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The Edo State Economy in 2017 and Beyond: Exclusive Interview with Gov. Obaseki

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Tuesday, December 06, 2016 6:45PM / Ottoabasi Ekong & Team from Proshare WebTV 

Recently the Edo State Governor Mr. Godwin Obaseki granted Proshare WebTV audience in his first exclusive interview, to share thoughts on his economic plans and strategies for Edo State. Here are excerpts from the exclusive interview.   

Question 1: Congratulations your Excellency on your elections and inaugurations as Governor. First, we will like to ask given the past 8 years of the progressive government, our analysis show that your predecessor was able to achieved 10 out of 14 campaign promises to the Edo people, from our scaling it gives him a 70% mark. What is your take on this?

Answer: The last 8 or so years of the APC administration in Edo state has been one that has re-established the connection between  the people and government ,the previous regime as you  recall, they practically imposed leadership, people sat back they did not have to participate, I mean their votes didn’t count, in any electioneering process, the outcomes were almost predetermined.  

With the coming in of Oshiomole administration, the mantra was let the people lead and the people voted, their votes were discounted, he went to court and the tribunal reestablished in the government, that early development created the nexus, very strong nexus between the people and government.

That process itself also restored the confidence of the people in government, people will now began to believe that government, that they contributed to bringing  the government in power and that government should work for them and the actions and steps taken by the administration at  that time further helped concretize the confidence  between the government and the people.

Because of that renewed connection, you know of one man one vote let the people lead, you then found out that it gave government the impetus to make certain bold decisions. For instance, the issue of getting people to pay for development taxation. 

As I will explain later, one of the things you found was we were able to move internally generated revenues from a paltry N300ml a month to about N2bl a month. because people had faith that it was their government and they responded accordingly. Also when we started the infrastructural renewal in rebuilding the roads, it meant that in some cases we had to demolish some properties to give way for the road expansion and because people believed it was their government, we did not have one citizen go to court challenging government action.

So that connection between government and the people helped give courage an impetus for the development trying to solve in the first few years of the Oshiomole administration.  

Question 2: looking at revenue in the past 8 years when we look at FAAC allocations and IGR, IGR in particular,Edo  state  has earned 80bl naira .with the recession, how do you plan to ensure sustainability in a public finance system.  

Answer: Don’t forget that I have been chairman of the state, Economic and strategy team so I have been one thread running through this administration since the beginning, so I understand very clearly what we did, how we had to build confidence in our people to pay taxes, how we built confidence in international and multilateral organizations like the World bank that then let us to have a budget support facility. 

Lagos state and Edo state are the only two sub-nationals on the continent of Africa that enjoy this facility. We have a three year budget support facility totally 225ml dollars withdrawn down two tranches, 150ml we have one more tranche to go. 

So how do we intend to sustain ourselves financially? we believe that as we expand the tax net because currently there are only 160,000 taxpayers in Edo state out of the population of almost 5ml, we believe that if we expand that and get the tax net to be more inclusive, we should be able to increase the revenues of tax being collected particularly if we make the process a lot more humane and friendly which we intend to pursue.   

Our goal is to further accelerate what we have accomplished because when we came in 2009, the ratio of IGR ,internally generated  tax revenues to  FAAC account was  10% to 90% that is 10% IGR and 90% FAAC  allocation. Today, it is 25% IGR infact, few months ago it got as high as 50% IGR and 50% FAAC. 

Our goal at the end of this administration is to reverse the trend such that 75% of our revenues will be obtained from internally generated revenues I know it would depend on external sources of the federal allocation for only 25% of funding we believe that will make our development more sustainable.

How did we intend to accomplish that? by opening up the economy pace, we have seen a window of opportunity with the recession, as the country faces a challenges of obtaining foreign exchange, it will therefore mean that there will be a lot more local sourcing and we begin to see that, so we are positioning ourselves as a hub, as a production hub for local sourcing particularly agro based products.   

Question 3:Governor Obaseki, we would like to know what will be the top three economy pillars that would anchor the economic blueprint for Edo State

Answer: We are truly blessed in Edo state because we have some key competitive advantages. The first advantage that fits you is our location, we are the heartbeat of the nation so all the national infrastructure be the road, be the electricity, transmission, be the gas transmission  network ,they all have pass through Edo state. 

That offers some advantages and we are  taking one of the advantages particularly focusing on electricity because of the availability of gas, by the way Edo state has the largest  onshore deposit of gas, so the gas collection network in Ugbeli is in Edo state and it helps one and two of the main pipelines that carry gas through the nation passes through Edo state. 

Coincidentally also, the transmission network ,Edo is a transmission hub and to generate electricity it is input and output  we can get gas to fire turbines here and we can evacuate because the lines  pass through here. It costs you a $1ml per km  of gas-lines and about the same  $1ml km per transmission line, but in Edo they converge which gives us a competitive  advantage in the generation of electricity.

So currently there is 450mw plant that complete waiting for gas and there is another  450mw plant being constructed by Azura which the State government helped to incubate. So our strategy  is going to  hinge on electricity, industrialization and services.

So in the case of electricity, we are opportuned to also have a major distribution company  here and that strategy is to focus on  large generating projects like  Azura and there are few  emergency plants  that are now been originated by the Federal Ministry of Power. We also will focus because of the availability of gas on embedded distribution projects and also dedicated distribution projects.  

We have key competitive advantage in Agriculture, in the Agriculture space,  we are focusing on agro-business, we are ensuring that we focus on large scale commercial farms as we know some of the largest plantations are in Edo state. Okomu is located in Edo state, Presco is located in Edo state, Rubber estate formerly Michelin is in Edo state,  we have the benefit of a palm oil research institute, we have the benefit of rubber research institute. So there is a solid base for large scale commercial farming which exist and we are leveraging that base to encourage and attract other investors on that scale.

But to take full advantage of that, we are also focusing on  out-grower schemes,  these out-grower schemes are going to be supported by off take contracts because we are not just going to ask our small scale farmers to go and farm without knowing how much and who is going to buy, how much they are going to sell their products for and who is going to buy.

So we will be  emphasizing  out-growers linked to this large  commercial farms  who will offer off take contracts. We will also be leveraging on  all the several initiatives to support  agriculture like the tractorized Edo project. We are going to have mechanized farming centers, we are going to have agronomic services and like I said because we have large plantations already. Some of these services already exist.

We are also going to be focusing on the extractive industry, don’t forget in the North of the state, we have rich limestone deposits and that is what has attracted 2 cement plants in a place like Okpella, there is BUA and then Dangote is now constructing a new 6ml tonne and then you  have plenty of other minerals , thanks to the reforms being carried out by the new Minister for Solid Minerals, we are fine-tuning our own internal plans to take advantage of what the Federal Government is doing. 

We are going to take advantage of our location to also develop the logistics business because what we are three hours away from a 30ml market, so from Benin is three hours from Lagos, three hours from Port Harcourt, two hours from Warri, one hour from Onitsha and things like that. So we want to reposition Edo as a logistics hub for distributing goods across the country.

Question 4: How does Edo State plan to work with the Nigerian Capital Market, in the areas of a) Raising Capital for the state where necessary and b) Supporting businesses in Edo State   

Answer: From a government perspective, we are going to strengthen our  balance sheet and be in a position to access the market as and when we need financing, as you know we currently have a bond, a N25bl 7-year bond which matures next year. Once we get that off our books we will look at the situation in the market and see if we want to raise another bond.

We believe there are opportunities to raise revenue bonds and infrastructure bonds, that is money tied to specific projects with defined cash flows. We will be looking at all the transactions that are available in the market and in our state, to see how we can introduce them to the market. We are also going to be looking at innovative ways of financing small and medium scale businesses, if you recall we are currently enjoying a N2bl facility which we have distributed across the state using some MFIs. 

The payment on that facility is very very  good and interesting  and we believe that if we can show these as a proof of concept, we can demonstrate that the cash-flows from these set of  MSME transactions are good, we hopefully can maybe by  providing some guarantees or some support get  going to the market and raise more money, to support small and medium scale businesses. The arena of possibilities are so huge that key and most important thing is get your balance sheet right, build confidence and then the markets will be open to you.     

Question 5: Governor Obaseki you have an Ambitious plan to create 200,000 jobs in the next 4 years, can you briefly share with us how you intend to achieve this? 

Answer: Well bulk of these jobs will be created from and by the private sector and the role of the government will be to provide the enabling environment for this to happen, and we have already seen it. Where will the jobs come from? from the areas I have mentioned agriculture for instance, currently between the 3 large estates they have under 50,000 hectares of land under cultivation.  

Our goal is to put between  200-250,000 hectares under cultivation in the next 4 years, which is huge. We have actually allocated about a 150,000 as we speak to about 10 large scale farmers. If and when they commence execution or implementation of their programs, which we have approved; assuming that 5 people work on a hectare as a tractor driver, a farmer for 50,000 hectares alone which is nothing, you have created 200,000 jobs. 

Aside from the industries, that will emanate from the availability of electricity, once people know this, they will locate and utilize that resource and by October next year Azura will be on stream, that is an additional 450mw of power.  So it is about encouraging private business and the key here is to make them feel safe, create a secure environment, create an environment where you have well-trained educated manpower. Those are the other things we need to build, which businesses need and we have no doubt in our minds, that we can be the haven, where businesses locate to.

Question 6: How do you intend to push your Industrialization drive for Edo State  

Answer: If you think about our national economy today, we spend about $15bl importing food items. With the scarcity of foreign exchange, the scarcity does not curb the demand it is real and exists.

We believe that if we create that enabling environment people will locate and produce here and I will give you an example of the Guinness plant, we commissioned last week. It was a spirit line and you know Diageo is one of the world’s largest producers of alcoholic spirits.  

That line will require a certain amount of ethanol and spirits, to blend the products. Ethanol either from sugar or cassava and so right there, there is a ready market for ethanol which can be made out of cassava. You can go on and on, because before now you are satisfied with supply from imports, with scarce foreign exchange people will be forced to look inwards and already are.

The other area will be of services, because we have looked and said What do people spend money on? we spend money on food, education, and so what we are doing is we are trying to renew our school systems. We are building or commissioned a state university in Iyamho, the infrastructure in that school is world-class and what we intend to do is for us to have a PPP(Public-Private partnership) in education.

We intend to take a school like that and partner  with a world-class university. So that some children who go abroad you know we spend almost $2bl every year paying school fees abroad, can now look and see that there is a local alternative. 

That you can send your children to a school like Edo State University and the school will have as great a faculty, as the ones in Europe or America and it will be much cheaper than sending the kids abroad. So education is another space. 

Third is Healthcare, I don’t know if you have had the opportunity of going through our five-star hospital. The infrastructure in that hospital and the amenities rival any you will find anyway in the world. We also want to PPP , have Public-Private partnership on that facility and such that people don’t have to go to places like India or Europe, to get medical care. Thanks to technology in medicine today, once we can have reliable partners then we should be a good market for healthcare.

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