Is Osun target of N5bn monthly IGR achievable?

In its quest to provide sustainable development for the citizens of the state, Osun State government has set a target of N5 billion monthly Internally Generated Revenue (IGR). Since coming on board, Bicci Alli, chairman of Osun Internal Revenue Service (OIRS), has not hidden his intention to raise the state’s IGR. To get this done, he said having increased the IGR from a paltry N300 million monthly average in 2010 to N1 billion monthly average as at 2017, next thing is to go a step higher.

From all indications, the Governor Rauf Aregbesola administration is now, more than ever before, determined to further increase the figure to N5 billion monthly by targeting the primary beneficiaries of its investments in critical infrastructure in the state.

In a recent chat with newsmen, the OIRS chairman said the investments resulted in the overall improvement of economic activities in the state, leading to increased production, job creation and a corresponding improvement in the standard of living of the citizens. Hence, the economy of Osun State grew from N110 billion GDP in 2010 to over N800 billion last year.

“The diverse economic activities in trade, transportation, energy, mineral, telecommunication, construction, agriculture and manufacturing boosted the GDP of Osun State, invariably reflecting in the growth of its IGR. This also debunks the claim that Osun State is a civil service state. Civil servants represent less than 1 percent of the 4.2 million residents of the state,” Alli said.

He explained that the state government is now set to harness various taxes from above 1,000,000 individual taxpayers and 27,000 corporate bodies, as against 62,000 individuals and 12,000 corporate bodies before the advent of the Aregbesola administration. These figures are expected to increase further based on the new interventions and investments by the Aregbesola administration, resulting in more tax revenues for the state.

Alli was emphatic that more tax revenue will accrue to the state government coffers from the proactive programmes of several tertiary institutions in the state. He acknowledged that the investment in human capital by the Aregbesola administration would yield bountiful returns in education tax, thereby contributing substantially to the state’s monthly IGR target.

In line with this, 277 model schools with 1,811 modern classrooms were built or rehabilitated and the schools were equipped with 62,922 sets of chairs and tables. Every school day in Osun, 253,000 elementary school children receive a nutritious meal produced largely by local farmers to boost learning as well as local production. The Osun School Feeding Programme is the longest running of its kind in the country. In six years, Osun has through its basic education agency invested over N8.5 billion to build capacity, both in human and physical infrastructure.

The state government has also made strategic investments in the training and re-training of over 26,591 teachers in 26 different training programmes and workshops. The investment in education, Alli said, is driven by the resolve of the administration to equip the future generation of Osun with the best possible resources regardless of their background, so they can seek a better and prosperous future for themselves and for the state. The beneficiaries will also subsequently be brought into the tax net.

Another area that is expected to contribute to the state’s aggressive IGR drive is the investment in transport infrastructure, which has begun to yield dividends. For instance, the transformation of Osogbo into a modern capital city with a modern railway terminus, the general urban renewal agenda of the administration, dualisation of major roads and construction of several township and rural roads have opened up new commercial corridors for businesses and real estate to thrive.

The state’s IGR drive is expected to be taken to another level with the Land Use Charge (LUC). According to the law establishing the Osun State LUC, “From the Land Use Charge Collection Fund, consisting of all land use charge payments deposited in designated banks, the share to be paid to each local government council shall be such percentage of the net land use charge on deposit, being 80 percent of the gross collection at the end of each month as agreed between the state and local government areas. The state portion shall be remitted to the General Revenue Accounts of the state.”

The LUC is considered a trump card by Governor Aregbesola because it has greatly boosted the state’s IGR. It aims at cutting down recurrent expenditure to match the growth of revenues for the development of the state. By empowering MSMEs through deployment of over N7 billion to 50,000 beneficiaries spread across 4,500 cooperatives and businesses, the state government has spread the tax dragnet to attract scores of market women, small-scale farmers, artisans and physically-challenged individuals, who are beneficiaries of the interventions.

The Osun Agency for Community and Social Development Project has also partnered with the World Bank, committing at least N2 billion on several social developmental projects to reach 1,073,129 beneficiaries in rural communities. The partnership is delivering 356 inclusive, gender-sensitive and multi-sectoral micro projects covering education, rural electrification, primary health care, transportation, and potable water provision in 263 communities across the state. Most of these businesses and individual beneficiaries are already captured in the tax net.

The efforts of the state government soon resulted in corresponding increase in investments and production in Osun State. Tuns Farms, an indigenous poultry company, in partnership with smallholder farmers, ramped up broiler production to position the state as the second-largest broiler producer in the country. Omoluabi Garment Factory, a PPP venture between Sam and Sara Garments and Osun State government, emerged as the largest garment factory in West Africa. RLG Adulawo, an indigenous computer assembly plant, also established operations in Osun as a result of the favourable infrastructure in the state. These investments created many jobs with both the organisations and their staff boosting the tax revenues of the state government.

The Aregbesola government has reportedly recorded a 760 percent growth on its investment base through diversification. This growth has been attributed to the state’s investment in oil and gas, modern poultry, agro-allied, and a host of other ventures.

That the N5 billion monthly IGR target by Osun State is realizable is incontestable. Renaissance Capital, an emerging markets investment bank in Africa, recently published a report listing Osun State among the largest economies in Nigeria. Osun State has also been ranked as the second less miserable and poverty-ridden state in the country for the year 2017, according to a report by Financial Derivatives Company released on January 1, 2018. The report, titled ‘How the States Performed in 2017’, stated that Osun had the lowest net FAAC allocation in the country but was not delinquent in the payment of salary arrears.

Between 2013 and 2017, The Oxford Poverty and Human Development Initiative rated Osun second-highest in Human Development Index among the 36 states in the country. In 2014, Rencap in its 36 shades of Nigeria economic review of states ranked Osun as the 7th largest economy in Nigeria, while in 2013 the NBS rated Osun as the state with the lowest poverty rate in Nigeria.

With the good outing of the Aregbesola administration so far, creating an enabling environment for investments and also providing critical infrastructure, it is not surprising that the state is so highly rated by independent observers. The goodwill has already reflected in the IGR growth trajectory, prompting the collective aspiration of citizens of the state as well as government officials that N5 billion monthly IGR is realizable.

Lekan Olagunju