once again calling on the Presidency to mandate the Minister Of Finance to pay local contractors now or else we will remain in this protest and hunger strike before the eyes of the globe.

“The Federal Government did not waste time to commission the projects we executed with borrowed money as her achievements, but now it is taking the government decades to do verification for our payment. The Federal Government cannot fool us forever.

“Therefore, FG must pay us now, because if the reverse had been the case, if we had collected government money without executing the projects, the government would have arrested and jailed us. This is corruption of the highest order and it is unacceptable.” He stated that due to the delay, many local contractors have died, while others have been hospitalized and cannot afford medical bills. “Our children have dropped out of school. Many among us are facing criminal charges in various courts across the nation for funds borrowed and unable to pay back.

“Some have fled their homes for fear of being attacked by creditors and some have lost their homes to banks and creditors,” he added. He said: “The Presidency inaugurated Presidential Initiative on Continues Audit in the Federal Ministry of Finance to verify the contracts we executed over the years and PICA has since verified these contracts over and over again and recommended for the settlement of the local contractors in batches, beginning with N10m downwards in order to cover a wide range of the local contractors based on the available fund. “Yet, Madam Finance Minister is still talking of verification every now and then, in order to manipulate the payment against PlCA’s recommendation.

“The Minister of Finance through her Special Adviser Media told us that N18 billion had been released to pay us, and announced to the whole world on July 8, 2020 that the finance ministry would pay local contractors between seven to 14 days from the date of the announcement. “This empty deceptive and unfulfilled promise heightened our pressure from our creditors after the expiration of the stipulated period yet the game continued.” He alleged that the fund being spent on the verification exercises is almost higher than the amount owed the local contractors put together. Rowland said that these local contractors borrowed money from banks with interest and executed these contracts.

Fictitious names as contractors’ albatross

The government said it had an obligation to pay, and committed to fulfilling every letter in the contract it signed with the local contractors. It, however, explained that the contractors’ list was loaded with fictitious names. It said there was a need to do audit, verification to purge out inserted fake contractors’ names.

The ministry said checks conducted revealed many fictitious names inserted into its payee list for contractors by unknown criminal elements. Hence, multiple verification exercises. Addressing the protesting contractors, the Ministry’s Permanent Secretary (Special Duties), Aliyu Ahmed, assured the contractors that the government had money to pay them. Ahmed said the funds were no longer up to the N18 billion earlier announced by the ministry while attributing the delay in payments to the measures put in place to ensure the Ministry disbursed available funds judiciously. He, therefore, urged the contractors to end their protest and give the ministry 21 days to sort the issues.

Poor revenue as bottleneck:

The Federal Government is battling with drastic drop across all sources of income. The emergence of Covid -19 in February this year froze major sources of government income. For instance, records showed that between January and May this year, the Federal Government suffered a revenue shortfall of N1.14 trillion. Analysis of figures obtained from the Ministry of Finance, Budget and National Planning showed the government generated the sum of N1.48 trillion during the five months period. Compared to the projected revenue of N2.62 trillion which the government had planned to generate within the period, the N1.48 trillion represents a shortfall of 43.5 per cent. A breakdown of the revenue performance showed that apart from oil revenue that surpassed its target, the Federal Government could not meet its projected target for other revenue sources. For instance, the government generated N701.6 billion from oil as against N422.4 billion, resulting into a surplus of N279.2 billion. In terms of NLNG dividend, the shortfall was put at N33.49 billion while Companies Income Tax, Value Added Tax and Customs Revenue had shortfalls of N129.12 billion, N50.29 billion and N38.52 billion respectively. Similarly, there was an underperformance of N19.8 billion on federation account levies while independent revenue from agencies of government, special levies, signature bonus and domestic recoveries recorded shortfalls of N308.47 billion, N79.45 billion, N76.06 billion and N98.76 billion. In the same vein, Stamp Duty recorded a shortfall of N83.33 ion, donor funding N17.79 billion and grants N20.83 billion. Faced with the drop in revenue across all sources of income available to the Federal Government, fulfilling payment obligation to the local contractors is relegated to background.

Last line

Local contractors are business people. Majority borrowed capital from commercial banks and other finance outlets at an exorbitant interest rate to execute Federal Government’s contracts. It’s only natural for the government to fulfill the contractual obligations by paying contractors.

 

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