Finance is the backbone of any human undertaking. In a recessional economy, finance is the lifeblood of economic and social activities, as national and subnational governments are forced to seek creative ways of avoiding extinction. Therefore, any administrator, who has the capacity to develop alternative sources of funding, becomes a hero and any subnational government that can meet its financial obligations becomes a classic case study.
Happily, Governor Willie Obiano has achieved these two things. Essentially, his objective in finance is to grow the IGR of Anambra State to a point where the state no longer waits on federal allocations to meet its recurrent expenditure. Remarkably, in the past three years, Obiano has achieved 188% growth in the monthly Internally Generated Revenue, which shot up from N450m in March 2014 when he took over to N1.3bn as at December 2016. To achieve this, he had embarked on a comprehensive bio-metric verification exercise of the state payroll and pensions, which saved the state over N100m in monthly recurrent expenditure and carried out extensive reforms in the revenue generation sector, such as the enumeration and automation of IGR windows and the introduction of POS in revenue collection.
Obiano has been highly innovative in the search for alternative funding by subnational governments and has been so effective that he even announced some tax waivers for the vulnerable populations of the state in his Economic Stimulus Package released in September last year without raising taxes.
In the words of Mark Okoye, the Commissioner for Economic Planning and Budgeting, Anambra State under Obiano approaches the challenge of Internally Generated Revenue from five strategic areas.
Said he: “They are enumeration, enforcement, automation, systems and finally the people who drive the entire process. This is the five-point strategy we use in dissecting IGR. We have suspended some taxes, right, but there are areas that we call the Green Areas, such as extracting our taxes from the Telcos, the big corporations, getting them to pay their sanitation levies, the VSAT levies, the business premises levies. So, anytime we look at a particular IGR window, we ask ourselves the following questions – Have we enumerated it? Do we know the size and potential of this market? We ask ourselves, are they automated or are people still exchanging financial instruments like cash? The third question we ask is, are we enforcing and are we enforcing in the right areas with the right enforcement strategies? What sort of systems have we given our people for enforcement? Do they have the right resources? The last question we ask is do we have the right people? You can put the best systems in the world in place but you need the right people to man them. I’ll take one example to highlight this. When we came into office, the Physical Planning Authority was doing about N7m – N10m per month. But today, we implemented two of this five-point strategy…We automated it completely. There was no more money being paid into the ministry. We told everybody, we have set up Pay-Direct. So, whatever money you have, pay it into the bank. That closed the leakages. The second thing we did was to give them resources. Physical Planning is across the state. People are building all kinds of structures in different places. We told them it should not only be in Awka. So, we gave them cars and equipment to ensure that they monitor all 21 local governments. And lastly, we gave them the right training. So, today, after these reforms and the support we gave to the enforcement team, we are doing as high as N80m a month. That is 800% increase from N10m. These are some of the things that we have done.”
This is the secret to the miracle of giving tax waivers in a recessional economy when most states are raising taxes to be able to float along.