A Call for a Collective Change of Mindset in Managing States Affairs: Lessons for Sub-Nationals

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Thursday, December 16, 2021 / 09:17 PM / by Prof. Yemi Osinbajo / Header Image Credit: StateHouse

 

Being the keynote address by His Excellency, Prof. Yemi Osinbajo, SAN, GCON, the Vice President of the Federal Republic of Nigeria at the Ekiti Investment and Economic Summit (Fountain Summit 2021) themed "INVESTMENT ATTRACTIVENESS and ECONOMIC DEVELOPMENT: LESSONS FOR SUB-NATIONALS" on the 14th of October, 2021


 

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Introduction

 

Governor Kayode Fayemi, thank you very much for the kind invitation to join you at this 1st Investment and Economic Development Summit and the third anniversary celebration of the government of Ekiti State. Congratulations! Accept my gratitude for the warm and generous hospitality of Her Excellency, Erelu Bisi Adeleye-Fayemi, and yourself to me and my team today as always.

 

I bring you and the great people of this State - the Fountain of Knowledge - the very warm felicitations of President Muhammadu Buhari, on this auspicious occasion of the third-year anniversary of your government. As you know, President Buhari has a special interest in this State being that your dynamic Governor is actually on loan in the second coming from the Federal Executive Council chaired by Mr. President.

 

The theme of the summit is an important one "Investment Attractiveness and Economic Development: Lessons for Sub-Nationals."

 

The economy of the sub-national is a peculiar animal. The State within the Federation is not a nation, but it must behave like one, it derives some resources from the federal pool, and generates some income; the sum will provide infrastructure and services to the community. The size of the sum and the quantum of opportunity available to provide livelihoods for the populace will depend on how the State enables local and external investors, small and large to put their resources into business and commercial activity business in the State.

 

The funded portion of the State's budget is after all a mere fraction of the sum total of economic activity or income-generating activity, formal or informal, within the State. So, the attractiveness of a State to commerce is a radical issue. The very lives and livelihoods of the people within the borders of the State, whether the people will live prosperous and happy lives, be educated, have access to affordable medical care, depends on it.

 

There is no question at all that Ekiti has established the foundations for a modern and thriving economy. The fundamentals are there; a modern, strong, consistently improving legal and Justice sector, with forward-looking laws, which include a contemporary administration of Civil Justice Law, a first-of-its-kind Sustainable Development Goals law, a Tourism and Hospitality law, Property Protection law, a 2020 amendment to the Ekiti State Board of Internal Revenue Law, which amongst other provisions, enables the service to collect all taxes due to the State Government and all the Local Government Councils in the State under any law through a centralized electronic payment platform. This is important for two reasons; the first is that it decentralizes payment and does so electronically, but also, it takes directly to the question of the bane of multiple revenue collectors and multiple taxations.

 

Also, a business-friendly environment with Ekiti ranking 18th overall out of the 36 States and the FCT in the inaugural edition of Nigeria's own homegrown "Subnational Ease of Doing Business Baseline Survey." The survey was commissioned to serve as a status report on the current attractiveness of business environments of States for small and medium-sized enterprises.

 

Ekiti State was strongest in the Skills and Labour and Infrastructure & Security indicators where it had an average score of 5.35 and 5.05, respectively. Also, in the last World Bank Doing Business sub-national survey on Nigeria released in 2018, Ekiti excelled in the area of "Dealing with Construction Permit" ranking 4th in the entire nation.

 

This is a State that has vast arable land for agriculture and its value, chains, a modern strong, and effective media and public communications system, an experienced CEO of the State, Governor Fayemi, whose academic, civil society background, (and we will leave out the outlaw days of NADECO), excellent relationships with international donors and DFIs, his experience as second term Governor, one-time Minister of Mines and Steel, and as Chair of the Governors' Forum, whose important experience in extracting benefits for the States from the Federal Government; all these put the State at a distinct advantage.

 

So, the evidence is compelling and significantly, there is a commitment to a private sector-led economy, and this is important. Business is, if you'll pardon the pun, the business of the private sector, governments should as much as possible facilitate, or at best, collaborate.

 

An excellent example is the formerly State-Owned, Ikun Dairy Farms at Ikun Ekiti, after 40 years of inactivity, the State Government divested 76% of its shareholding to a private dairy company, Promasidor, resulting in a company that is now producing over 80,000 litres of milk per month from a herd of just under 500 cows.

 

There is also the recent concessioning of hospitality facilities such as the iconic Ikogosi Warm Springs affirming the same principle. This is a very important principle, the idea that it is the private sector that really should lead the economy.

 

Some years ago, in 1999, when we assumed office in Lagos State, at the time the previous government had sold majority shares in Eko Hotel and when we got into office, we were very angry. We tried our best to get it back, we went to court. About a year into our court action, the Minister of Finance called me (I served as Attorney-General) and said to me that the new shareholders were prepared to pay some dividends. I said no, we shouldn't accept anything from them because they might go back to court and say that we had conceded the case. But the finance minister said, "why don't you listen to how much they want to pay first?" When I heard how much they wanted to pay, I said he had to take it immediately!

 

The truth is that after many years of Lagos State owning majority shares in Eko Hotel, we had made no profit and we had spent at the time, millions up on till the time we took office in 1999, just trying to make that hotel work. Today, it is a thriving business and Lagos State is earning significant dividends from it. I'm sure His Excellency, Governor Babajide Sanwo-Olu can confirm. So, the private sector-led model is the best and I think this is absolutely the right way to go, as the Governor as indicated.

 

There are several investments in the agro-allied value chain, JMK Foods, an integrated rice mill, FMS Farms, Promise Point, and Arog Limited, all with starch and ethanol production plants using cassava feedstock; and Egbeja farm, an export-focused snail farm.

 

And there is a growing tech start-up ecosystem with companies like Kinplus Technologies, a software and web development company, building applications and enterprise promotion software, and is also focused on talent development; and JM Tech Centre, a research and technology institute recently launched in Ikun Ekiti. All of these are thriving and modern businesses that are functioning here because the environment has been provided for them to succeed.



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Your Excellency, two Saturdays ago I represented Mr. President at the swearing-in of the new President of Sao Tome and Principe. As I sat in that well-appointed hall and took in the solemn grandeur of the oath-taking of the new democratically elected President, I reflected. Here was a country whose GDP is $472million, and it is a nation, it has one vote in the United Nations as we have. Ekiti State has a GDP of $2.8billion, 5 times the size of the GDP of the Nation of Sao Tome.

 

But it's not just Sao Tome, Ekiti's GDP is higher than that of the nation of Gambia. Gambia has a GDP of $1.902billion, and also Cape Verde with a GDP of $1.704billion, or Seychelles, the lovely tourist destination Nation, with a GDP of $1.125billion. Ekiti's GDP is about the same as the GDP of Liberia which is $2.95billion.

 

The Nigerian sub-national (and we are talking about Ekiti, not even Lagos) is indeed a peculiar animal, even a relatively small State like Ekiti, small in terms of population in particular and even in allocation from federal revenue, has a bigger economy than many African nations.

 

So, the hopefully useful point to be made is there has to be a collective change of mindset. Thinking differently, there is a need for a sub-national to think like a sovereign State. You have a bigger GDP and even more revenues than many nations.

 

I was talking once to a President of a West African country with a total population of 5 million and I told him about our home-grown school feeding programme where we feed 9.6million children every day. He said to me, "bro, come and feed us now, we are only 5 million, you can feed all of us every day if you want."

 

So, the question the policymaker should ask is, what if I were a landlocked nation? How will we survive? There is a different mindset when you are sure of a monthly allocation of cash at least enough to pay salaries, whether you generate income or not. This is the challenge. The so-called Dutch disease, one becomes complacent. But what if you had to take responsibility for all those who reside within your borders, pay all salaries, from Internally Generated Revenues (IGR)?

 

Sometimes a shock is what you need. That's what happened to us in Lagos. I am sure that we all know the story, Governor Fayemi was very much a part of those who thought through some of the issues then. Lagos was happy with its allocations, we started off with 600 million a month in 1999/2000, until then-President Obasanjo withheld our local government funds, and did so until he left office, even after the Supreme Court ordered the release of the funds. So we were compelled to think like a sovereign State.

 

We moved to re-engineer our tax office (much like what the State Government is doing here in Ekiti), and our lands registry, our own oil. From an IGR of N600 million in 1999/2000, Lagos does almost N45 billion a month today and targets 60 billion by next year, I'm told.

 

I think the way surest way forward is to deepen investments in niche areas or the areas of Ekiti's comparative advantage. We have already noted the tremendous potential in agriculture and dairy, but clearly, the way of the future, especially for the huge population of young men and women seeking good-paying jobs, is technology.

 

And I think you are in the flow of progress with the planned establishment of the Technology Special Economic Zones. Clearly, the future of fast-growing economies is in the knowledge economy.

 

Every day we are beginning to see the transition, as Shimon Peres, former Prime Minister of Israel said, "from the age of territory, we are entering the age of science; land size, natural resources are forced to give way to science and the knowledge economy. Science has no borders, land has borders, and visa and other immigration restrictions. Technology has erased borders, even physical offices."

 

Young men and women in Ekiti can work from here and earn world-class wages. This is why the planned investment in the Ekiti Knowledge Zone is strategic. And it's exciting to see that the plan is to use business process outsourcing as an anchor. It is designed to be a service-led SEZ, a digital technology hub, leveraging its proximity to 5 tertiary institutions. This is if one may borrow the term, the future of jobs and we must commend the farsightedness of the State Governor and his team for determining that technology as the knowledge economy is the way to go.

 

However, for a digital SEZ to be successful, it must be attractive to digital companies; that means there must be high-quality, well-trained local talent. I'm glad to hear already that on account of the reduction in charges for laying of cables for broadband connectivity, the State is already attracting investments in the laying of cables. That I think is fantastic because it is an important component of the knowledge economy in using that for commercial purposes.

 

The CEO of Apple Inc, Tim Cook was asked why his company was investing in China. He said and I quote: "The number one reason why we like to be in China is the people. China has extraordinary skills. And the part that's most unknown is there are almost two million application developers in China that write apps for the iOS App Store."

 

Gone are the days when you could argue that you should be an attractive destination for investment because you have cheap labour. Today well-trained technology and innovation talent is the game-changer.



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So, there are three keys to the knowledge economy which in my opinion is the future. The three keys are education, education, and education. It would, therefore, be very important for Ekiti State to leverage its famed love and passion for education by focusing on Science, Technology, Engineering and Mathematics. I think Ekiti has not lost that edge and this is the moment, I believe, to refocus on STEM education.

 

STEM education is vital for being able to participate in the 4th Industrial Revolution which is at once a digital age and knowledge age. This must be the fountain of the knowledge economy.

 

Of course, education is not only at the high end but also requires a strategy for imparting of technical and vocational skills to artisans. The importance of having a pool of healthy, well-trained workers such as electricians, fitters, mechanics, laboratory technicians, welders, machine toolists, and even web designers, is vital for an ecosystem that will be attractive for technology and innovation investments.

 

Happily, Ekiti State has the highest score amongst all the States in the Technical and Professional Skills category of the Ease of Doing Business Rankings, so there is certainly a strong foundation to build upon in this regard.

 

But I think there is more to leverage, for example, there is tremendous potential for the development of a whole medical education and healthcare industry around the huge private investment in the iconic Afe Babalola University and the ABUAD multi-system Teaching Hospital. I know that the State was helpful in providing access roads and some other facilities to the campus. Today, ABUAD is getting mentioned internationally for the complex surgeries being done there a variety of cardiac surgeries, neurosurgery breakthroughs in skull-based tumors surgeries, spine surgeries, even a special type of neuron surgery called Awake Neurosurgery, where the patient is actually awake while operating on his/her brain.

 

Many countries of the world do not have the number of medical talents assembled in that hospital alone. There are huge opportunities here and I believe that we must tap into those opportunities also.

 

Let me close by commending Governor Kayode Fayemi and the excellent team that you lead. Your Attorney-General, my dear friend, was with us leading a team of Southwest Attorneys-General after showing us all he had done in Ekiti State, I had to remind him that he actually comes from Ogun State, but he would argue about that!

 

Governor Fayemi, I must commend you for leading a focused and value-sensitive, modern, and informed approach to governance. So much has been done, but always much remains to be done. On your third anniversary in office, I pray that you will finish well and finish strong and this State and its great people continually enjoy peace, and prosperity.

 

God bless you all, thank you.

 

 

About the Author

Professor Yemi Osinbajo is the Vice President of Nigeria.

 

 

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