VZCZCXRO1787
RR RUEHPA
DE RUEHOS #0008/01 0061441
ZNY CCCCC ZZH
R 061441Z JAN 10
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 1159
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 0707
RUEKJCS/SECDEF WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RHMFISS/HQ USAFRICOM STUTTGART GE

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 000008 
 
SIPDIS 
 
E.O. 12958: DECL: 12/31/2019 
TAGS: PGOV EFIN ECON ELAB NI
SUBJECT: SOUND MANAGEMENT BOLSTERS EDO STATE BALANCE SHEET 
 
REF: A. 09 LAGOS 227 
     ¶B. 09 LAGOS 285 
 
Classified By: Consul General Donna Blair, Reasons 1.4 (B,D) 
 
 ------ 
SUMMARY 
------- 
 
¶1.  (C) Fiscal management, the introduction of new 
technologies, and the implementation of coherent polices by 
Edo State Governor Adams Oshiomhole (Action Congress) have 
bolstered the State's balance sheet, according to 
commissioners and observers.  The State has significantly 
increased revenues and reduced recurring expenditures while 
implementing crucial infrastructure projects.  Sustaining the 
momentum will require overcoming significant budgetary and 
institutional challenges that remain.  This is the second in 
a series of telegrams assessing the government of former 
labor leader Adams Oshiomhole one year after he came to power 
as governor of Edo State.  END SUMMARY. 
 
---------------------------- 
APPROACHING SELF SUFFICIENCY 
---------------------------- 
 
¶2.  (C) The administration of Governor Oshiomhole has made 
significant progress toward making the Edo State government 
economically self-sufficient.  Edo State faced declining 
revenues in the first half of 2009 as declining oil revenues 
cut sharply into Federal allocations.  Oshiomhole responded 
by introducing radical measures to increase internally 
generated revenues (reftels).  Internal revenues tripled to 
900 million naira per month over the last year, Governor 
Oshiomhole told PolOffs on December 7, a figure repeated in 
subsequent meetings with other commissioners and economic 
advisors.  In addition, recurring expenses were trimmed by 45 
percent.  These efforts have positioned Edo State to cover 60 
percent of its current operating budget with internally 
generated funds.  The governor's goal is to fund all 1.5 
billion naira in recurring expenditures each month with 
internally generated funds, freeing allowances from the 
Federal Government for capital improvement projects. 
 
--------------- 
RAISING REVENUE 
--------------- 
 
¶3.  (C) Deployment of new technololgy and more rigorous 
enforcement activities have improved revenue collection, 
Oshiomhole claimed.  The administration plans to utilize 
identification cards in conjunction with point-of-service 
centers to streamline tax collection, manage payroll 
disbursements, and accept utility payments.  Use of this 
technology will also help combat fraud (septel). 
 
¶4.  (C) Enactment of legislation forbidding environmental 
degradation and protecting forests generated additional 
revenues over the past year.  New laws and stepped-up 
enforcement by the State Ministry of the Environment have 
resulted in a 250 percent increase in logging fines, 
according to Commissioner Clement Agba. 
 
------------------- 
CONTAINING COSTS 
------------------- 
 
¶5. (C) Recurring expenditures represent 40 percent of Edo 
State's monthly budget, down from 60 percent at the inception 
of the Oshiomhole administration.  Cost containment followed 
a year's work to scrutinize and eliminate unnecessary 
spending, reduce fraudulently inflated payroll disbursements, 
and privatize some community services. 
 
¶6. (C) The governor repeatedly stated his commitment to 
consistent application of the rule of law, claiming he "will 
not negotiate compliance" with rules governing fiscal 
responsibility.  The governor cites the proposed 
implementation of Oracle payroll management software and the 
use of biometrics as evidence of his commitment to strong 
fiscal management.  These practices reduce incidences of 
"ghost workers" and artificially inflated salaries that have 
previously drained Edo State resources. 
 
¶7.  (C) Some public services have been contracted to private 
 
LAGOS 00000008  002.2 OF 002 
 
 
enterprises to improve service delivery and to contain costs. 
 Waste management provides one example.  The Oshiomhole 
government has divided Benin City into 70 waste management 
zones.  Based on competitive bids meeting clearly defined 
criteria for equipment and capacity, contracts have been 
awarded to 48 firms for collection as well as for management 
of the city dumps.  An independent third party manages the 
payment collection process in a transparent online process. 
The State government retains 20 percent of the collected 
fees, while 70 percent will be paid to the waste management 
firms, and the remaining 10 percent go to the billing agent. 
Agba says that his ministry projects annual revenues will 
increase from 4.8 million naira (USD 32,000) to 200 million 
naira (USD 1.3 million) based on a 70 percent collection rate. 
 
----------------------- 
EARLY SIGNS OF SUCCESS 
----------------------- 
 
¶8. (C) Oshiomhole believes the bureaucracy of Edo State 
should finance itself.  Funding recurrent expenditures from 
internally generated revenue would enable federal allocations 
to finance capital improvement and infrastructure projects. 
Sixty percent of the state's revenue is currently available 
for such projects, up from 40 percent at the inception of 
this administration.  The Governor indicated his desire to 
increase the amount of available funds to 75 percent of the 
budget to meet his commitment to upgrade hospitals and 
schools, to improve poor drainage systems that currently 
undermine road construction projects and to advance 
reforestation efforts. 
 
¶9. (SBU) Signs of an improved economic environment exist. 
Main arteries in the city center have been rebuilt with new 
easements.  In at least one longtime sore spot, green space 
has replaced the filth of a neighborhood dump site.  Dredging 
and creation of primary and secondary drainage systems, key 
to sustainable road construction, has begun. 
 
¶10. (C) To date, 30 billion naira in service contracts have 
been awarded, bolstering employment in the State.  The Bank 
of Industry has provided a 500 million naira microcredit 
facility for individual business owners as well as small and 
medium sized busineses. 
 
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CHALLENGES REMAIN 
----------------- 
 
¶11. (C) The governor expects wage pressure to increase the 
salaries of teachers, judiciary and healthcare workers in the 
next year.  The State House of Assembly dominated by the 
Peoples' Democratic Party is withholding 2.7 billion naira in 
matching funds intended to upgrade the derelict school 
facilities in the State.  Improvements to the state-wide 
drainage system will cost the state 40 billion naira.  Senior 
civil servants require training in management and technology 
while the public servant workforce at large would be aided by 
the introduction of fresh talent and ideas, according to 
economic advisor Godwin Obaseki. 
 
¶12.  (C) Obaseki further argued that the initial successes 
were "picking the low-hanging fruit," and that sustained 
progress would require institutionalizing the attitudes, 
practices, and commitments already begun.  "We have the 
political will, what we need is the right long term plan," 
which he said the Governor's ecomomic team is developing. 
 
¶13.  (U) ConGen Lagos coordinated this telegram with Embassy 
Abuja. 
BLAIR