Saturday, 23rd September 2023

Enugu’s $30b GDP target not dependent on FAAC allocation, says Mbah

By Guardian Nigeria
18 September 2023   |   4:06 am
Dr Peter Mbah, governor of Enugu state, has promised to disrupt the state's incremental growth and grow it sevenfold in his time as the chief executive.

Enugu State governor Peter Mbah

Dr Peter Mbah, governor of Enugu state, has promised to disrupt the state’s incremental growth and grow it sevenfold in his time as the chief executive. On the sideline of an investment summit where his administration’s ambitious economic roadmap was interrogated, he spoke with GEOFF IYATSE on how he intends to leverage a creative finding model in the phase of fiscal challenge to turn the state into an investment destination.

What has been your experience as a chief executive considering where you are coming from?
It’s been quite an exciting journey. Nothing has happened that has taken us unawares because we did an expensive study of the situation. We knew what we were coming to meet. When we made promises to our people, we gave timelines. The reason we backed our promises up with timelines was because we were aware of the things we needed to deal with and we knew the timelines we committed to were sacred, we were not going to deviate from them. We did promise we were going to have an investment forum or round table within 100 days in the office and today we have kept the promise. It is not just about the symbolism or making a promise and keeping it, but it is essentially the substance; the fact that there are huge takeaways and huge successes from what we have done today.

You recall that we got the mandate of the Enugu people entrusted into our hands based on all the promises we made. One of them was to grow the economy from $4 billion to $30 billion. We also said to them that the growth will be driven by the private sector but enabled by the government. We were deliberate because we knew that for us to tackle unemployment and generate wealth, we need private-sector investment. It is not going to come from the public sector.

For the private sector to invest, they also need the government to do certain things. You can hear a lot about the risk in investment. It is not even the emphasis on ease of doing business, which is providing infrastructure, security and the ease of obtaining your business permit as well as construction and property permit. It is beyond that. It is the understanding of how projects are structured. How do you make a project attractive to the private sector? So, you have to identify the aspects of the project that you must de-risk, whether it is the technical risk or commercial risk. This is because businesses are more than happy to take financial risk, but they are not interested when it has to do with political, technical or commercial risk. Those risks are not really what the private sector wants to take. Of course, some businesses can undertake to embrace such risk but most of the time they do not. Since we would want an influx of businesses, we want the state to be the preferred destination for businesses, investments and tourism. That means we have to go the extra mile, which is essentially what the summit underscores.

You have many programmes and projects lined up. What are the priority areas you want to focus on? When you talk about financing, are you thinking about bond issuance?
Our strategy is to have a creative alternative financing model and that is quite broad. The creative alternative financing model means that the current financing model, which focuses on revenue from the federation account, is suboptimal. It is not going to work with this current model. So, we all have agreed that this current model cannot serve us if we want to intervene across critical sectors.

First, you have to look at what you have control over. You have control over mobilising your domestic revenue and your domestic resources. You need to identify how to optimise internally generated revenue. What are those impediments that are stopping you from optimally collecting revenue from the service or the businesses of the MDAs or from expanding your tax net? I am not saying increasing your tax rates but expanding your tax net.

We have done that already in the first 90 days in office. What we have done in our revenue enables the ministry to elevate the service levels to meet the collection of payments and the services people receive. Now, you can, in the comfort of your home, assess whatever service, particularly with the land administration and management. We have automated the systems there so that you can, within 72 hours, apply for your C-of-O and obtain them. You can access almost all the services you need within the land ministry, whether it’s search or registration via digital means. Of course, registration and construction permits can also be done online. We have automated those systems. What does that do to our revenue? We are now able to track payments because payments are no longer collected in cash. You have to assess and pay online and it goes to the state’s treasury single account. There are a lot of things we have done to begin to mobilise domestic revenue.

Now in terms of other financing options. By the way, the projects we have created are very deliberate. There may not be enough time to give a detailed analysis. One of the speakers talked about our area of comparative advantages. And that is the truth. If you look at agriculture, the areas we have focused on are areas we have almost four times factor productivity. Our advantage, our rate of productivity in those areas is four times better than what you have in any other state. If you take soya beans for example, which is one crop that we are interested in, our factor of productivity in soya beans is almost four times. So, the yield you get from planting soybeans on our land is four times more than the yield you get in any other state, even in the north.

We have identified those areas of comparative advantages and those are the areas we’re focusing on. The same thing goes for cassava, palm products and other specific areas we are focusing on. On the value chain, beyond just scaling up our production, we must get involved in processing. That is why we are talking about the special agro-processing zones, which we hope to do at least three across the three senatorial zones.

In terms of harmonisation of our land tenure, which one of the speakers raised; we plan to de-risk land and increase access to land. As an investor, you have absolutely no business worrying about interfacing with the communities. This is because we’ve earmarked about 300,000 hectares of land for agriculture and we are providing access roads to those lands. We have isolated them to different sizes. You have 1,000 or 5,000 depending on the appetite of the investor and how big we have profiled the investor.

There are several initiatives, multiple initiatives we have deployed in the areas of ease of doing business. There are a whole lot of them. In infrastructure, we are also doing a lot because we know that businesses have to make profits. So, you don’t want to burden them with the provision of roads or water. We are providing water, roads and bridges. There is a whole lot we are doing to make. When we say Enugu is going to be the number one destination for businesses and people, we know what we are saying. And as business owners and those with backgrounds in business and entrepreneurship, we understand and know what it takes to invest. Hence, we make sure that the ground is well watered.

Policy summersault is a challenge in Nigeria. What frameworks are you putting in place to reduce political risk and give assurance to investors that the policies that attract them will not be reversed when you leave office?
Out of the three-pronged approach we have taken, our strategic objective is strengthening our institutions. We are not just building this around us as individuals, we are also building the institutions. These are policies that will outlive anyone. At the end of the day, if you have strengthened the institutions through policy frameworks, it will not be easy for one single person to come and reverse that because it is entrenched and that is essentially what we are doing. We are strengthening our public service sector by ensuring that a lot of what we are doing has regulatory and legal frameworks. They are all embedded in the regulatory framework.
We get the buy-in of the lawmakers. We have retreats with them, we have workshops with them to get them to understand the policy direction of the government, and then we will build systems around this. That makes it almost impossible for any one person to reverse the policies. So, we are doing things that are bigger than us, things that would outlive us.

We have seen private sector individuals who started the way you have started but lost track along the way. How courageous are you going into this? Do you have the courage to step on your toes to get the job done?
What may help you to know I dare to just do a check on my background. I came into a sector where we were regarded as late entrants. We were just regarded as one other oil company. Fast forward to 14 years, we became the market leader, having 23 per cent market share with the next company having just five per cent, in a sector that was already mature. That is the oil and gas downstream sector. So, it is not like a nascent market where new players are struggling for market shares. We came in as late entrants in 2008. By 2021, we were the market leader. You don’t go from starting from point zero to becoming a market leader without courage.

When I was going around talking to the people of Enugu about my plans for the state, I used phrases like ‘disruptive innovation’, ‘quantum leap’ and leapfrogging. That is essentially what we are here to do. We are going to disrupt the sub-optimisation. We are going to disrupt the status quo. And we are going to do things differently. Not necessarily better, but differently. Because it will take us from basically shifting the paradigm for us to essentially achieve these goals. We’re talking about ambitious goals.

If you look at the pattern of growth we have had in the last 24 years, we have been able to grow the economy incrementally. We have grown marginally over the last 24 years. But that is not what we have proposed. We have not paid attention to the pattern or the trends. If we did, we would have used the same rates of growth to measure ourselves. But what we have done is to say, look, we are going to grow sevenfold in the next four to eight years. That means exponential growth. It means you have to come up with disruptive innovation. You have to do radical things. Disruptive things. That is why we talk about the creative alternative financing model we have talked about.

But there are structures that we put in place to make sure that our cash flow is not impeded. Yet we are still able to finance major projects. We know we need about N2 trillion in the next four years to achieve the sort of infrastructural development and cutting-edge social services that we want to provide for our people. If you look at the revenue from the federation account, even if you take everything to do a capital project, it is not up to 400 billion in the next four years. From that, you will fund recurring costs. We’re even talking about a slice, a very tiny slice of it. We’re not reckoning with the current financing model. It won’t work. We have to be creative. We have to be innovative. We have to be disruptive, positively disruptive. That is why we talk about this massive infrastructural development and investment flow that we would attract to Enugu. Of course, growing the economy exponentially too.