Upon re-assumption of office in May 2015, my first executive acts were the signing into law of the Kwara State Internal Revenue Service Bill and the Kwara State Public Private Partnership Bills. One outlined the strategic framework for our development aspirations. The other provided the financial structure for bringing that vision to fruition.
These two laws are significant because they set the foundation for my developmental vision for Kwara State based on current financial realities.
While our internal revenues have tripled since the establishment of KWIRS, the Public Private Partnership (PPP) law has institutionalized Public Private Partnership as a development strategy.
The PPP Law has also created the legal backing for the Kwara State Infrastructure Development Fund (IF-K). It is therefore with pleasure that I welcome our Partner Banks, Contractors, Engineers, Consultants and other important stakeholders to this ceremony.
I will like to start by situating IF-K in the context that necessitated its creation. In 2014, I approved the Kwara State Infrastructure Investment and Finance Strategy (KIIFS), as the framework for plugging the infrastructure gap of about N255b identified in a study conducted that year. After exploring several financing options, we opted for a modulated approach to meeting the funding required for these infrastructure.
My desire for rapid infrastructure growth, and the need for an appropriate savings and investment mechanism solely for infrastructure and related works led to the establishment of the Kwara State Infrastructure Development Fund, (IF-K).
Following from the PPP, IF-K is the second phase of my government’s long term strategy to diversify our local economy, stimulate economic growth via private sector participation in infrastructure development and create opportunities for collective prosperity.
The purpose of the IF-K, therefore, is to pool funds for infrastructure projects, optimally leverage private sector resources for infrastructure development and channel State Internal Revenue to directly impact economic diversification and growth strategies. IF-K is also designed to ensure maximum quality assurance for asset and services procured by government and encourage broader and deeper interactions with the Kwara State Government from private and non-private partners.
The fund will be financed through a N5b seed fund and a N500 million monthly contribution from the state’s Internally Generated Revenue through an Irrevocable Standing Payment Order(ISPO). This implies that the money will be taken at source from the state’s Internally Generated Revenue and provides an additional layer of assurance to project partners. Additional non-IGR funds, such as those from the Federal Government and global development partners will be added to IF-K as they become available.
Under IFK, funds will be disbursed on a quarterly basis, and are projected to grow by N6 billion by the end of the year. In order to ensure accountability, and insulate the funds from political control, the IF-K will be managed by a reputable investment company, Investment One, which has been appointed by law as trustee for the scheme.
Investment One is also to market the fund to potential investors and mitigate against payment risks by ring-fencing the funds and limiting their utilization to the approved purposes for which they have been earmarked.
In other words, the trustees are independent of the state government, and will only disburse funds upon the presentation of a certified certificate of completion and at agreed project milestones.
As an added measure to ensure quality standards, the certificate of completion is also subject to further authentication by an independent project inspector. IF-K is therefore not susceptible to interference from any other party.
I must also emphasize that we will continue to fund smaller projects through other platforms as only projects worth N300m and above will be included on the IF-K payment grid.
Following today’s launch, the payment grid will commence in December, 2016 with all ongoing and new projects targeted for completion by December, 2018. Furthermore, the total value of ongoing project debts to be addressed through IF-K is estimated at about N11.1b.
As a demonstration of faith and a token of our commitment to pay all outstanding contractor debts, we have disbursed N1.7b to significantly reduce current debt to contractors. The balance to be paid from IF-K is estimated at N9.4b.
This amount will be reduced on a quarterly basis until all debts are finally liquidated before the end of the administration. Simultaneously, contractors will drop off the IF-K grid as their obligations are terminated to allow for the introduction of new portfolio of fresh projects.
Over the next 10 months, therefore, over N5.8b will be pumped into the state’s economy via IF-K. Our expectation is that this injection will keep our project partners in business and have a positive spiral effect on employment generation. In the medium term, the remaining N5.3b of government spending will boost the state’s Gross Domestic Product (GDP) for about 18 months while sustaining the multiplier impact on job creation.
Given the benefits of stable and reliable funding provided by IF-K, I state without any equivocation that the era of abandoned projects is over in Kwara State. As a demonstration of this determination, all ongoing and new projects will be funded to completion under the IFK before the end of my tenure.
Furthermore, many of you have privately expressed concerns to me or spoken publicly about the state of infrastructure in our state in recent times. I am not unware of the situation. So let me give you this assurance.
Once the rains are over, we will commence major projects in the road, education, energy and health sectors across the state in a manner that accelerates development and ensures its even distribution.
We will start with the flagging off of the construction of a Diamond Underpass at Geri Alimi, Ilorin and the commissioning of our newly-acquired Asphalt plant.
In my second inaugural speech, I made a commitment to transform Kwara State into the North Central’s new frontier of prosperity through major infrastructure development and better opportunities for our people. By the grace of God, I will deliver on that commitment because where others see economic challenges, we see opportunity to innovate and thrive.
Let me conclude by acknowledging Investment One, our partner banks, project contractors, consultants, other stakeholders, and the IF-K implementation committee for their various contributions towards bringing this innovation to fruition.
I now have the honour to formally launch the Kwara State Infrastructure Development Fund (IF-K) for the sustainable development and prosperity of Kwara State.
Thank You All and God Bless.
Dr. Abdulfatah Ahmed
Executive Governor, Kwara State
Ilorin. 26th September, 2016