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2023 GOVERNORSHIP AND
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GOV. PETER MBAH’S FIRST ANNIVERSARY: A Look at the Tax Reforms, Gains and Programs of the Mbah Administration – A Chat with Emmanuel Ekene Nnamani, Executive Chairman, Enugu State Internal Revenue Service
Mr. Emmanuel Ekene Nnamani, Executive Chairman, Enugu State Internal Revenue Service
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GOV. PETER MBAH’S FIRST ANNIVERSARY: A Look at the Tax Reforms, Gains and Programs of the Mbah Administration – A Chat with Emmanuel Ekene Nnamani, Executive Chairman, Enugu State Internal Revenue Service

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Emmanuel Ekene Nnamani is the Executive Chairman, Enugu State Internal Revenue Service. Prior to his appointment by the Executive Governor of Enugu State, he was a banker, specifically in the internal control group of First Bank. In this exclusive chat with Pacesetter, he shares all there is to know about the recent tax drives and reforms in Enugu state, as Governor Peter Mbah marks his first year in office. Dateline: May 20, 2024.

What did you meet as the revenue of the state when you were appointed? Can you give us some statistics?

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Yes, upon assumption of office, the average revenue of the state was hovering around 2.1 billion and 2.3 billion. That was what we met on ground.

Put a figure to the state’s IGR as at April.

Yes, not just April. April was marred by a lot of public holidays. Collection was not too easy and a lot of fluctuation in networks. But what we know is that we are now making an average of 5 billion monthly, in terms of revenue of the state. That’s currently where we are.

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What have you been able to achieve since assumption?

We are nine months in office. Yes, what we have achieved since the resumption are; we have been able to double the revenues of the state and since that time, the state has relied on the revenue to pay salaries of staff, no longer depending on FAAC. We have also achieved streamlining the process for internal revenue service. We’ve engaged in massive training of staff and PWC Nigeria has been supporting us massively in terms of training our staff and improving their skill sets. We’ve also been able to bring the service together. When we came on board, we met a service that was running helter-skelter. There was no unity. There was no process flow. So, we’ve been able to bring the service staff together. We started building a team. We started having a process flow. We have also tried to provide internet in the board. Every aspect of the headquarters of the board is now covered by Wi-Fi internet. We’ve also provided 30 kilowatt solar energy for the headquarters of the service. Why we did that is to ensure that we may not have any excuses why we failed to deliver on the mandate given to us. We started identifying those who are not taxed and again, apart from the staff process that is improving, we’ve been able to build to depend majorly on IT in our collection. When we came on board, the state engaged a new tax management system which is also a central management system for the entire state.

So, we moved from being a mono-payment gateway state to now multiple payment gateway state. When we came on board, we had only Interswitch collecting revenue for the state in terms of payment gateway. We got approval and expanded it to five payment gateways. Now we have Interswitch, Remita, eTranzact, Unifed Payments and Flutterwave collecting revenue for the state. Now we’re giving the citizens of the state and taxpayers options. So, when there’s down payment or down time in one payment gateway, another payment gateway is up and that has given us a leverage to scale up our revenue collection. Other things we have done are; we have been able to activate new revenue areas or new revenue lines. For instance, when we came on board, there was no purchase tax in the state. We activated purchase tax and capital gain tax because they were actually provided for in our laws but were never activated all these while, and revenue is coming in from there. We have also tried to expand the net of who pays our PAYE -Pay As You Earn and Withholding taxes. Another area that was actually a big win for us is bulldozing into the informal sector where hitherto, no revenue had come into the government in the informal sector simply because some people said they were given waivers, some said they were compensated for voting in the past administration. But in this administration, I don’t think when you vote, the compensation they give you is to waive tax payment. How will government develop or build their projects? That sector is giving the state revenue day in, day out. In the month of May, we have made over 300 million naira from the informal sector where hitherto no fund comes into government purse, and over the past four months, we’ve made an average of 250 million every month. Using technology has been an advantage because in the informal sector, we entered using e-tickets, which is a novel task collection in the informal sector and we also consolidated it so as to avoid too many footfalls into a business premise. That doesn’t mean that we have achieved the target of the state. The target of the state is mammoth and we are facing it squarely.

Speaking of targets, one of the Governor’s promise, arguably the most popular, is to grow Enugu’s economy from $4.4bn to $30bn over four to eight years. Walk us through an achievable plan.

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It’s very much achievable. When we talk about building the economy from 4.4 billion to 30 billion dollars, it’s not revenue. It’s the GDP of the state and when we talk about the GDP, you can see that the state is actually on the right direction. So, what has the state done to ensure that this projection comes true? You have seen the state constructing massive roads. These roads will bring in economic activities, open up rural areas for massive commercial agriculture, which you have started seeing some massive agricultural entrepreneurs coming into. It will also open up these areas for new estates, property acquisition and property build-up. Then you have also seen the state trying to reactivate some of the dormant assets in the state, talking about Presidential hotel coming on board, United Palm Products Limited coming on board with an investment of about 100 billion naira. We are talking about the state signing a contract to build a five-star hotel within the International Conference Center. You have also seen the state activating the completion of the International Conference Center and you have also seen investments coming into the new transport terminals in Ogui, Gariki and Abakpa axes. You are also looking at the state making frantic efforts to complete the International Airport, getting into cargo terminals. You also have the state trying to activate waterway transportation through the Ogurugu in Uzo uwani, activating all lines of business that will increase that GDP to where we are going. These are massive investments plus a whole lot of investments coming into it, and all these things, when they start, they increase the revenue of the state, because if any of the companies are activated now, they will recruit staff, they will pay PAYE. If they issue contracts, they will pay withholding tax and other taxes that follows within that axis.

Let’s not shy away from one reality out there on the streets. The people believe that the government has actually increased taxes. The governor has said he didn’t increase taxes but simply widened the tax net. In the budget for the present fiscal year, according to the governor, N300 billion of its N521.5 billion budget is to be raised through IGR. Does this not lend credence to the assumption that taxes were increased?

No, I think what you should know is that when you look into the budget, journalists should be able to go into details of the budget provision, not actually the summary of the budget. Yes, the state made a provision of about 250 billion naira to come from internally generated revenue but if you look at the IGR, some of the projections or the estimate is not all about taxes. So, there are taxes, there are non-tax revenues, there are realization from sale of dormant assets, which you will see that sale of assets dominated the internally generated revenue, if you go through the budget very well. The tax did not increase beyond levels and if you watch what is being collected, there are actually less what the state can do in terms of increasing tax. They don’t actually have much of the powers to increase taxes, because the personal income tax is a federal law, and you don’t have unilateral powers to increase it. The withholding tax, capital gain tax, stamp duty tax, these are federal laws. What the state has power to do is the Land Use Charge, which the state, instead of increasing it, reduced the rate.

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(Cuts in) Really?

Yes, we reduced the rate because we are so much interested in covering wider net than restricting it to people and asking them to pay unrealistic amounts. So, we crashed the rate by less than half to ensure that people actually pay. The only thing in our Land Use Charge is that people who are seen to be the rich, who live in areas that are regarded as high-reserved areas, have to pay exactly what is worth the value of the property because Land Use Charge is calibrated on the value of the property. Like somebody who lives at Abakpa or Emene pays around N38,000 a year as Land Use Charge while someone in Emene pays around N28,000 and someone in 9th Mile pays around N15,000. Can’t you see that it’s actually reduced by more than half? But if you live in Zoo estate and it’s residential, you are going to pay N266,000. So, this is actually calibrated in line with the property value, there is no increase of tax anywhere. In the informal sector where you hear all sorts of noise, I think what we did is actually a penetration methodology because we asked the market to pay N21,000 a year and it includes the tax, ESWAMA levy, local government stallage, the business premise. You can imagine that, all of them consolidated to pay N21,000. The truth of the matter is that the amount is totally unrealistic and the state cannot continue with that, reason being that if we go by the presumptive tax model of what the federal government has actually proposed, a shop in Ogbete that has an average turnover of N1,000,000 a year is expected to pay at least 2% of its turnover in a presumptive tax model. If it pays 2%, is that not N20,000 to be paid as tax only? Then let’s go to collect stallage of N5,500, let’s go in again to collect our ESWAMA bill of N6,000 because Ogbete generates a lot of waste. Asking them to pay N21,000, I think that is the lowest you can get anywhere in the country for now because we actually want to penetrate the market. An average tax, a shop that has an average turnover of N1,000,000 should pay N50,000 and that’s our projection.

From your response, one can say that there is a gap which could be as a result of a lack of sensitization, so to speak. Is there anything your office is doing to sensitize the people, especially with that informal sector you’re talking about?

I don’t think the challenge is sensitization, it might be part of it, but the challenge is that an average Igbo does not see tax payment as a contribution towards the building of the state. We have had a lot of sentiments analysis about tax. We also had a lot of bad orientation about tax. Some people see tax as payment we give to the government official to go and eat. They are not seeing it as their own contribution to grow their economy. If you remember that even in the 60s, in the coming of the whites into Nigeria, when you ask an Igbo man to pay tax, it’s like you are removing blood from his system and that is actually why the first riot we had in Nigeria was in Igbo land, in Aba, because they were asked to pay tax. Some will even come here and tell me, why not go to the United Nations and ask them to give us money to develop? Why not go to World Bank and ask them to give us money to develop? Why not go to the federal government to collect FAAC and develop the state? What they don’t actually understand is that the development of a state is by the citizens or residents of those states. Everybody has to contribute towards building of the state. Where we should have an issue is where these taxes and levies are being collected and you’re not seeing the evidence of what the government is doing. Now we have got a government that is totally deliberate in providing critical infrastructure to the states and everybody sees what they are doing and they are very committed to achieving those objectives. So, why not support the government? What we ask them to pay is N21,000 a year and you have an opportunity to pay monthly, quarterly, half yearly or yearly. I don’t think anywhere in the world where you asked somebody to pay N21,000 for a whole year to include tax and levies, you have killed them.

There has been the argument that IGR alone will not grow a state’s economy. Beyond increasing taxes or expanding the tax net, what is the government doing differently to boost the state’s economy?

Yes. Like I have mentioned part of it, the best thing the state wants to do is to attract investments. Since power has been devolved from exclusive list to the concurrent list and it is one of the critical infrastructure that aids development, the state went to the federal government and sought for authority to regulate electricity in our state and that has been granted. We are going to see massive investments, private sector investment into the power sector to ensure that every home, every business has a sustainable energy to drive economic growth. Apart from that, the state has also said that Enugu as a city is totally congested and does not allow for expansion and the state has gone to the House of Assembly to enact a law that empowers it to develop a new Enugu. In that new Enugu, the state plans to have a city that can rank equal or in resemblance of the city of Dubai and this city will be a smart city, connected in all ends, internet-wise. So, now we’re going to have a city that has number one internet of things embedded in its infrastructure. When you have such a critical investment in property, then the state is opening its doors for critical investment. You know, when Lagos did something like Lekki, Banana Island, you imagine the type of investment that came in there. Enugu wants to do their own, but in a high level. These are ways that increasing the economy or increasing the GDP of the state will come to be. That New Enugu will attract the best of infrastructure. It will also attract the best of corporate entities, so, you’re also going to see some of our big companies relocating their headquarters here in Enugu because they now have an environment that is comparable to where they were before, and with our international airport coming on board, flying to major cities in the world, then I don’t think there’s any reason why anybody cannot site his head office here in Enugu because London, America will be some hours away from you. These are deliberate actions the government is taking. I hope you know that the governor of the state is a top-notch businessman and he wants Enugu to be leading in business.

Multiple taxation is one of the ugly heads to rear. What are you doing about this because at the end of the day, it creates some sort of financial burden on the people

It’s just a use of wrong language. There is no multiple taxation. What we have is the incumbents, those agberos that have been collecting this money in the informal sector, whom the government has displaced, to start collecting the tax that originally belonged to the government through the e-ticket. You will now see these incumbent agberos disguising themselves, coming with force to molest some of the citizens who are unaware and who fall victim of their molestation, to extort money. We call it illegal fee collection, not double taxation, because at first instance, it’s not a tax, it’s a forceful collection from citizens. So, we are tackling it by sensitization but you know, in Igbo land, an average Igbo man is so much focused on his business. He cares not listening to radio, he cares not listening to anything you post on social media, because our presence is felt in social media, we are everywhere. However, I think I need to also say that we will continue to do more. Inasmuch as those incumbent agberos are still there, we will continue to do more. We are now collaborating with security agencies. My last outing on radio suggests that even those agberos collaborate with some security agents and that is where we have an issue because if the security agents we are using to stop them from operation, collaborate with them simply because they want to collect part of what they have made, you have an issue there. But don’t get worried. We will follow it in another way and also, you have heard about the increasing demand for state police. That will happen sooner than you may expect and when that happens, that is a done deal.

Is there a means of verification? Is there something that a businessman should watch out for? Is there a means of identification?

Yes. For payment, all payments in the informal sector are now done through e-tickets. So, we say that when you have paid any money through the e-tickets, and somebody told you he has actually paid, you dial *8011*042# to confirm that the payment has been made. But we also discovered that our people are not in a hurry to go to this USSD code to confirm it. So, what we have done is to activate SMS. Upon payment, you should receive SMS. Another thing we have also done is to activate and to cut off cash payments. We don’t want anyone to pay cash to any of the e-ticket agents. We have created an account called e-ticket account for each of the agents. It’s a state account, we monitor it. Citizens can now transfer money into that agent account created by the state. Nobody can deny that they did not pay this person, and when you pay, you will receive an alert that you have paid. We have also set up an enforcement and monitoring unit of the Revenue Service who will no longer use our branded vehicles to go out into the field. They will use the same intra-city colored buses and tricycles to go into the field to monitor exactly what is happening. They will go with security agents. Some of the security agents may also disguise themselves. That is some of the measures we are currently doing. In summary, you can detect that one is an illegal tax collector when he asks for cash, because we will not ask for cash payments.

Have you received resistance from the beneficiaries of the status quo?

They didn’t resist because they know it’s the power of the state. The only thing they did was to use the citizens to oppose it. Some of the people who come to mount your studios (referring to media houses) opposing taxes are not market men, women or traders. These are the incumbents, those who are on top of their voices crying, to see if the government will stop collecting the taxes so that they can return to the illegal collection of revenues. A trader in Ogbete doesn’t have the time to leave his or her shop, going from one studio to another. They did not resist it openly but they used other ways to try to force the hands of the government. What we also did was to call them, retrain them and make them e-ticket agents. Some are e-ticket enforcers; in the e-ticket ecosystem, we over 1,500 staff working for the state, making money on daily basis, feeding their families, enjoying a new lease of life. Instead of being agberos, they are now official agents of the state.

What more should be expected from your office and this administration as she marks her one year?

People should expect continuous partnership and collaboration. We want to appreciate the people of Enugu for accepting us into this position and accepting the journey we have proposed towards making Enugu a revenue independent state. We will also increase our communication strategies to know where the taxes and revenues we are collecting are pinching them and how we can ameliorate things. But the only thing I cannot promise the people is that we will stop collecting revenue, we will continue to collect revenue. One other thing they should expect from us is that the Land Use Charge which every property in the city has to pay will be scaled up and that every citizen has to buy into it. That’s the way to develop our state. This state belongs to us, let us contribute towards its development and it is only when you have contributed that you have the moral justification to hold the state government accountable to fulfill her promises. Through the GIS, the Enugu Property Information System, we now know every property in the state and that is where we are going to navigate from June 1, using it to collect the Land Use Charge.


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