World Bank consultant and Abia State Finance Commissioner, PHILLIP NTO, in this chat with Assistant Politics Editor, DANIEL KANU explains why the state is not enthusiastic on accessing the bond market.
Coping with Abia economy
There is a serious economic problem which is leading to what I may describe as financial meltdown. It is not peculiar to Abia State or Nigeria; it’s a global problem. It happened sometime in 2009 when there was low growth rate, and I think there is a repeat of that in recent time which is leading to decline in price of oil. Nigeria is a mono economy, heavily dependent on accrual from oil, and the oil is dependent on international market forces. Based on that, Nigeria, I may say, seems to be having little economic challenges. But Abia, being a state whose public expenditure profile is based on prudence, is doing its best to survive the situation.
Abia and bond market
Ordinarily, when you collect bond, you are mortgaging your future because you pay over a long period of time. But our governor is one that feels that it is not proper to mortgage the future of the state. Abia is trying to come out from the mess, the monumental difficulty which it was pushed into in early 2000. So for the state to be mortgaged again means that the state will definitely be declared insolvent. It is the reason the governor is not enthusiastic at going to the bond market. But what some other states are achieving with their bond money, Governor Orji is also achieving with the amount he gets from the federation account and the internally-generated revenue (IGR).
So as I always say, it’s not how much you get that matters, but how prudent you are with what you have. And it is that prudence by the governor that is guiding development in the state. Even if you get the money from the bond market, the money can be embezzled by a greedy governor or it may not be properly managed. The major thing is how prudent you are with the little that you have in the management of resources. If you know how the situation was before now, you will know that this governor was carefully sent by God on purpose.
Expectations from government
I think this is a question the governor himself could answer, but as one that has been part of the series of meetings held, I think Ochendo will be concerned and committed to finishing the projects he started and kicking off new ones like the airport and seaport which he expects his successor to finish. Of course, you know that government is a continuum. I know the governor would want to live to his responsibility of delivering his mandate of delivering the goods and services expected from him.
The general objective of the government is to ensure the welfare of her citizenry. So all the projects of this government are geared towards the people’s well-being and happiness. Most of Ochendo projects have direct bearing on the citizenry, and I know he will want to continue on them. Ochendo projects are not targeted on the rich, the reason you go to all local governments and communities and find hospitals and health centres here and there. You can see large number of roads that this government has done. You can see the revolution in the housing or agricultural sectors. You can see that no sector is neglected. All that Ochendo is doing is to put proper foundation for a good take-off for the next administration. He wants to hand over a clean government institution. The budget we are preparing for 2015 is also targeted on the people. The budget is to make Abia greater economic vibrant state.
On tax harmonisation effort and latest committee
You may recall that when I came on board as the Commissioner for Finance, the first thing I did was to look at the situation on the ground in terms of multiplicity of taxes and levies. So we found out that the state, before now, was entrenched in a serious multiple taxation which is a serious problem to investment. What we did was to look at the ways and means of harmonising the fees and levies that we concluded through the state revenue summit that held in July.
The whole essence was to put a platform that would ensure that multiple taxation is eliminated in the state. When you eliminate multiple taxation, what next? There must be a mechanism on the ground that will ensure that the people are well empowered. You know that Abia is a home of entrepreneurs and we found out that those entrepreneurs don’t have access to external finance. What do I mean by external finance? It means they cannot access loans from formal financial institutions where the interest rate may be a bit reasonable. They were prone to accessing loans from informal sources where they paid almost 100 per cent interest rate. So what Abia did through my office was to initiate an exco memo, in which we requested the exco to approve the setting up of state agency for small and medium scale enterprises (SMEs) . The whole essence of the agency is to assist the small and medium scale enterprises to access loans from banks because these SMEs cannot do it on their own. With the agency like the one we are setting up, it will be easy for them to collect loan from banks and distribute to beneficiary SMEs. That is the entire essence of the package. Right now, the House of Assembly is trying to put up a law to back it up. Once the law is operational, the agency will go into full force to ensure that there is a sustained economic development and empowerment in the state.
For us, the objective of the state revenue summit is to provide an interface between the tax-payers and the government. It’s not like before where the government would formulate tax policies and throw them down on the people; this time the tax-payers are also part of the tax policy formulation. So, nobody will say that government is imposing taxes and levies on them because they are part of the decision-making process. That is Ochendo’s style of leadership – involving the people. After that, the next thing will now be: how do we empower these entrepreneurs? This is because it is only when you empower them that they will be able to pay their taxes.
