• Friday, December 08, 2023
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We’ll grow Osun IGR to N1bn monthly -finance commissioner


Q:Talk us through how your state government is generating huge revenue in a state hitherto thought to be too poor to raise reasonable internally generated revenues.

Government policy is to determine the amount of raw materials that will be bought within the state. What this has done is to increase the income generating capacity of the people of the state. Companies operating in the state have increased their monthly turnover. One of these companies makes close to about N200 million turnovers monthly. Initially, it was paying N5 million monthly as tax, but as things improved, its tax has risen to around N16 million every month. They now employ more people.

In terms of turning around the economy of a dead state, the governor has already explained to you. But the key word is that we are using the fiscal policy to drive economic growth. This is so because the monetary policy is in the hand of the federal government, there is nothing we can do about it for now. What expenditure should you make? How do you use expenditure to distribute wealth?

You have seen the path the governor has taken which is to increase the income level of the people. In terms of social service, we have OYES. Some of the participants have been trained to be self employed in skills including the repair of laptops, computers, etc. What we are doing is to domesticate the economy of Osun. We have an investment in a garment factory. When the company grows, we can exit or leave it for the incoming generations. The company will employ about 3,000 tailors.

When we talk about reengineering, it is about a process. He talked about restructuring the bad debts we met on ground. He also talked about deficit. The reality is that revenue always lags behind the expenditure. You need to create jobs, open up roads so that farm produce can get to the cities, and enhance more commercial activities.

There is an economic indicator from the Federal Ministry of Planning that shows that food prices have been stable because of the intervention programme in agriculture. A lot of money is going into the agricultural sector in terms of credit to the cooperatives, which the cooperatives guarantee to their members and help to put in place self regulation on the lending.

Revenue reengineering goes along with expenditure reengineering which means the two have to be addressed. Therefore, we have blocked leakages in the areas of salary payment, expenses, pension and gratuities. We know how much we have saved. We automated pension and gratuity payments. As at now, if you want to pay tax, you will have to approach a bank and by so doing, the tax payer makes the money instantly available to the government.

We have removed the middlemen who usually keep and play with the money. As soon as they pay, they receive their automated revenue receipts. Your revenue growth determines the extent to which banks are ready to support deficit financing. I see internally generated revenues (IGR) growing to N1billion monthly soon.

We are trying to gauge our IGR ratio. Our IGR penetration ratio, i.e., revenue as a percentage of the GDP, was well below regional average of two percent. What we have done was to take the ratio to South-West regional average, and from there we became the most efficient state in terms of IGR generation which is 4 percent.

In the last 20 years, the state has never bothered to check whether those deducting employees’ taxes remitted it into government coffers. We have stopped that through the tax audit and that assisted us to know the exact tax each employee should be paying.

Our state is not on the list of states that are heavily indebted. What we did was to create derivative financing. That concept means that you are not carrying it on your balance sheet just as we are not paying for it. If you award a contract that will last for about three years, you will spread the payment by issuing a promissory note. The contractor takes the promissory note to the bank who will buy it. That gives the banks the opportunity to participate in government activities.

We have tarred about 500 kilometres of roads in the state. The essence of this is to renew our urban centres and increase the standard of living. The construction has reached advanced stage on Ilesha and Gbogan roads. At present, they are about 90 percent completed, and funded by our savings. There is another road that if completed will put the state as the central market between the North and South, that is Kwara road, which we have completed at the cost of about N78 billion.

You mentioned the state’s GDP, how did you come about this?

We used secondary data provided by a researcher, and at that time it was N758 million.

Your current budget projects an IGR of about N19 billion by year end, what was your IGR as at the end of first term?

As I said in my earlier interview, we were in the range of N1 billion monthly. But this year, we want to realise about N1.5 billion monthly which translates to what you saw, and next year we will move to N2 billion.

What public private participation projects are available, what percentage are you willing to give out?

It depends on the project. The Omoluwabi Garment we have done was also a Public-Private Partnership project. You know all over the world, government does not know how to do business and so, it is better to allow the private sector to take the lead.

We want to attract the private sector to the state as we want them to develop our tourism sector. We want them to develop tourism. We want to develop Tourism Park as well as the tourist spring in the state. There are other tourism areas but those are at the front burner.

The Osun-Osogbo Groove has been adopted by the United Nations Education Scientific and Cultural Organisation (UNESCO), whatever we are doing is to complement their efforts. A pavilion is now there and some other facilities. All these are meant to make the tourist comfortable.

What does Osun – Osogbo festival contribute to the state’s income?

It has improved our hospitality business as the festival attracts about 400,000 tourists. We now have 2-star hotels. We are encouraging Sheraton and Protea Hotels to come into the state. We are doing a free train services for our citizens during the festivals. If an average tourist spends N1,000, you can estimate how much will come to the state during this period.