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The Challenge Before Adeleke 

todayJuly 27, 2022

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The Osun State governor-elect has his job cut out for him, says OLUMIDE OBAYEMI 

In contemporary Nigeria, there is a growing disquiet about the state of the nation—insecurity, inflation, unemployment, lack of basic infrastructure, unstable power supply, absence of basic health care, etc. pervade the nation. Osun State, in particular, being a “civil servant” State, and heavily indebted to both local and foreign lenders, has low revenue generation sources and lacks major industrial presence. On Saturday July 17, 2022, the people of Osun State went to the polls and elected Jackson Adeleke as the new governor. We attempt to identify the problems faced by the State. 

First, there is a serious dearth of veritable sources of industrial presence in Osun State. There are neither regional headquarters nor large presence of major corporations such as NNPC Plc, MTN, Mobil, Chevron, Texaco, Oando, GT Bank Plc, Zenith Bank, Guinness, Union Bank, UBA Plc, Unilever, Nestle, etc. in the State. This situation is further hampered by COVID 19 effect on globalization and the Russia/Ukraine War with its attendant recession. For instance, taxes imposed on commercial transactions usually reflect the level of business activities in a region. Thus, the performance of Osun State with regards to Value Added Tax (VAT) collected within Osun State will demonstrate the volume of commerce and businesses carried out there.  

It is instructive that the Black’s Law Dictionary defines “Value Added Tax” as: “a tax assessed at each step in the production of a commodity, based on the value added at each step by the difference between the commodity’s production cost and its selling price….a value added tax acts as a sales tax on the ultimate consumer.” VAT, charged at a flat rate of 7.5% (in Nigeria), is a consumption tax, which is levied at each stage of the consumption chain and is borne by the final consumer. At each stage of production, sale and supply of goods and services, VAT is collected. In Nigeria, extant Section 40 of the Value Added Tax Act (VAT Act) provides for the creation of the Special Account presently being administered by the Federation Allocation Committee (FAAC) and for distributing the revenue accruing from the collection of Value Added Tax (VAT) which is contained in the Special Account (as opposed to the Consolidated Revenue Fund (CRF) Account under Sections 80 and 81 of the Constitution of the Federal Republic of Nigeria of 1999 (CFRN)). 

According to the FAAC, VAT Revenue that each state generated between January and August 2021 and the allocation to each of States of the old Western Region, are as follows: Lagos is the highest in transactional taxes with N429.203 Billion. This is followed by Oyo State with N64.646 Billion, Delta State with N13.964 Billion, Ogun State with N11.823 Billion, Edo State with N8.284 Billion, Ekiti State with N6.635 Billion, and Ondo with N4.554 Billion, respectively. The least among its contemporaries is Osun State with N1.995 Billion

Also, according to the National Bureau of Statistics (2015), Micro, Small and Medium Enterprise National Survey 2013, the Southwest is the second most populated region in Nigeria with approximately 41 million residents. The region, made up of Ekiti, Lagos, Ogun, Ondo, Osun and Oyo states, is home to the two states with the highest number of SMEs, Lagos with 8,395 and Oyo with 6,131 SMEs. Osun has the lowest SMEs. 

To the Presidential Enabling Business Environment Council (PEBEC), “2018 Making Business Work Report…The Journey So Far,” agriculture is the main occupation of the people of the Southwest region; Ondo is the largest producer of cocoa in Nigeria with about 75,000 tons of cocoa production annually, which accounts for about 28% of Nigeria’s total cocoa production. The region is also home to tourist attractions such as the Ikogosi Warm Springs (Ekiti), Olumo Rock (Ogun) and Erin Ijesha Waterfall (Osun). 

The PEBEC Report states that the overall score for Skills and Labour is 6.03, which is the score recorded by the Technical and Professional Skills sub-indicator. The Southwest region recorded the highest score of 6.63 for skills and labour. Ekiti leads, while Osun trails with 8.09 and 6.66 respectively. Generally, there seems to be state-provided structures to facilitate ease of access to talent. For an agriculture-based economy, electricity for storage and preparation of produces and transportation for movement of crops and works, respectively, is comparatively poor. 

Now, what should Adeleke do to raise the revenue of Osun State within the next eight years? First, Adeleke must groom a successor, with the successor serving as the Chief of Staff and understudying the Principal, who must be a youth under 25 years of age. This would be in the Ahmed Tinubu/Babatunde Fashola model. Second, all out-of-state companies with government contracts must have registered local offices, bank accounts, and 30% local employees in Osun. This will facilitate collection of 10% Withholding taxes by Osun State from the contract sum and provide employment.  

Third, Public-Private-Partnership (PPP) policy must be kickstarted in high gears. Pastor Enoch Adeboye, Pastor WF Kumuyi, Pastor SK Abiara, as well as churches belonging to Pastors Ayo Babalola and T. O. Obadare are natives of Osun State. There are also other business magnates from Osun State to be enlisted to build food processing industries in Osun State, with shared ownership. Fourth, the Redeemed Christian Church of God, Deeper Life, Apostolic Church must move their redemption camps from Lagos Ibadan Expressway to Osogbo/Ilesa axis.  

The weekly and monthly pilgrimages by the faithful would bring funds, employment and development to Osun State. Fifth, in the Abere area of Ede/Osogbo areas, Government should build parks, resorts, golf courses, houses and flats for leasing, and forbid outright sale, with rents and fees accruing therefrom flowing to the government. Sixth, with science and technology, agriculture can move to a great level, by using semeiology to crossbreed more durable species of livestock. Irrigation must be employed with Osun and Oyan rivers to promote season-wide planting and harvesting.  

Seventh, the number of commissioners should be reduced to six by merging and collapsing ministries. Eighth, wipe out Special Assistants and Advisers. These are unnecessary leakages. Ninth, appoint Hausa and Igbo people into positions. This will boost inclusivity among various residents of Osun. 

Olumide K. Obayemi is with the University of Lagos. 

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