The article by my friend Agba Jalingo raises concerns about Cross River State’s increasing debt burden and questions the strategies that Sen. Bassey Otu, the incoming governor, plans to adopt to address this issue.
Agba highlights key statistics from the National Bureau of Statistics and the Debt Management Office, indicating the growth of both external and internal debt for the state. He also mentioned the state’s Internally Generated Revenue (IGR) and federal allocation figures, emphasizing that the total annual earnings are significantly lower than the amount owed in debt.
Agba rightly points out that the debt burden poses a serious challenge for the state and calls for innovative solutions from Sen. Bassey Otu. He expresses skepticism about the effectiveness of increasing taxes as a means to raise revenue and inquires about any alternative ideas for boosting the IGR.
The article also criticizes politicians who are aware of the state’s financial difficulties but fail to address the situation effectively once in power. The author expresses frustration with the recurrent complaints from successive governments and calls for a change in approach to governance.
In response to this article, it is crucial to approach the issue from a pragmatic standpoint. While I cannot provide specific information on Sen. Bassey Otu’s plans, as an ex-investment banker/public policy consultant I can offer some general insights on 5 key areas on how to address the inherited debt burdens in Cross River State and enhance revenue generation.
1. Debt Management Strategy:
Sen. Bassey Otu should develop a comprehensive debt management strategy that focuses on reducing the debt burden over time. This strategy could include measures such as debt restructuring, renegotiating loan terms, and exploring options for refinancing at lower interest rates. It is important to prioritize debt repayment while ensuring the sustainability of essential services and infrastructure development.
2. Economic Diversification:
To enhance the state’s revenue base, Sen. Bassey Otu could consider diversifying the economy beyond its current sources of income. This may involve identifying and supporting sectors with growth potential, such as agriculture, tourism, manufacturing, or technology. Promoting investments in these sectors can stimulate economic growth, and job creation, and generate additional tax revenue.
3. Efficient Taxation:
While the article expresses concerns about increasing taxes, it is worth noting that a well-designed and fair tax system in Cross River State can massively contribute to revenue generation.
The Sen. Bassey Otu government should focus on improving tax compliance and broadening the tax base to reduce the burden on a few individuals or businesses. By implementing measures to combat tax evasion and ensuring transparency in tax collection the Governor-elect can help optimize revenue collection without unduly burdening the population.
4. Public-Private Partnerships (PPPs):
Engaging in strategic partnerships with investors and the private sector can be an effective way to address infrastructure needs and promote economic growth. Sen. Bassey Otu could explore opportunities for PPPs (no more MOUs), attracting private investment for the development of critical infrastructure projects. This approach can help reduce the burden on the state’s finances while fostering economic development.
5. Cost Reduction and Efficiency Measures:
Senator Prince Otu should prioritize fiscal discipline and explore opportunities for cost reduction within the government’s operations. This could involve conducting thorough audits to identify inefficiencies, streamlining government processes, and eliminating wasteful spending. By optimizing resource allocation, the state can redirect funds toward debt repayment and essential services.
It is essential for Sen. Bassey Otu and his administration to conduct a comprehensive assessment of the state’s financial situation, engage with experts, and develop a well-informed and evidence-based strategy to address the debt burden.
By implementing a combination of prudent debt management, revenue enhancement, and cost reduction measures, there is potential to improve the financial stability of Cross River State as Senator Prince Otu takes over and ensures sustainable development for its citizens.
Mr. Richard Duke works with Riccardo Herzog Consulting and writes from London.
NB: Opinions expressed in this article are strictly attributable to the author, Richard Duke, and do not represent the opinion of CrossRiverWatch or any other organization the author works for/with.