El-Rufai outlines Kaduna State privatisation plans 

by | May 17, 2017 1:11 am

Nasir-El Rufai, governor of Kaduna state, plans to privatise about four state owned enterprises to create jobs, the 57 year-old said in an interview with BusinessDay.

“There is a privatisation programme; I think we have three or four companies, industrial enterprises that we inherited that we have already put out for privatisation,” El-rufai said.

“We have the Kara Fruit Process, which processes tomatoes, Kaise Ginger, which was set up to process ginger, and the Zaria Pharmaceuticals, which produces syringes for the medical sector. All three are moribund and we have appointed a consortium of advisers, led by Deloitte, to privatise them and the process in going on.

“I think they are about to receive bids or they have received bids, so that is the industrial enterprise,” the governor said.

El-Rufai also plans to sell some state government houses, which he finds as surplus to what is required.

“We believe that once the enterprises are revived and expanded, jobs will be created, and one day, we will be able to sell our diluted equity for much more, so we are ready to do that. That essentially is the strategy for the two classes of assets. For the government houses, we just want to get out of that business, apart from the governor, deputy governor, and high court judges, we are selling all the houses to the highest bidder and if you are entitled to, or you have been allocated the house, you have the right to match the highest bidder, it is strictly the highest bidder approach, and based on open market value,” he said.

El-Rufai was elected governor of Kaduna State in 2015, and promised to create jobs and transform the state’s fortunes.

“I think we have had some success, for instance we nearly doubled our IGR within one year because of the reforms we put in place and the establishment of the new Kaduna Internal Revenue Service. So our IGR is increasing significantly as a cushion for falling oil prices and falling inflows from the Federation Account,” the governor said.

Kaduna’s internally generated revenue (IGR) composed of local direct taxes and service fees, grew materially to over NGN20 billion or nearly 35% of operating revenue from NGN12 billion in 2015.

The shift marks a positive result in the administration’s efforts to increase local tax revenues, to compensate for lower revenues from FAAC statutory allocations, according to global ratings agency, Fitch.

The FAAC is the primary mechanism for funding Nigerian states, but has since dwindled after oil revenues dwindled, owing to lower prices and below trend production.

Its process determines allocated funding levels on a monthly basis and is derived from revenues accruing to the Federal Government, largely sourced from the oil sector.

“However, given the low level of tax compliance and slowing growth from an agricultural and service-oriented economy, non-oil revenues may increase slowly, as the administration pushes to further expand the tax base,” Fitch said in a report affirming Kaduna’s credit rating at B: Outlook-Stable.

“Fitch issued a statement maintaining our B rating stable outlook, and I do not know of any state government in Nigeria that has been able to maintain its rating in this recession, but Kaduna state was able to maintain its rating,” the governor said.

“Yes, our ambitions are huge, yes they will cost us a lot of money but as I said, in the short to medium terms, we will have to incur more debt, but also, we see in the short to medium term, not only how we are going to be able to service the debt but pare it down and reduce it significantly and we are about to get a $350 million dollar budget support facility from the World Bank on concessionary terms of about 5 to 10 years moratorium, 40-50 repayment plan or something like that, which will significantly add to our debt burden but it’s a long term concessionary borrowing plan that will give us a lot breathing space to invest even more in our infrastructure, attracting investors that will give us the tax revenue to take the state to the next level,” he added.