Mr JIMI LAWAL, the Senior Adviser Counsellor to Governor NASIR EL-RUFAI, spoke on how Kaduna state has increased its Internally Generated Revenue (IGR), created jobs and attracted investments in the last six years.
The Internally Generated Revenue (IGR) of Kaduna state has been growing in the last six years, from N12 billion in 2015, to N44.9 billion in 2019 to over N50 billion last year. What has this administration been doing differently since it came into office?
First, we can identify three things immediately; we have expanded the database of taxpayers. When the Governor Nasir El-Rufai administration came into office in 2015, the database of taxpayers was just about 100,000. Now, we have close to 500,000. So, if you have 100,000 people paying taxes on an average it will amount to 500 million. If that number increases to 500,000, we have multiplied the number by at least five times or let’s say five folds. That was the first thing that we did and the tax rate remains the same; it has not been increased.
The second thing we did was to create more jobs. A lot of new employers have since come to Kaduna and started new business, big businesses and I can give you a couple of examples. We have Olam, the biggest poultry factory in sub-saharan Africa and they’re employing close to 3,000 people. They started in 2017 and they are one of the first businesses that we encouraged to locate in Kaduna. They are a Singaporean company, a sovereign wealth investment-owned company and they invested over $150 million. In fact, they employed over 150 veterinary doctors alone. So, by time 3,000 workers start paying Pay As You Earn (PAYE) taxes, you can see where the additional revenue is coming from.
I chair the Economic Development Council, we go out of our way to reach out to the existing businesses in Kaduna; we call them the “Brownfield” as opposed to new businesses that we call the “Greenfield”. We engage the Brownfield companies, we meet them on a quarterly basis and we ask them what the government can do to expand their businesses and most of them will tell us that it is issue of financing and getting money from the banks. So, we approach the banks on their behalf, we give them entrepreneurial training to enable them cope with their businesses and create additional jobs by expanding and also assist them with access to market. These are things that we have done to help us expand the IGR.
Last year, the state raked in N50 billion at a time when businesses had shut down owing to Covid-19 pandemic and the attendant lockdown. This trajectory somewhat defies the logic of economics. What is the explanation of this phenomenon of improved IGR in times of low business activity?
It might appear to be so but it is not an anomaly, because we did not have that many closures during the lockdown. When you have a lockdown, it is not the same as when a company goes out of business. You and I are government employees and during the lockdown, the office was shut but our salaries were being paid and we paid the PAYE taxes. So, what we did during the lockdown was to focus on the federal government intervention to ensure businesses survive and we ensured that Kaduna state employers of labour get their fair share of interventions funds that are available to all businesses in Nigeria.
We reasoned that Kaduna state is about 5% of Nigerian economy so every intervention fund that the federal government introduced, we pushed to get between 5% and 10% for Kaduna state businesses and this include interventions like working capital funds, payroll advances and additional capital for different sectors of the economy. So, we got our fair share to ensure that businesses remain competitive and they didn’t have to close down.
In addition, we also promoted entrepreneurial activities. We have a programme at Kaduna Business School called the Kaduna State Entrepreneurial Development Programme (KADSTEP). It is to encourage young people to start businesses. We have an agreement with Bank of Industry (BoI), whereby once someone has a line of business, they can do a business plan, we will assist them to raise money. We have put down N500 million as state government and Bank of Industry will also bring in N500 million. By that, we created a pool of N1 billion to support new businesses in 2010. So, during the lockdown, there was no shutdown; in fact we expanded our tentacles to e-commerce, where people can do businesses online. Some of our restaurants that had to close down, we encouraged them to do takeaway deliveries and people can place orders and have food delivered to their homes.
Reports indicate that self-assessment under the banner of presumptive tax has not yielded the desired results in Kaduna state because some micro business owners under-declare their profits. What is the Economic Development Council, which you head, doing to solve the problem?
It’s a case of balance. You have to have a balance, keeping in mind that the first reason that we increased our IGR was because we expanded the database. We first introduced the mechanism of Presumptive Tax to capture taxpayers. So, the issue of under declaration, we can come to that later, we can correct that. But if we don’t capture them through the Presumptive Tax mechanism, we can’t talk about adjustments. So, first we captured and then we will review what is the fair tax to pay and enforce the penalty of default in paying taxes later.
PAYE or taxes are not the only source of IGR to the state. We have ground rent and land use charge also as major sources of revenue and we have been fairly aggressive in the collection of ground rents. We have spent so much money in digitizing tax management and taxation system. We now have the Kaduna Geographic Information System (KADGIS), where people can get electronic titles for their properties. With that, we are focusing on pushing for such property owners to pay ground rents and land use charges. We have been successful in doing so. These are the sectors that has contributed to the IGR and we are collating data on those who are under declaring as we go along, and a few cases might result to court enforcement or orders to get the taxes paid.
Government mooted the idea of a Development Levy of N1,000 per adult every year but the proposed tax was greeted with criticisms and complaints. Has Kaduna state dropped the idea?
No no no, it is a law and the government cannot drop the idea; once a law is passed by the state assembly, it is our duty to enforce and uphold the law. I’m also surprised to hear about the complaints because most of people that we have spoken to, everybody is complying. Let me tell you why people are complying; they are complying because they can see the ongoing development and the Development Levy is supporting it. When people are able to see the difference in what the government is doing with their revenue, they will voluntarily contribute towards that development drive. Our mechanism of collection has made it easy for us. We are involving our traditional rulers in every ward in the collection and they also get a fee. Part of the collection goes to the local governments, Village Heads and then the state government.
We are spending these funds judiciously. For instance, as you are aware, when Governor Nasir Ahmad El-Rufai came into office, he made Basic Education free and compulsory up on to JSS3 and now it is free and compulsory up until SSS3. We have also launched what is called the Universal Healthcare service which means that you don’t have to sell your house or your car, if you have a medical emergency. Once you subscribe to the health insurance, you can go to any of our hospitals or Primary Healthcare Centres and be treated without paying humongous bills. So, this is where the Development Levy is going to and most of the residents are happy to relate to that.
One thousand naira can be a huge sum for someone that’s unemployed, has the government considered waiving the levy for the jobless?
You see, we are creating jobs remember; so the issue of the unemployed is a moot point because we have a register, a job seekers’ register, where we ensure that all those who signed up as looking for job, we do our best to assist them to either find one or to start their own businesses. We ensure the latter through the KADSTEP programme which is run by Kaduna Business School. We are sympathetic towards the unemployed, we don’t arrest over the Development Levy.
In other words, is it correct to say that the state government has not started enforcement on the Development Levy?
No, we are collecting the levy through the mechanism that’s in place, we are not arresting, harassing or forcing people to pay. It is a voluntary contribution so far.
But when you leave it open-ended like this, most people may not comply as people don’t generally want to pay taxes, is the state government not considering enforcement?
At some point yes, the mechanism for collection and enforcement is through the District and Village Heads, because they know those who live in the community and they can tell which household has paid and those that haven’t. So, let’s have a different assumption that people are not going to cooperate by not paying. What we’re experiencing is the fact that people appreciate what this government is doing and they can see the development around them–roads, water supply, education, new schools, health care facilities and much more. With that, citizens are voluntarily participating and meeting their own side of the bargain because they know that without revenue, government activities can not materialize.
Last year, the Nigerian Investment Promotion Commission (NIPC) listed Kaduna state as the first subnational to attract the highest Direct Foreign Investment in six months. How did it beat Lagos state, which has a sea port, an international airport and enhanced infrastructure?
First, it is the investors’ confidence in the leadership of the state that is responsible. Once investors believe that they have a leader who is just, reasonable and supportive of their businesses, it doesn’t matter where you are or what you have to offer, that’s where they will go to. They want an environment that is investors-friendly, where they can get support from the leadership.
The governor goes out of his way to attract investors and support them. For example, some investors want land and a rebate on the premium and the governor rises promptly to their requests. Lagos has no land compared to Kaduna; I think we are the third or fourth largest state in the country. For manufacturers, Kaduna has a lot to offer, especially when you combine the availability of land, leadership that is committed and friendly to investors. And our annual Investment Summit has been holding unfailingly every year since 2015. Last year, during the pandemic, we did a virtual summit and states like Lagos had to copy from us. These are the things that the investors are seeing and that’s why they are trooping to Kaduna state.
Some of landmark investments that we have been secured so far, one them is the African Natural Resources and Mines. That investment is the largest investment in sub-saharan Africa in the last 10 years in the private sector, it is a $750 million steel plant located in Kagarko. The steel plant, in terms of capacity, when it is completed and starts production later this year, the output is almost the same with Ajaokuta Steel Plant. The federal government has spent over $8 billion in Ajaokuta and there is no production. The African Natural Resources and Mines company will start production by July this year and they will be engaging 12,000 to 15,000 employees.
We also have Dangote-Peugeot Automobile. We have had PAN for the past 30 years in Nigeria but the assembling system is old and we have started a new one by engaging Peugeot to partner with the richest man in Africa, Alhaji Aliko Dangote and we have received interests from some other Northern states to join in. The factory has been completed and it will start rolling out vehicles in the next couple of months. So, all the brands of Peugeot that we don’t get to see in the Nigeria, will now be assembled in Kaduna state. We are also reviving moribund industries that have been abandoned, industries like the Ikara Food Processing Plant. Kaduna state is the largest producer of Tomato but farmers incur damages due to lack of proper storage facility and preservation. Ikara Food Processing Plant is being revived to be able to produce tomato paste out of the tomatoes. We also have a lot of major farmers and commercial agriculture, migrating to Kaduna state and we are supporting them.
We also have the first commercial ranch in the entire country being established in Kaduna state. A partnership between Kaduna State Government, Miyetti Allah Cattle Breeders Association and Arlan, which is a Denmark company and owns the 3rdlargest dairy farm in the world. We are settling 1,000 herdsmen with 5,800 herds of cattle and they are going to have homes, milk house, milk parlours, market, schools, healthcare centres all that they require like water and grass, to ensure a productive ranch. The milk being collected and packaged by Arlan will become a source of repayment on development and revenue for the farmers. There is no need for herders to continue their nomadic lifestyle, that has led to fatal clashes between them and farmers.
Talking about the Damau Milk Company, the groundbreaking took place in January last year. What is the difference between what is happening in Damau and what Ekiti state has been showcasing at the moment?
We are producing milk in Kaduna apart from Damau, but for us that’s what we inherited and improved upon. For us it is not a big deal, the company is called MILCOPAL. It has been producing and collecting milk for the past three years. Establishing a modern ranch is a big scale commercial venture where you have close to 1,200 homes, each home is a self-contained for a family of four, that will sum up to about 5,000 residents. This means having to build a village from scratch. We have to provide both primary and secondary infrastructure. Some of the cattle have to be imported from South Africa. We did farmers selection from the 1,000 farmers and they have been trained. We have gone far and we hope that this year or early next year, the Damau Milk Company will start production. In Kaduna, we love to focus on large scale accomplishments.
Small and Medium Enterprises are the greatest employers of labour, you have highlighted what you have done for the brownfield and Greenfield companies, is there any financing structure for Small and Medium Enterprises?
Yes, first it is the federal government’s intervention, the Covid and Post Covid economic support initiative. We are very active on that and we have 5,000 businesses that have benefited on that. We also have a joint venture agreement with BoI and on that we have created about 2,000 jobs with about N1 billion advance and second fund of about N1 billion. We are also working with the National Open University of Nigeria to do what is called the Kaduna Artisan programme, where a lot of Kaduna citizens will be trained on viable private sector jobs, so that they can become competent artisans like carpenters, tailors, bricklayers, electricians and masons. We are building a lot of homes in Kaduna state and we need these artisans to help the developers. Our goal is to build 5,000 to 10,000 homes per annum in the next few years and the services of artisans are needed. Upon training, we will support them with small loans to enable them buy tools required to be self-sufficient and they will also be able to take on apprentices. It is a case of success breeding success, we are multiplying employers of labour in Kaduna by focusing on the economic sector.
There is a new concept initiated by the federal government, called the solar home project, whereby five million homes will be solar powered. They will have their own power supply without having to wait for the national grid connection. Most of our people live in areas that are not connected to the national grid. So, the future is in self-contained and smart homes which will have solar powered panels, which will be energized during the day for use at night. They will top up and pay through their mobile phones. We are banking on getting at least 30000 to 40,000 units for Kaduna state out of the five million. We are about to sign the MoU and we are doing the survey on how to situate the houses in all the 23 LGAs in Kaduna state. Some of those homes will also have their businesses on the side; like barbers, hairdressers and other small businesses. They will have access to power supply from the solar system.
The state government signed an MoU with Prof Justin Lee of the Institute of Structural Economics in the University of Peking, China, to revive textiles. Has the project not gone beyond the signing of papers?
Yes, we have gone beyond paper signing, this is the part where the pandemic has slowed us down. During the pandemic, international travels came to a halt in the past 12 to 18 months. Covid 19 started from China, most flights from China were halted but now that business travel is returning, we have resuscitated our agreement with the University of Peking, for them to help us with investors that will revive the cotton garment sector. We have made progress, we have identified the location; we are going to have 400 hectares of land next to Olam. We are expecting a group of investors from China to visit us later in the year. We will be providing the infrastructure required by way of constant power supply. We are installing a new power plant of 84 megawatts in Kaduna. We have borrowed N10 billion from CBN to fund the project and the bulk of the electricity supply is to support the industrial zone where the cotton and garment factory will be located.
Anniversary Facts:
- The Malam Nasir El-Rufai administration has expanded the database of taxpayers from 1,000 when it came to power in 2015, to more than 5,000 presently;
- The government has stepped up collection of ground rents and land use charges as major sources of Internally Generated Revenue (IGR);
- The government has also created more jobs by attracting businesses to Kaduna state, by improving on the Ease of Doing Business;
- In 2017, Olam Poultry Farm and Feed Mill, the biggest poultry factory in sub-saharan Africa, set shop in Kaduna and has employed close to 3,000 people, including 150 Veterinary Doctors;
- The Singaporean company has invested over $150 million in the factory;
- The El-Rufai administration has also attracted the African Natural Resources and Mines company to Kagarko town;
- The steel plant is a $750 million investment, the largest in sub-saharan Africa in the last 10 years in the private sector. When it starts production this year, the company will engage 12,000 to 15,000 employees;
- The Dangote-Peugeot Automobile Company, a partnership between Alhaji Aliko Dangote and Kaduna State Government, as well as some northern states, will start rolling out vehicles in the next couple of months;
- Kaduna state has commenced the first commercial ranch in the country; a partnership between the government, Miyetti Allah Cattle Breeders Association and Arlan, a Denmark company which owns the 3rd largest dairy farm in the world;
- The project will settle 1,000 herdsmen with 5,800 herds of cattle, with homes, milk house, milk parlours, market, schools, healthcare centres and water as well as grass;
- On a quarterly basis, the government reaches out to existing businesses, helps them with financing issues, gets them banks assistance and assists them to find markets;
- The administration also promotes entrepreneurial activities through the Kaduna State Entrepreneurial Development Programme (KADSTEP), which is run by Kaduna Business School;
- The programme aims to encourage young people to start businesses and already Kaduna State Government has an agreement with Bank of Industry (BoI), to assist with financing;
- The government has committed N500 million and Bank of Industry (BoI) has set aside an additional N500 million, thereby creating a pool of N1 billion to support these new businesses;
- The administration is also working on the Kaduna Artisan Programme, with the National Open University of Nigeria (NOUN), where eligible citizens will be trained to be artisans.
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