The Kano State Government’s aggressive drive to improve its revenue generation has come under severe criticism from the opposition. But the State Commissioner for Finance, Professor Kabiru Isa Dandago told Forefront’s Abdullahi Baba Alawusa that new Internally Generated Revenue (IGR) reform is not targeted at emasculating the poor or low-income earners as postulated by critics. Also, he explains Governor Ganduje administration’s socio-economic policy initiatives and why the government is revisiting the abandoned multi-billion Kanawa International Market project.
Looking at the Governor Ganduje’s administration in Kano state, what are the key policy initiatives for socio-political and economic development of the state?
We are all aware of the dwindling revenue affecting the three tiers of government due to unprecedented fall in crude oil prices at the global market. Under the able leadership of Dr. Abdullahi Umar Ganduje, the government is fully aware that without adequate revenue, there could never be workable economic policies to ensure sustainable development across the state. As a result of this, the incumbent administration decided to shift its focus from crude oil reliance to IGR drive for maximum productivity. This is the crux of the government’s development plans. We want to ensure the little resources available are channeled towards infrastructural development. So, we are committed to providing essential services like health, education, roads construction and improved agricultural best practices that would benefit the teeming populace and improve their socio-economic well being. The state government is also partnering with the private sector in critical areas to enhance commercial activities. So far, we have about twenty private investors from the US, Canada, India, Italy and many other companies from Europe who have signaled their interest to invest in Kano state. This is apart from the long list of local investors that have signed Memorandum of Understanding (MoU) with the state government. Already, the Dangote Group has established a tomato processing industry at Kadawa in Kura local government, and with this chain of developmental strides in place, Kano will soon reclaim her position as the true center of commerce and industrial hub. That means creating multiple employment opportunities for our youths; one of the cardinal objectives of this current administration.
What strategy has the administration adopted to realize these lofty objectives?
The administration is people- oriented and centres around four key pillars. First is Employment Generation. All the plans by government to woo investors as well as improved revenue generation strategies being implemented are geared towards creating employment opportunities for the masses. As we all know, Nigeria is grappling with the menace of unemployment among the youths and government alone, at federal, state and local government levels cannot provide employment to all. Secondly, this administration takes the issue of education seriously and that is why we make basic primary education free and compulsory to encourage school enrolment for our children. Our objective was to have a very solid human capital that will ginger production and enhance economic development in the state. Thirdly, the administration is keen on reviving the middle class as a strategic component of socio-political and economic development. If you look at the economy now, you discover that people are divided into two broad groups: the rich and the poor. There is hardly those that can be grouped as the “middle class” and we believe without this category of people, no economic policy, no matter how well it’s drafted, can achieve the desired result. So, the government’s IGR drive is specifically conceived to help revive the middle class as well as improve the purchasing power or capacity of consumers of goods and services that would in turn galvanize the economy. Our target is to have at least 30 per cent of the population elevated from the poor to middle class and by 2017, we envisage that this percentage would double through several economic empowerment strategies. Once this is achieved, the social menace of begging, sycophancy and redundancy by our youths should be a thing of the past and at the same time, crime rate would reduce significantly.
The State’s aggressive drive to increase revenue generation through engaging private firms to collect taxes on its behalf is unique, even as the government tax policy has come under criticism. How do you react to the critics?
Well, people are entitled to hold divergent views on public administration. But let me state categorically and without any fear of contradiction that Governor Ganduje is very much concerned about improving the people’s welfare and like I said earlier, this administration is people-oriented, hence whatever policy decision taken must be done strictly for the overall well being of citizens. The fact remains this government is taking a different approach in tax collection, unlike the old model which people are used to. The administration decided to reform its tax collection procedures by putting in place certain mechanisms to block leakages and ensure accountability. With this new model, government is not giving any mobilization fee to consultants, unlike what obtains in the past. The agreement signed with these firms is to boost the State’s revenue base using their technical expertise in collaboration with relevant government agencies such as the Board of internal revenue and other MDAs. Now, instead of paying them for the services rendered, we agree that whatever amount generated, the firms would have some percentage of the sum total as their commission. That means if nothing is generated, they’ll not be given any money as consultancy fee. And at the end of the day, both parties stand to gain from the exercise. The government would benefit from the technical expertise of the partner-firms, improved revenue base, transfer of technology, ensure prudence and accountability among others. The commission rate varies from five to fifteen per cent. So, their commission is based on their performance. This tax reform model is novel as it has never been used or adopted by any state government. Already, some states have indicated their interest to copy this model. These firms, which are designated as Technical Advisers, were engaged based on comparative advantage to monitor and evaluate the tax regime. They will offer professional advice to the government on several technical terms like direct and indirect taxation. At the moment, we have engaged about 23 firms to officially collect taxes in several aspects on behalf of government and we are satisfied with their performance.
What category of companies and individuals are targeted in this tax regime given mounting complaints by some people that they operate small-scale and low capital base, yet they are forced to pay huge taxes to the state and local governments?
All the tax laws in Nigeria are emphasizing on income; gains on property. So, those who are poor and are not making income, or do not own any property and are not consuming, definitely they cannot pay taxes. People should be informed that, taxation is not targeted against the poor. In fact, taxes are collected from the rich in other to provide essential services for the poor. More than 80 per cent of Kano people are poor; only about 15 or 20 per cent are rich and, like I said earlier, we do not have the middle class and that’s what we’re trying to create at present through several of our economic empowerment initiatives. We’re committed to the collective drive to upgrade small to medium, and medium to large enterprises for enhanced productivity. So you can see, government is not targeting the poor for taxation. We want to bring the very rich a little down and uplift the very poor so that we now have a confluence of the middle class at the center.
The Kanawa International Market was conceived in 2007 to ginger commercial activities in the state. But the project was abandoned half way. So, what informed government’s sudden interest to revive this project after many years of abandonment?
Yes, the Kanawa International Market is a very good project conceived as a model international market by all standards. It was designed to accommodate 15,000 shops; a 5-star hotel accommodation; a large parking space for trailers and sundry heavy duty trucks; a fire service station; and many other ultra-modern marketing and commercial facilities. Unfortunately, the project was abandoned because it was not effectively managed. The fact that the project has the capacity to boost commercial activities and enhance the state’s economic development drive, government decided to intervene. It was actually a Public-Private Partnership (PPP); hence we took over the project because the Governor is not happy that a gigantic project of this magnitude was abandoned, even as he is desirous of bequeathing an enduring legacy of such an ultra-modern market of international standard befitting the status of Kano as the true center of commerce and industry. Moreover, when completed the Kanawa Project would not only generate additional revenue for the government, but will also create employment opportunity for the state’s teeming youths through direct and indirect labour as well. Right now, we are mobilizing private investors to come in as partners for this dream become a reality. So far, some private companies from the US have indicated interest to invest in the project. A single account is to be opened in which both the private partners and the state government will deposit the necessary capital for the project take-off and once the arrangements are concluded, we intend to commence the gigantic project in earnest. So, I can assure you that before the end of 2016, people will witness tremendous progress made in that direction.
What is the investment ratio between government and private investors for the Kanawa Project?
For now, the US investors are interested in housing and construction of shops in the proposed market. We have agreed with them that they’ll invest 67 per cent of the total capital outlay needed for the take-off, while the state government will bring 36 per cent and like the tax reform, this is also a new model of public-private partnership in which all stakeholders have equal chances to benefit. And given the envisaged benefits derivable therein, the governor is keen to see the project kick-starting and once completed; the market would be a model commercial hub that is befitting of Kano city. The stakes are high and we cannot afford to squander this opportunity.