Ogun State Government has called for the review of the terms and conditions for accessing counterpart funded projects by international donor agencies by states.
The state contended that the current arrangement was no longer in tune with current economic realities in Nigeria.
State Commissioner for Finance and Chief Economic Adviser to the Governor, Mr. Dapo Okubadejo, made the call during a meeting with a team from the International Economic Relations Department (IERD), Federal Ministry of Finance, led by its Director, Hajia Aisha Omar, in his office in Abeokuta.
He argued that mandating participating states to provide a certain percentage of the counterpart fund as a requirement for accessing loans or grants, as a demonstration of their commitment, was no longer realistic.
He added that most states were contending with numerous financial challenges, suggesting that donor agencies should collaborate with the Federal Ministry of Finance to evaluate capacity of states seeking such loans or grants before approvals are granted.
Okubadejo also enjoined development partners to deemphasise the use of level and rate of disbursement, instead of the impact rate of loans to partnering states as a yardstick for measuring their performance.
He said, “Using counterpart funding as a way to determine commitment is no longer popular because resources are scarce. Most states are grappling with wage increase, COVID-19 pandemic, slowdown in economic activities and decrease in Internally Generated Revenue. All of these have put pressure on the funding capacity of state governments. We would love to do these projects, but because counterpart funding is put as a requirement, a lot of states will be slow in kick-starting the projects.
“But if you put in place necessary governance requirements to ensure compliance and implementation, and evaluate the government’s capacity to deliver on the projects, I think we would achieve a lot more.”
The governor’s chief economic adviser further decried the situation where states are mandated to spend certain amount of grants and loans on hiring consultants, maintaining that Ogun State, due to its huge investment in human capital development by the current administration, had a large pool of in-house experts who have been assisting it with its development plan strategies, thereby making such condition uneconomical and unattractive.
Okubadejo noted, “A situation where you say out of about 250 million dollars, 50 million dollars was meant to be for technical assistance and hiring consultants, is not tidy enough. For us in Ogun State, because of our heavy investment in human capital development, we have a lot of public office holders with good professional requisite skills, experience and capacity to do these things we are expected to hire C
“This is so because a lot of the reforms that were envisaged by these projects are in our own economic development plan and strategy. For instance, we set up the Ogun State Investment Promotion and Facilitation Agency; it was envisaged in the project, but we set it up without using consultants. We also passed the Private –Public Partnership law and set up an office for it by ourselves. For the procurement portal, we were advised to hire a consultant for about 350 to 400 thousand dollars, but because of our capacity in the state, we developed the portal by ourselves internally and we submitted it to them to verify and validate, they said fantastic, and it was approved. That’s how we created the e-procurement portal we are using now. And with this, we saved almost four hundred to five hundred thousand dollars for the state.”
Responding, the team leader, Hajia Omar, corroborated the commissioner, saying her agency was working on the mandate of the Federal Executive Council for a downward review of amounts allocated for consultancy services, and focus on infrastructural development and capacity building for sustainability of the programme.
Omar said, “The directive of the Federal Executive Council is that allocations under Consultancy should be brought down to the minimal except when highly required, and that we should focus on infrastructure, in-house building for sustainability of the projects, because projects will still be there years after the intervention of the development partners.
“There is really no value most time when you talk about hiring Consultants because most times we have in-house experts, except for some new fields that have not been developed within the civil service”
“You were also right that much emphasis is being placed on level and rate of disbursement instead of the impact of projects, and I think that is one discussion we have been having seriously with our development partners, For us, from us from Finance side, we want to see what you have spend and what you have on ground, is there value for money? That is our own focus and I think it is now our duty and responsibility to draw the attention of development partners and ensure emphasis should be on impact, not on disbursement.”