Mbata: We’re Prudent in Managing the State’s Resources

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Hon. Obinna Mbata is the Imo State Commissioner for Finance. In this interview with Amby Uneze, Mbata who is also the former Commissioner, Ministry of Internal Resources and Pension Affairs, spoke on the management of the state’s resources. Excerpts:

You are barely nine months in office as Finance Commissioner, what are the prospects and challenges of your office?

Broadly speaking, I will say it’s been interesting and has its own challenges at the same time since January 14, 2016 when I was sworn in. It’s being engaging because it’s a hands-on work since it relates to finance. In terms of challenges and expectations, every Nigerian presently understands the difficulties that we all are facing as a nation especially in the areas of our finances due to the obvious down-turn in the economy. We are currently in recession and this has been occasioned by a huge drop in revenue generation especially from what we get from the sale of fossil fuel in Nigeria from which we derive our major source of foreign revenue.

This development has impacted negatively on the economy and together with the attacks and destructions of oil facilities, pipelines, flow stations in the Niger Delta area which has had the concomitant effect that while we are grappling with fall in the price of crude oil in the international oil market, we are also grappling with the challenge of drop in the production. We were in the past, doing roughly 2.2mbpd of crude oil, but in recent times about 1.4mbpd, so it is not rocket science to determine that these have actually impacted negatively on the finances of the country at large and on that of states in particular, Imo state being one of them.

Some of those early challenges that we faced in getting into 2016 arose from meeting the state’s obligation with respect to payment of salaries and pensions. Some obligations equally arose in outstanding benefits and all what not but afore mentioned were the very immediate ones.

Putting into consideration that Imo state runs free education from primary to tertiary levels and it’s one of the cardinal objectives of this administration which we have executed very successfully too, we had to strike a balance in the revenue that we were getting which had dropped drastically. Over 60 percent in some instances in certain months and we had to devise a means of making sure that those obligations; payment of salaries, pensions which form part of our recurrent expenditure are all taken care of.

Sometime in January we had this industrial (strike) action that was embarked upon by Labour over payment of salaries and because of the fact that in Imo state we didn’t want to be caught in that web of being one of the states that owe salaries. We entered into negotiation with NLC despite the one day strike action which we didn’t want to linger because the government was quite proactive in making sure that issues that were raised by Labour in respect to payment of salaries were seriously addressed.

I will also like to point out here that one of the things that led to that strike action was the government’s good intention and initiative to embark on concession of the management, not sale, of some of the critical establishments in the state, a lot of which are also revenue-generating.

The intention behind that which had succinctly been explained by the Governor at different fora, was to ensure efficiency in the running of such organizations, because it didn’t make sense that you had an establishment where you pumped funds into on a monthly basis and had the expectation of revenue being generated, but does not make returns or contributions by way of any revenue generation. We have people who supposedly go to work there on daily basis, but when you measure productivity you find out that it is nil, because the reason for which the agency was set up was not being met. The revenue targets that were given to the organizations were not being met and the state was still there funding such establishments.

Then you have to ask yourself whether it makes any kind of economic sense. Therefore to ensure efficiency in the running of some of these organisations, government decided to concession management of such establishments to be run very profitably. If I may give an example with what is presently happening in the country where the Federal Government has stated its intentions to concession the management of the Abuja International Airport, the Lagos International Airport, the Port Harcourt International Airport, the essence of it being to bring in efficiency into the running of those establishments.

The government in Imo state had this vision even before the federal government decided to embark on such a step of concession. That is the whole idea of the policy, but it was misunderstood in certain quarters. Some people were insinuating that government wanted to sell those establishments and as a result, people expressed fears that jobs will be lost and so on. But the government in her good intentions embarked on vigorous negotiation with Labour and at the end of it all government showed that it was not out to victimise anybody, but rather was out to have an efficient public service in the state, because our resources are very limited.

To get it right, we have to be smart in the management of our resources. So in the course of the negotiation, the government showed its goodwill in meeting with the demand that was made by Labour that 70 percent of all the earnings made by the state on a monthly basis be to given to them for the payment of salaries and pensions. This was acceded to by the state government. I know that a lot of people raised eye brows wondering why the state would agree to such an agreement but we allowed it to show good faith.

How has government been managing the remaining 30 percent to be able to discharge her responsibilities?

Something people wonder is whether what we are doing in the state is magical, how we have been able to sustain our responsibilities up till this time. My colleagues in other states, when we attend meetings, ask me how we have been coping with the agreement (70:30) in the state. The primary thing is that we have been able to ensure management of what we get out of the 30 percent through prudence and prioritisation in our spending.

His Excellency would always tell you that you will have to cut your coat according to the size of the material that is available to you, not according to your own size. So, we understand on the average what we get and we try to prioritise our spending to make sure that those things that are considered very critical like education (continuous free education in the state) and the provision of certain infrastructure are put in place and so far we have tried very well to cut down on overheads.

Still people accuse us of being very stingy, but we would rather be parsimonious and viable than be very happy with spending and then the state would not be able to meet up with some basic functions. I’ll say in a nutshell, that is what we have done. The government set the tone right from the swearing-in of the Commissioners this year when the Governor told us that that we have to also bear the economic challenges because we can’t be telling people to tighten their belts when you as government appointee are living like a king.

It started with us (the appointees), we all had a cut (pay cut). I was a Commissioner for Internal Resources and Pensions from October 2014 to June 2015, I know what it was like then compared to our remunerations as commissioners, presently, and same applied to all Special Advisers and Special Assistants. You will also realize that the number of Ministries in the state was cut down from 22 to 13 to cut cost, because if you have 22 ministries you will have 22 Commissioners and so on.

We have become more efficient because anything that is waste is cut off. We are very practical about the things we need to apply our resources to. Remember there are quite a lot of interventions in the areas of agriculture and small businesses; and if you have to succeed in those you should have some level of liquidity to put into some of these interventions. Some we do through the Imo State Micro Finance Bank and some in partnership with the Federal government and international partners. The government has quite a number of responsibilities but we have ensured that we are smart and efficient in handling our spending.

What about the roads, infrastructure in the communities and other projects, how is government funding them?

With respect to infrastructure, we have presently embarked on uplifting infrastructure; roads especially, in the state capital because we want to make Owerri a cosmopolitan/mega city. In that respect, if you go around the city, you will see so many road projects going on simultaneously and we are one of the few states that you will still find infrastructural development, roads construction going on, in spite of the economic challenges facing the country.

And this is because of the fact that we have been able to manage the resources well. His Excellency will always urge us to think outside the box by doing things in an unusual way in a positive form to achieve success. This is one of the critical areas we have put focus on; continuous improvement in the infrastructure of the state. The governor has sounded it clear that none of these infrastructure developments will be left unfinished by the end of this administration.

You talked about the internally generated revenue of the state, how has it improved? And recently the state government introduced the policy of N3000 adult tax levy. Is it justified?

Regarding our internally generated revenue, we have what we call Fiscal Sustainability Plan, which is in partnership with the federal government and most states of the federation have keyed into it, Imo inclusive. The whole essence of it is to make sure that we manage our resources very well, stick to certain fiscal responsibilities and reduce wastage and make improvements in certain areas, including our IGR.

In that respect we had restructured the Board of Internal Revenue and appointed a new acting chairman all geared towards making sure that we turn around the state of our IGR. Before now we were generating about N400 million on monthly basis but since the restructuring, refocusing and re-engineering we are recording improvements in that respect. For a couple of months now, on the average we are recording about N650 to N700 million and our intention is that we will continuously improve on this monthly (bearing in mind our target of N2b monthly).

Some of the strategies we had put in place to ensure that this comes to fruition is application of technology in revenue collection. So from the point of assessment to the point of collection, we are putting a whole lot of technology, removing human element from it to ensure that there is accountability. If we don’t have proper mechanism put in place, some of these funds that come in as taxes and other revenue would eventually not get into the coffers of the state government.

Again we are focusing on the informal sector such as the barbers, those who operate kiosks, small shops, etc. This sector is very huge, but the problem is developing a system to get accurate data on them. The essence is that we identify them, carry out enumeration, find out what they are generating from their businesses, then we will be able to do an evaluation. The major challenge in tax collection is information to the individual that is being taxed, to educate them on the reasons why they have to do it. Another avenue to improve revenue generation is the commencement of issuance and signing of Certificates of Occupancy (my colleague the Commissioner for Lands flagged this off a couple of days ago).

This means that people who had applied for Certificates of Occupancy for some years now have the opportunity get same and to do so with ease. We want a system of issuance of certificates to be liberalized because we want people in the various villages to be able to apply for C of O on their village lands, so that it will be another way to unlock the dormant capital which had been lying in waste there. You can use your C of O to borrow money from banks to do or support your business. Issuance of C of O is another area we expect, from our projections, to get huge revenue.

On the N3,000 per annum on taxable adults, this government wants to bring governance to the wards through what we call the State Development Councils (SDCs) in all the 305 electoral wards that we have in the state. The SDCs are manned by coordinators in each ward. When you have challenges in your ward, it is now the responsibility of the coordinator in that ward to ensure that the problem is brought to the fore so that the agencies or the ministries tasked with taking care of those issues would immediately come in to intervene.

Government activities would be brought even closer to the communities this way. Thus, the essence of N3000 per annum tax is to ensure inclusive participation; to make you party to the development of your area, your ward. The funds are pooled and domiciled in the ward for its development and nobody would come to take it away from there. It is for your general development, and you can hold the SDC of your ward accountable.