Economic Confidential, June 2007

FOCUS ON KWARA STATE

ECONOMIC PRIORITY OF GOVERNOR BUKOLA SARAKI

An Interactive Session with Kwara State Commissioner for Finance. Alhaji Abdulfatai Ahmed on the achievements of the administration of Governor Bukola Saraki. It was conducted in May 2007

As the tenure of the present administration comes to an end on May 29, how has the state fared in the last four years?

If you look at the inception of this administration in 2003, one of the key areas the government felt that it could make a difference in what was already on ground was impacting on people’s lives and it led us to come out with a strategic planning process, which was put together in our State Economic Empowerment and Development Strategy (SEEDS). That process enabled us to look at the key areas the state required to make a difference in people’s lives in terms of human capital development, in terms of empowerment and also in terms of ensuring that key indices that is required to change people’s lives are put into consideration. Inputs were taken from all stakeholders and we were able to articulate the needs of the people into a documental process. And we were also able to isolate funding requirements to meet these key areas of developmental projections. You know very well that we have been faced with the challenges of not getting enough resources, but with what has been available we have been able to execute most of the things we isolated in the SEEDS document. And this has reflected especially in the areas of education. We have seen the development of areas, which have been forgotten in education like renovation of schools and improvement in the standards and ensuring that examination fraud was completely eliminated as well as cultism.

What other Considerations?

We also gave consideration to the equipment of teachers to support most of the schools. We set to grow the health sector too by putting a lot of emphasis on the primary health sector because we found out that most people did not have access to primary health care. Our attention went straight to developing the primary health sector by ensuring that health services are available to people within the nearest areas in the environment. We also focused on agriculture. Agriculture is one area, which we felt is the core competence of the state. So, we must take agriculture to another level and that level entails growing the commercial agric sector and also evolving a strategy to support the subsistent farming level. These two have existed hand-in-hand. The commercial farming sector led us to bringing in some white farmers from Zimbabwe, who have been settled in Shongai. Today, we are happy to let you know that we have been able to come out with one of the biggest commercial farming concept we have in Nigeria as at today. And we have a lot of confidence reposed in the system by investors who appear to us to be able to raise about N1 billion from the money market. These funds have come in form of debt and equity to support commercial agric farming. I will expect other banks to come in sooner or later. For now the farmers have come up with an integrated farming system, which has seen them go into poultry, mixed farming and fish farming and others.

How do you provide for subsistent farmers?

For subsistent farmers, we have been able to ensure that they are put together into groups and they have been able to access loans under the Central Bank of Nigeria ’s Agricultural Credit Guarantee Scheme to support the growing of cassava, which is one of the predominant crops we have here. They have gone into rice planting and will be going into maize and ultimately go into fish farming. It is interesting to also note that we have established an agric school in Malete. This is supposed to change the face agric business in Nigeria. We are moving away from an era where young graduates will leave school and start talking about going to white collar jobs; we are moving to area where farming will be taken as a key profession. It is one of the professions that should be seen as any other collar job. This is a school that is going to graduate the first batch of students within the next few months and we hope that these students would be supported under the Agricultural Credit Guarantee scheme towards getting the necessary inputs that will support them in their initial farming activities. It is a continuous process and I hope also that this would also help to grow and support subsistent farmers. These are part of the processes that the state government has put in place to ensure that we move agriculture to another level.

What are the other strategies you employ to help the farmers?

Part of the strategies we have put in place to eradicate a situation where farmers suffer glut during harvest is to ensure that whatever comes out of these farms get a lot of added value. This we hope will encourage the farmers to keep planting and also keep creating outlets for farm produce and farm products. Luckily a lot of commercial farmers are buying into the need to support farming to the next level, especially secondary and tertiary levels. With the re-election of the Kwara State governor, agriculture is expected to take a higher level from where we are now.

You identified funding as a major challenge in the implementation of the Kwara SEEDS documents. How have you been able to overcome the challenges of funding, and how much has been invested in each of the sectors of the state’s economy?

By and large, I am unable to give you the exact figure or what percentages we have been able to allocate to various sectors. But I know that one of the critical areas we found as challenging when the government came in is the issue of funding. Knowing fully well that we are in a civil service driven environment, we are heavily reliant on P.A.Y.E (Pay As You Earn) to support our internally generated revenue. One of the key strategies we did first was to re-engineer our internally generated revenue system. We looked at various processes and we created a new collecting process, which has led to a double of what we met on ground. We used to have about N64 million to N84 million on the average, and today we are on an average of about N150 million. We have not increased taxes; we have only plugged the loopholes. We have increased and supported our collection process. And also we have a good relationship with our commercial banks. We came out with well-structured feasibility studies, which we allowed them to see and they have been able to support us, at least from the money market funding level, to be able to achieve some of the areas we have been able to get done in the SEEDS document. This is because we have to work on an optimal utilisation of funds. There is no need for wastage. For instance, we have to calculate how much we have, where it can take us to, what is the gap and how do we fund it, and what are the kinds of financial instruments available to support these kinds of gaps. These are areas we have been able to work on and we have been able to work in consonance with the commercial banks. This support has led us to achieve most of what we have been able to achieve in terms of the funding requirement.

Over N15 trillion statutory allocations have been shared from the Federation Account among the three tiers of government since 1999. How much of these funds were allocated to Kwara State since 1999?

On the average our monthly FAAC allocation is between N1.1 billion and N1.2 billion. VAT hovers from between N100 million to N120 million on the average. Like I said we are in civil service driven environment, which indicates that a good portion of our allocations usually go into recurrent expenditure to support wages and salaries. We have evolved strategy funds management system, which has enabled us achieve what we have been able to achieve today. Otherwise, there is no way we would have been able to do it. Our salaries and wages take two-third of what comes to the state in terms of allocations from the Federation Account. Without the evolvement of a strategy funds management system and good rapport with commercial banks, we wouldn’t have been able to achieve what we have done in the last four years, especially in capital projects development. We have not been getting much support from donor bodies. We know the activities and politics that govern the inflow of foreign aids, so we were very careful about creating additional debt portfolio for the state. This is because we are already burdened with the repayment of foreign debt. So, we are very careful in creating additional debt, except we have specific projects, which we know will be able to support the return on investment.

As a member of FAAC, what is the situation on states’ compliance with the president’s directive for the release of Excess Crude?

Let me say that Kwara State has fully complied with the directive on details of how we intend to spend the excess crude. The details have been forwarded to the Revenue Mobilisation Allocation and Fiscal Commission. We already have our projects outlined in the SEEDS document. Every project we plan to do for the Medium Term Expenditure Framework has been clearly spelt out. For us, our documents and requirements for funding have always been put in place.

What are the projects you are spending the excess crude on?

We have access roads. Roads have been built and open in every local government of the state. If you go to any local government in the state, you will see the impact of the state government in roads, schools, hospitals, and empowerment. On empowerment, we have to ensure that entrepreneurial concepts are evolved and this has led to creating empowerment schemes along the line to support the growth of this area. Also, we have used part of the funds to support agriculture. Agriculture, as I earlier said, is one of the critical areas that we felt we needed to develop and we found out that we cannot do it alone. We came out with public private partnership concept, which we have used to support the development of agriculture. Also, we have housing estates, which the state government has built and is being sold to civil servants at an affordable price. We have been able to get additional support from the Federal Mortgage Bank of Nigeria to build houses, which will be sold to civil servants and other beneficiaries who are mostly contributors to the National Housing Fund.

The state governor and other officials of the state government during the last four years made series of trips to attract Foreign Direct Investments. How much of these FDIs have been attracted to the state?

FDI cannot easily come by through just making a trip. We have gotten support from Kwarans in the United States. They have been able to support us in agriculture, transport system and schools. The last time we went to California, we have been able to create a working environment between us and the California State to be able to support our agriculture especially. We are looking at the scenario where they will help us to create and support the Agric Mall. The State Government intends to come out with an Agric Mall. This mall is going to be private sector driven initiative that allows prospective farmers to come to hire or buy inputs used at subsidised rates and most importantly to have access to these things as and when due. This is because our farmers struggle to get bulldozers and other things. All these things will be available in the agric mall. We expect support to come for some of these things from the United States. We expect all these things to get to fruition most likely within the second or third quarter of this year.

What has been the concept of your government?

Let it be known that our approach to governance has always been public private partnership concept. We see ourselves as midwives. We create the enabling environment and invite them to do their investments. Gone are the eras where you expect the government or somebody to put down his money without seeing how it is going to be utilised. For now, our own concept is public private partnership. As the state government creates the enabling environment, we expect them to bring in their investments and create values for them. You can see what we are trying to do with the Cargo Airport. We are trying to make it work under the public private partnership concept.

It’s like agriculture has been left to the private sector in the state. To what extent is the Kwara State Government’s involvement in development and growth of agriculture?

Kwara State Government provided the first initial requirement for the white farmers from Zimbabwe when they came in. The requirement includes land clearing, access roads, electricity and water. The state government went ahead to help them to establish a special purpose vehicle (SPV), which has been designed in such a way that banks and other prospective investors have been invited to buy shares through strategic funds raising process. The purchase of these shares will reflect inflow of funds. These funds can now be channeled into the 13 farming entities. It is an integrated farming activity, which comes from the primary to the tertiary level. The state government also has a stake of about 20 per cent in the SPV. The other 80 per cent is expected to be picked up by prospective investors, mostly commercial banks. This is how the state has been able to come out to support the commercial farmers. Farming entities around these commercial farmers will also enjoy inputs from these farmers. The commercial farmers are to support the small farmers around them with inputs in terms of technology, fertilisers and harvest, among others. It is a way of extending services to the local farmers that are in Shongai. These are part of the support process that the state government also has done. But by and large, the key thing is to come out with an agro-allied system.

In the last four years of Governor Bukola Saraki’s administration, how much jobs have been created in the state?

The state government has created about 10,000 jobs. We have areas where we have empowerment schemes, where micro credits were made available to people who own GSM phone centres. We have areas where we have partnership with Peak Milk for instance. The company sent credits to retailers who come up with shops and we also have the same arrangement for sugar and so many others. We allow people to come up with schemes that will make them to be self-dependent. In Shongai Farm, there are so many labourers like 2,000 to 3,000 that picked up jobs there indirectly. We also have areas of direct employment from government where we employed people like teachers and nurses, among others. But, the most important areas are areas of self-empowerment schemes.

What do you regard as the development priority of Kwara State for the next four years?

We will basically go into consolidation in the next four years. You see four years is not enough to come out with a project that will change the lives of everybody. I believe the new administration will go into consolidation, especially in the areas of agriculture, health, education, and opening up access roads, so that there can be free movement of goods and services.

Besides allocations from Federation Account, how do hope you plan to source for funds to carry out your consolidation in agriculture, health, education and roads?

Our average monthly inflow in terms of revenue allocated funds is about N1.1 billion to N1.2 billion, while our revenue from Value Added tax (VAT) is about N100 million and N120 million on the average. Of course, we have pockets of investments. The state has also gone into major investment in stocks. These are areas we expect to support the growth of funds to be used for capital projects development in future. By and large, we have been able to get good returns on our investments. You have seen the movements in the stock market. We have stocks in Guaranty Trust Bank, Zenith Bank, Intercontinental Bank, and Access Bank. All these were bought at the primary offer. We expect that in the near future some of these stocks will be converted into investments.

What has Kwara State Govt done or is doing to remedy the power problems in the state?

There is a new power station that is coming up in Gana area of Ilorin, which will enable us to boycott Osogbo and allow us to have direct access to the transmission of electricity from Lagos area. Of course, our linkages with Osogbo have been part of our power problems. We hope to get an improved electricity supply once our power station comes up. Secondly, we had a memorandum of understanding signed sometime ago with a prospective investor that is coming in to have gas from Shagamu to Jebba. We expect the gas to come out with some electricity generating process, fertiliser-blending process and also to support activities in the Jebba paper mill. If that one comes up, we hope to generate electricity from gas. Thirdly, we are also looking at the option of solar energy. Some of our streetlights have been replaced with solar energy. The state government has spent about N112 million on the pilot phase of the solar energy. Solar energy saves you the problem of having to run hydro electricity. These are the areas we are working on to support power generation, which is key to industrialisation.

What is the performance of the State’s budget for 2007, and will the new administration go for supplementary budget to carry out the various projects you have highlighted?

Obviously with administration like this you expect to go for supplementary budget. First, our budget was premised on closing up on State Economic Empowerment and Development Strategy (SEEDS). This is because like I said in 2005 we had a Medium Term Expenditure Framework (MTEF), which we programme from 2005 into 2006 and 2007. So, 2007 supposed to be the closing term of that MTEF, but of course we have to do a budget for 2007. So, we expect that with the coming of a new administration, new concepts will come in and new State Economic Empowerment and Development Strategy like SEEDS 2. With SEEDS 2, this implies that you have to have a supplementary budget to support the new administration coming in and the new requirement in expenditure framework.

END