Osinbajo to Govs: Think beyond 8-year cycle

…Says state govts must think, plan like countries in order to be financially viable
…Govs must not wait for constitution amendments to harness potentials in their states’
…States must be productive entities to ensure economic growth – Duke
Vice President Yemi Osinbajo, on Thursday, admonished state governors in the country to think beyond four or eight year tenure by laying solid foundations for their successors to build on.

Osinbajo also urged state governments to think and plan like countries in order to be financially viable, as he observed that states and countries have similar problems.

The Vice President gave the advice at the 2018 LEADERSHIP Conference and Award in Abuja with a theme titled: “Towards financially viable state governments”.

Speaking on the need for new narrative, Osinbajo said: “Governors have to think beyond four or eight year cycles. There must be a commitment to laying a foundation that our successors will build on, and for successors to be ready to build on foundations laid.”

Osinbajo, who was the keynote speaker, explained that the country is heading towards a time when states should be competing against each other for big investments.

He noted that governors must not wait for constitution amendments or restructuring for them to begin to harness the potentials in their state.

He said: “States must behave as countries as the dynamics of success are changes. We are heading towards a time when our states would be competing heavily against one another for big ticket investments. It is already happening elsewhere in the world.

“Think about what this development would mean for Nigeria soon. When company makes important decisions about citing their business primarily based on how easy it is a state makes it for people to do business in it.

“States can make it easy for investors to acquire land, to register property, to pay taxes, to access broadband internet and would declare winners while states that make these things difficult impossible for investors will languish as the world carries on without them.

He emphasised that if all of these sound theoretical, consider that information and communication technology, which of course does not require natural resources for location, contributes about a tent of Nigerian GDP already up from negligible levels less than two decades ago.

Osinbajo observed that the telecoms sector has attracted $70 billion in foreign direct investment in the last 16 years.

He said that is the size of the economy potential they are talking about and they can take their business anywhere once infrastructure is right.

The vice president said the access to broadband is worth highlighting as an example of how states can make decisions that can make or mar their economic future.

According to him, this is an issue that is frequently debated at the National Economic Council (NEC), noting that the argument was that states should not charge prohibitive prices for installing fibre optic cables.

He said: “That is good as the country is in this time should be covered with broadband as an investment in our future.

“The alternative of course is for state governments to look only on how it can maximise today’s revenues by charging exorbitant fees for broadband installation.

This will be case of penny wise, pound foolish; short term gains at the expense of future potentials and profit.

“In the future, and that future is right at our door steps as states will strive or suffer on the strength of things and how fast and cheap the internet is.

“There must always be the temptation to prioritise raising IGR at all cost but if this is done in a manner that stifles today’s entrepreneurs and investors, then clearly there would be great price to pay along the line.

Recalling the six years of the late Chief Obafemi Awolowo government as Premier of the Western Region which is often cited as one of the most progressive of any government in the developing world, Osinbajo said the government devoted as much as 42% of 1958/1959 recurrent budget for education, one of the highest in the world at the time.

Disclosing that the states in the entire Western Region aside Lagos, do not earn enough in taxes to pay salaries let alone do major capital project, Osinbajo noted that without federal allocation, most states cannot survive.

He observed that the problem of the state is not different from that of the federal government; a complete reliance on a source of revenue that is extractive, and so requires no creativity and productivity and whatsoever.

According to Osinbajo, “Most resource rich nations and subnationals in developing worlds, end up being poor and financially unviable because making easy revenue from extractive source is habit forming. The habit of easy money without effort, thus few jobs are created because there is no value added.

“You have countries like Japan, Singapore and South Korea with no with significant natural resources and they are one of the most successful economies in the world because they create enough jobs for most of their population.

“This is possible because financial viability is based on innovation and productivity. Productivity means adding value, not necessarily possessing the resources but adding value to the resources, even if it means importing the resources.

“I think a lot of the answers to the challenge of creating financially viable state government are the same as the problem of creating a financially viable country or nation states.

The Vice President further explained that many of the same principles that work for a national government, will also work for a subnational government, saying one of the priorities of government of today is diversifying their revenue base through taxes and blockage of most of the leakages.

He further disclosed that the federal government has been able to increase from the 14 million tax payers out of the 70 million economically active Nigerian citizens to almost 20 million.

On creating an enable environment for business, Osinbajo said it is another must do as the administration has pursued this goal aggressively since 2016, saying that, “I am pleased to note that we have already started seeing the results. We have reduced business registration times, we have implemented a functioning visa on arrival system, lunched an online system for value added taxes and other reforms.

“By dismantling bureaucratic obstacles in the way of businesses and investors, we are hoping to unleash the full potentials of private enterprise.

Osinbajo pointed out that the kind of enterprise that creates jobs and grows the economy, produces future tax revenue for government, saying on account of these reforms, the World Bank has recognised Nigeria as one of the top 10 most improved economies in the world, citing the business climate reform in the country.

Also speaking during the 2018 LEADERSHIP conference and award in Abuja, former Governor Cross River State Governor Donald Duke bemoaned the inability of states to be self-reliant and to provide quality living standards for its people.

This is as he warned that the country faces an uncertain future, should nothing be done to re-vamp the economic mechanism.

He also noted the need for the extension of the derivation formula to all revenues, saying there is a strain on infrastructure to generate revenue.

Speaking on a theme titled, “Towards financially viable state government”, Duke said the country needed a system where both Federal and state governments thrive on the prosperity of its people based on structures put in place.

He said: “States need to be able to generate revenue and derive something from that; if you are going to sustain it, you will also have to support it so that it is sustainable.

Take a state like Gombe, it has Ashaka Cement Factory, something goes to Federal Government for that investment, something should also return to the state because the state will be involved one way or the other, in providing infrastructure even if it’s for the evacuation of cement.

This makes states have a stake in developing their economy even more than is being done today.

“I once advocated for this derivation formula in the Constitution should extend to all revenues not just natural resources because there is wear and tear on the infrastructure to generate the revenue.

“Each state in Nigeria can and, ought to be financially viable not just being a political entity, it must be an economic entity.

“Unfortunately, there’s really been no time out instructing states that you either tow this path or you are out of it; the time out caller will have to come from the Federal Government giving the window, 10 years, each of you go back, sit down with your team and formulate what you have comparative advantage over others and develop it.

“We need to have a system where states and the federal government thrive due to the prosterity of their people and not in spite of it because this rent-seeking economy that we run not only affects the states, it also affects the federal government.

“The federal government is abnormally poor; only about 5% of our budget is reflecting in our GDP and it ought to be 20-25%. So, great numbers are not collected because we’ve not been able as a nation-state to extract revenue through taxes or through the prosperity of the people themselves in creating wealth”.

Duke said while some states may seem to be doing well as per infrastructure, their major goal should be an improved quality of life of the people as well as change their economic system.

“States also have to ensure that the prosperity of the people is the number one objective in governance. Each state must be a productive entity able to not only fend for himself but also contribute to the national purse; this is not happening and it will not happen until states are forced to make it happen.

“In another 30 years, we will be the third most populous nation in the world after India and China; if we do not change the trajectory of Nigeria today, you can imagine what we will be in another twenty years.

“If we think what is happening is a problem, compare it to what will happen in the future, it’s a child’s play when you do.

“You will have governors that will leave land mass here and there but do they have the resources to impact on the quality of living of the people that they govern,” he added.

Meanwhile, the Chairman, Leadership Newspaper Group, Sam Nda-Isaiah, has said that the personalities conferred with Leadership Awards deserve commendation due to the rigorous and thorough measures their nominations went through before they emerged.

The Leadership chairman, who said this on Thursday while delivering a welcome address during the Leadership Conference and Awards Ceremony at the International Conference Centre, Abuja, said the organisation has painstakingly maintained the integrity of the awards and ensured that only those who meet the rigorous selection criteria emerge winners.

According to Sam Nda-Isaiah, it is due to the consistency maintained of the credible process of selection of the Leadership award winner since 2008 when it began that has made it to be the most prestigious in the country; just as it is also the most credible.

He said, ’”The internal work that threw up this year’s winners was no less thorough. I take this opportunity therefore to congratulate all the winners in their different categories.

‘’Every year during this ceremony, we choose a very germane and contemporary theme. Our theme for this year, “Towards Financially Viable State Governments”, cannot be more fitting’’.

Nda-Isaiah said it would not be out of place if it is held that the state governors ought to assume the posture of the chief executive officer (CEO) of corporations’.

He said a state governor must earn money from his/her state in the same way corporations do for their shareholders, or else the people will start chasing them away from government houses with cutlasses.

Nda-Isaiah said, “The days when states would go cap-in-hand every month to the federal government will soon be over because the federal government itself will be too busy struggling to solve its own federal problems.

The good news is that every state in Nigeria can survive as a rich entity, with a little imagination from its leaders.

‘’The world is changing and our nation is also changing, and any leader who has not noticed this trend already is not worth the trust of the people.
‘’Those who lead and those who intend to lead at the state level must come to terms with the fact that it is no longer business as usual. State governments must now think out ways to be financially viable in order to survive.

‘’The federal government will no longer be able to maintain state governments like spoilt brats’’.

The Leadership chairman also postulated that perhaps it may take the states to come to terms if they by providence pass through certain hard times.

He said, “Lagos State found out the hard way that it could earn much more than its monthly allocations from Abuja when the then President Olusegun Obasanjo illegally impounded the monthly allocations of its local governments for selfish reasons.

‘’That was when the governor then, Bola Tinubu, knew the real definition of IGR. Since then the state has not looked back’’.

He further stated that States need to develop their own proprietary methods of boosting their IGRs; adding that Lagos chose corporate taxes because that’s where its advantages lie.

‘’It could be abundant mineral resources for some, and yet for others it could be massive land resources.

‘’Any state government that gives the impression that it is waiting for a constitution amendment before it can take advantage of the state’s mineral resources is simply dumb.

‘’State governments can apply to the federal government for mining leases in their states and simply become mineral-rich. The problem is that no state has been able to do this.

Some states are succeeding with agriculture, especially rice cultivation using the CBN intervention funds. It is the same logic’’, the Leadership chairman added.