1. GOVERNMENT OF ENUGU STATE OF NIGERIA FEASIBILITY STUDY/PROJECT PROPOSAL FOR 15 BILLION TERM LOAN TO FINANCE INFRASTRUCTURAL DEVELOPMENT FOR SUSTAINABLE ECONOMIC DEVELOPMENT BY GOVERNMENT OF ENUGU STATE 1

2. TABLE OF CONTENT ABOUT ENUGU STATE Tertiary Institutions within Enugu State Financial Institutions in the State PROJECT PROPOSAL Overview Project Profile THE PROJECTS AND COST PROFILE JUSTIFICATION GOVERNANCE STRUCTURE ENUGU STATE ECONOMY CASH FLOW ANALYSIS ENUGU STATE MEDIUM TERM REVENUE AND EXPENDITURE FRAMEWORK 2016 – 2019 ENUGU STATE MEDIUM TERM REVENUE AND EXPENDITURE FRAMEWORK 2016 – 2019 INVESTMENT OPPORTUNITIES UNDER PPP 2 Feasibility Study/Project proposal

3. BACKGROUND ABOUT ENUGU STATE Enugu State also referred to as the Coal City State was created via a military decree on August 27, 1991 with the city of Enugu as its capital. Enugu State derived its name from the capital city, ENUGWU (top of the hill) which is regarded as the oldest urban area in the Igbo-speaking areas of South-East Nigeria. The city owes its geopolitical significance to the discovery of coal in 1909. 3 Feasibility Study/Project proposal

4. Pre-historic facts about the people that inhabit the present Enugu State suggests that their earliest settlement dated back to 6,000 BC based on early pottery work found in the Okigwe-Nsukka axis. Much of the pottery excavated by a team led by Thurstan Shaw of the University of Nigeria, Nsukka in 1978 uncovered a rock quarry which was a mine for tools and pottery making for a stone civilization at nearby Ibagwa in the present day Igbo-eze South Local Government of Enugu State. Enugu was the administrative headqurters of Southern Nigeria, capital of former Eastern Region, East Central State of Nigeria and later Anambra and former Enugu States whose economy depended in the past on coal industry and palm produce. At the helm of administration in the State is an Executive Governor elected on the platform of a registered political party. The State has 24 Ministries overseeing the affairs of Government, the State House of Assembly also has 24 members elected from the 24 Constituencies of the State with the State Judiciary as the third arm of Government. It covers an area of 7,161km2 (2,765sq mi), and ranks 29 th out of the 36 states of Nigeria in terms of area coverage. The State has a good climatic condition all year round. The hottest month is February with about 87.16*F (30.64*C), while the lowest temperature is recorded in November/December, reaching about 60.54*F (15.86*C). The lowest rainfall of about 0.16 cubic centimeters is recorded in February, while the highest rainfall is recorded in July at about 35.7 cubic centimeters. 4 Feasibility Study/Project proposal

5. BACKGROUND According to 2006 National Census Report, Enugu State population was 3,267,837 (1,596,042 – males and 1,671,795 – females) thereby ranking 23 rd out of the 36 states of the federation. However, using the annual national population growth rate of 3.18%, the State population is projected at 4,331,318 for the year 2015. The State has seventeen Local Government Areas (LGAs) with principal cities such as Enugu, Agbani, Awgu, Udi, Oji River and Nsukka. Coal was discovered in the State in 1909 and mining of coal started in Ogbete, Enugu in 1916. Of all the minerals available in the State, only coal has been exploited in commercial quantities. Limestone has been confirmed to occur in commercial quantities and Dangote Group (Nigeria’s leading indigenous manufacturing business) is in the process of setting up a cement manufacturing plant in one of the limestone locations in the State. There are varied natural resources and large number of well-trained manpower in the State with talented professionals who are determined to provide manpower base to support investors in transforming the State into a private sector driven economy. The UNDP human development report indicates that as at 2007, the per capita income of the State stood at $307.60 (N46,140), but this grew to about $420.97 (N63,145.78) in 2015, drawing from the annual growth rate of per capita income at 4%. 5 Feasibility Study/Project proposal

6. BACKGROUND On security, the State received an award for the most outstanding Community Policing Command in West Africa for 2014, United Arab Emirate (UAE) due to organized Neighborhood Watch Programme in the State and proper linkage to the security agencies for effective Community Policing. There are major markets in the State before the advent of shopping malls, super markets and other trading places. Some of these markets include: Ogbette, Kenyatta, Gariki, Ogige Nsukka, Orie Orba, Afor Agbani, Orie Awgu, Nkwo Ezeagu, Ndiuno/Obeleagu Umana, Nkwoagu Udi, Ozudaa Achi, Afor Ugwuoba, Nkwo Ibagwa, Ogrute Main market, Orieagu Udi, Afor Ugwogo, Aforugwu Owa among others. 6 Feasibility Study/Project proposal

7. BACKGROUND Tertiary institutions within Enugu State For the State to achieve equitable and wide spread of Education to enhance the production of professional and technical manpower required for economic growth in all ramifications. The present administration has as its priority the reforming in the education sector and the state as a destination for quality manpower as well a centre of excellence. The existing high institutions in the state as shown below provides a hub for quality education and sustainable manpower development. 7 FGN Owned Institutions University of Nigeria, Nsukka Federal College of Education Federal School of Dental Technology State Owned Institutions Enugu State University of Science and Technology Institute of Management and Technology Enugu State College of Education Technical State College of Agriculture and Agro- Entrepreneurship Studies Enugu State Polytechnic Iwollo Private Institutions Caritas University Renaissance University Bishop Godfrey Okoye University Our Saviors Institute of Science and Technology Institute of Ecumenical Studies Peace land College of Education African Thinkers Community Of Inquiry College Of Education Feasibility Study/Project proposal

8. BACKGROUND BACKGROUND Financial Institutions in the State For commerce and industry to thrive in any society, an efficient and sound financial institutions must be in place. Therefore to service the numerous companies, industries and other commercial concerns in the state are the zonal branch offices of the following Commercial and Micro-Finance Banks: 8 CBN (Zonal office),First Bank, ZenithBank, UBA,UnityBank,Eco Bank Stanbic IBTC,FCMB Plc, Sterling Bank, Union Bank, Guarantee Bank Fidelity Bank, Diamond,Skye Bank,BOI(Stand office) Access Bank,Heritage Bank Commercial Banks OHHA MFA, Enugu Umuchinemere Pro-credit MFB Coal Camp MFB, Enugu Nnebuife MFB,Enugu Bethel Micro –Finance Bank Ogige MFB, Nsukka UNN MFB Micro- Finance Banks Feasibility Study/Project proposal

9. PROJECT PROPOSAL Overview Enugu State Government is ever committed to diversification of the economy as a strategic initiative to boost Internally Generated Revenue for a sustainable industrial and economic development, despite the financial crisis facing the nation. However, considering the expected development of foreign and local investments accruing from the recently concluded Investment Summit. The State Government seeks to acquire bond in order to finance critical infrastructure needed to create enabling environment for Investors. In line with the development aspiration of the people of Enugu State and Four Point Agenda of His Excellency Rt Hon.Ifeanyi Ugwuanyi, the Governor of Enugu State of Nigeria, the State Government has proposed to access the bond market for a long term funding. The proceed from the bond will be used to fund infrastructural development initiatives. The objectives of the proposed bond issues include but not limited to: Over all development of Enugu State Provision of critical infrastructure across 17 Local Government Areas of Enugu State. Provision of Central Infrastructure Enhance investment effectiveness Improve quality of life of her citizens 9 Feasibility Study/Project proposal

10. PROJECT PROPOSAL The projects selected for funding, would indeed open up the State economy as well as enhance the Internally Generated Revenue through the strict collection of all revenues due to the Government. For instance, the road infrastructure when completed has a multiplier effect of boosting Real Estate Development like ground and tenement rates should be collected from housing infrastructure. 10 Feasibility Study/Project proposal

11. PROJECT PROPOSAL Project Profile Provision of Road and other infrastructure The administration of His Excellency Rt. Hon Ifeanyi Ugwuanyi has for the past one year committed itself to the funding of critical infrastructure in order to provide enabling environment for private sector development. Greater percentage of this Bond will be utilized to fund the expansion of existing road network, development of new road, provision of street Lights, traffic Lights and road signage in different parts of the State. The allocation for road will cover both on going roads, newly advertised roads and others extracted from the integrated Enugu Urban renewal document. The overall goal as contained in the 4-Point Agenda is to create Job, reduce Poverty, provide Security, enhance Night Business and also provide world class road infrastructure that will reposition the State as a regional hub of the South East. Completion of New Secretariat Complex A vibrant Civil Service is an institutional memory that will provide critical link between the policy making and implementation, to this extent, upon assumption of office His Excellency expressed the desire to complete the Ultra Modern State which was inherited by the new administration. This is to improve the quality of available manpower in the State as way of motivating them for an improved service delivery. to the completion of. On assumption of office, the Governor completed the first phase of the New Secretariat to afford staff world class working environment with plans also to complete the second phase and also relocate the remaining staff. These efforts are geared towards enhancing the productivity of the civil servants thereby enhancing service delivery in the system. A robust civil service system will create enabling environment to facilitate PPP arrangement that will lead to a sustainable that will lead to expanding the frontier for public sector to contribute in the development of the State Public /Private sector driven economy that will invariably cause a multiplier effect and affect all sectors including growing the IGR of the State. 11 Feasibility Study/Project proposal

12. PROJECT PROPOSAL Completion of Medical Diagnostic Centre The Diagnostic Centre is one of the projects inherited from the last administration which has been earmarked for completion in line with His Excellency’s desire in making Enugu State a Health Tourism State which was demonstrated during the recently concluded Investment Summit in the State where Health Tourism was one of the Themes considered very keenly. The current administration has rolled out plans to complete and operationalize this world class Medical Diagnostic Centre in the State, when completed will reposition Enugu as a Health Tourism State in Nigeria. Enugu/Nsukka Water Scheme One of the challenges facing the State in which the state intends to confront is the provision of adequate water supply to the citizens, successive governments have tried to improve water supply in the State but have not really being successful. His Excellency Rt.Hon. Ifeanyi Ugwuanyi understands clearly that water is crucial for sustenance of life as well as other social and economic uses and that intervention in this area of improving water supply will invariably improve the IGR in the state. To tackle this head on, the Governor has adopted these schemes listed below: The Ajalli Owa Water Scheme: This water project has its source from the Ajalli River, which originates from Ezeagu Local Government Area. This project is to supply water to Enugu metropolis and environ. The Oji River Water Scheme: This is a World Bank -assisted project aimed at expanding the current water supply to Enugu City and adjoining Local Government Areas in the State. The Greater Nsukka Water Scheme: This another water project being implemented by the Enugu State Government. The scheme is aimed at ensuring steady water supply to Nsukka environ. The source for the water is Adada River in Uzo-Uwani Local Government Area of the state. 12 Feasibility Study/Project proposal

13. 13 THE PROJECTS AND COST PROFILE NEWLY ADVERTISED S/N PROJECT NAME LOCAL GOVT/LOCATION ALLOCATION 2016 (N) 1 Construction of Ugbawka-Nara-Nkerefi road (Phase 1)Nkanu East35,000,000 2 Construction of Amechi-Idodo-Amuzam-Amagunze road (Phase 1)Nkanu East20,000,000 3 Design and construction of Enugu Akwu Achi-Nkwo Inyi market road (Phase 1) Oji River30,000,000 4 Construction/rehabilitation of 600 metres Onu Nweneabo-Ndiuno Akpuoga Nike access road Enugu East20,000,000 5 Construction of 600 metres Ibagwa Nike-Amaokpo boundary roadEnugu East20,000,000 6 Construction/rehabilitation of Iheaka-Ibagwa-Alo Agu road (Phase1)Igbo-Eze South25,000,000 7 Design and construction of Uhuogiri-Nenwe/Oduma road (Phase1)Aninri20,000,000 8 Design and construction of Amaeguelu-Amumkpa-Ogbombara Etitiama- Onuihiala road (Phase1) Aninri20,000,000 9 Construction of Ukehe-Aku-Nkpologu roadIgbo-Etiti30,000,000 10 Construction of Amokwe road starting from Udi Station, through Ibuzo Amokwe to Amokwe Station (Phase1) Udi40,000,000 11 Construction of 9 th mile-Ajali-Imezi Owa Local Government Headquarters- Aguobu-Owa-Awka North, Anambra road (Phase1) Ezeagu40,000,000 12 Construction/installation of belly bridge across Nyama river linking Umuogo Amechi and Ugwuagba Amechi Uno/Obeagu communities (Phase1) Enugu South10,000,000 13 Completion of the construction of Ndemde Bridge and surfacing of the road linking Maryland, New Era and Achara layout Enugu South35,000,000 14 Reconstruction/rehabilitation of Poly clinic-Ilukwe-Church road, Fork road Asata (Phase1) Enugu North20,000,000 15 Completion of Omuoha-Obuoffia bridgeNkanu West20,000,000 Feasibility Study/Project proposal

14. 14 THE PROJECTS AND COST PROFILE 16 Construction/rehabilitation of Ogonoeji-Ndiagu Akpugo road (Phase 1)Nkanu West15,000,000 17 Construction/rehabilitation of ugbene ajima-ezeani-Army Barrack Nsukka road (Phase 1) Uzo Uwani25,000,000 18 Construction/rehabilitation of Ngene-Oyibo-Agunese-Mmaku road (Phase 1)Awgu10,000,000 19 Construction/rehabilitation of Ogbaku-Ogugu-Owelli-Ihe road (Phase 1)Awgu40,000,000 20 Construction/rehabilitation of umualor-Eha Amufu road (Phase 1)Isi-Uzo40,000,000 21 Design and construction of Okpu-Orba junction-Ohebe Agu-Orba primary school road (Phase 1) Udenu30,000,000 22 Construction/rehabilitation of Ohom-Orba-Nkpo-Orba market (Phase 1)Udenu18,129,964 23 Design and construction of Dam Uke road (Phase 1)Aninri20,000,000 24 Design and construction of Amachala Onovo-Nzerem road (Phase 1)Aninri20,000,000 WATER 1Enugu/Nsukka Urban water scheme Enugu1,000,000,000 TOTAL 1,603,129,964 OTHER PROJECTS 1 Completion of New Secretariat complexEnugu500,000,000 2 Completion of Medical Diagnostic centreEnugu700,000,000 1,200,000,000 GRAND TOTAL 15,000,000,000 Feasibility Study/Project proposal

15. JUSTIFICATION Enugu State Government remains the highest employer of labour in the State, but this is about to change soon, as His Excellency, Rt Hon Ifeanyi Ugwuanyi has a broad-based strategic plans currently on to ensure that the State is listed among the top destinations for local and international inventors who desire to invest in Nigeria. Enugu State economy has maintained a steady growth trend and a good measure of stability and this is largely attributable to the relative political stability, strong and efficient institutions, security, critical infrastructure development and consistent economic policy direction. This positive development has opened up the economy by creating opportunities for private investors and businesses to thrive, thereby furthering the economic development process in the State to a higher level. This is evident in the rate of local and foreign investment flow into the State. Further evidence of this good enabling environment provided by the State Government is the rating as one of the 65 th Most Resilient Cities in the World in 2015. Earlier in 2013, the former Inspector General of the Nigeria Police, Abubakar Mohammed, voted Enugu State as the Safest State in Nigeria. Enugu State Government just hosted an Investment Summit which took place from the 12 th – 14 th of April, 2016 which was attended by people from all over the world. This has basically put pressure on the State to provide critical infrastructure. This summit has opened the state for local and foreign direct investment and therefore required extensive investment in areas of critical infrastructure. The ministry of Commerce and Industry has put in place measures required to improve on easy way of doing Business Index in the State. 15 Feasibility Study/Project proposal

16. JUSTIFICATION The State Government has signed many MOUs (memorandum of understanding) with investors and is in the process of signing more for investment in the critical sectors of the economy, hence the need to provide road infrastructure and other social amenities. The State is working with Federal Government to reposition Akanu Ibiam International Air port to become a Cargo Hub that will serve as a transit point for cargo into Nigeria, as well as to other West and Central African countries. Enugu State is strategically located as a nodal State, connecting Eastern, Western and Northern Nigeria in trade and commerce. It is easy to access part of Nigeria from Enugu State. This accounts for rapid development of 9 th Mile Corner Ngwo as an industrial and commercial area. A Free Trade Zone is also emerging within the 9 th Mile Corner axis. Hence the favorable location of Enugu State that enhances accessibility to other parts of Nigeria is a major growth driver in the development process of the State. Enugu State has high quality natural water which is another driver. It has been shown that Enugu State has one of the best high quality natural water reserves in Nigeria. This partly accounts for the location of major breweries – Nigerian Breweries Plc, Nigerian Bottling Company Plc, 7- up – Bottling Company Plc in the 9 th Mile Corner area. It also accounts for the establishment of water processing plants like Aqua Rapha, Eva,etc at the 9 th Mile and other areas of the State. 16 Feasibility Study/Project proposal

17. JUSTIFICATION Recently, a committee made up of prominent private and public sector players from the State, was set up to facilitate the passage of the Bill on Public Private Partnership which is already at the State House of Assembly, the Bill will give the private sector players the enabling environment to thrive in the State in terms of doing business. The committee is made up of renowned intellectuals, entrepreneurs, etc in the State. The current administration is further developing agriculture, trade, commerce and service sectors which are the major contributors to the State’s GDP so as to yield more revenue and expand the economy of the State, also through provision of urban and rural infrastructure to attract foreign investors into the State. Commercial agriculture is the main thrust and San Carlos agricultural initiative, a PPP project, is currently exporting pineapples to many countries. The State is projected to certainly make about 2.5 to 3billion monthly from IGR in the next 7years. The state has also adopted a Single Treasury Account and a robust ICT platforms to ensure that all eligible tax payers are brought into the State Tax Net and leakages are blocked. This way all Government revenues are paid into the coffers of the Government by all Government establishments and eligible tax payers in the State. Considering His Excellency’s score cards for the past one year and expected inflow of private investment into the State gives a strong justification for the State to redouble its efforts towards investing in infrastructure. Therefore, justifies the proposed application for Bond. 17 Feasibility Study/Project proposal

18. JUSTIFICATION Enugu State also recorded the 3 rd and 4 th positions out of the 36 State in Nigeria in terms of Internally Generated Generated Revenue (IGR). Hence, need to diversify its economy, plug avenues of wastages due to immediate implications of the current economic slowdown in the country. Recently, a committee made up of prominent private and public sector players from the State, was set up to facilitate the passage of the Bill on Public Private Partnership which is already at the State House of Assembly, the Bill will give the private sector players the enabling environment to thrive in the State in terms of doing business. The committee is made up of renowned intellectuals, entrepreneurs, etc in the State. 18 Feasibility Study/Project proposal

19. GOVERNANCE STRUCTURE The Governor and the Executive Council At the helm of administration in the state is an Executive Governor. He/she is elected on the platform of a registered political party in Nigeria. Constitutionally, a person so elected serves for a term of four years, and could be re-elected for another four year tenure, after which he/she is no longer eligible for another term. To assist the governor in the administration of the state are the commissioners. Commissioners are appointed by the governor, and after the approval by members of the State House of Assembly, they are assigned to ministries where they serve as chief executive officers. The ministries and parastatals are the implementing organs of government. The governor, alongside the commissioners and other top government functionaries constitute the State Executive Council. The council is usually convened once a week where policy issues and other important state matters are discussed. 19 Feasibility Study/Project proposal

20. GOVERNANCE STRUCTURE List of Ministries Enugu State has the following ministries ; Ministry of Justice Ministry of Information Ministry of Transport Ministry of Housing Ministry of Rural Development Ministry of Works and Infrastructure Ministry of Commerce and Industry Ministry of Gender Affairs and Social Development Ministry of Human Development and Poverty Reduction Ministry of Labour and Productivity Ministry of Environment and Mineral Resources Ministry of Lands and Urban Development Ministry of Water Resources Ministry of Chieftaincy Matters Ministry of Special Duties/Inter-governmental Affairs Ministry of Agriculture Ministry of Budget and Planning Ministry of Science and Technology Ministry of Culture and Tourism Ministry of Local Government Matters Ministry of Finance and Economic Development Ministry of Youth and Sports Ministry of Education Ministry of Enugu Capital Development Authority 20 Feasibility Study/Project proposal

21. GOVERNANCE STRUCTURE The State House of Assembly Enugu State has a legislative assembly known as the State House of Assembly. It is made up of 24 members, drawn from the 24 State Constituencies of Enugu State. They are elected and serve for a four year term, and can be re-elected for as many times as possible. In other words there is no time limit for members and this is backed by the constitution. Primarily, their main duty is to receive, debate and pass bills, plus other oversight functions. At the head of this legislative body is the Speaker, who is assisted by a Deputy Speaker. The 24-member legislature is also formed into committees to facilitate the business of the House. Though rarely used, the legislature has the powers to impeach the governor of the state, if the latter commits an impeachable offence. 21 Feasibility Study/Project proposal

22. GOVERNANCE STRUCTURE The State Judiciary Enugu State has a well developed judicial system. There is a Chief Judge for the state. He is more or less the first among equals, but could assign duties, as well as supervise activities of other judges. The other judges are posted to the various high courts or judicial divisions scattered all around the state. The judicial divisions in Enugu State include; Enugu, Nsukka, Oji-River, Udi, Agbani, Enugu Ezike, Awgu and ObolloAfor. There is also the Customary Court of Appeal where appeals arising from customary courts are settled. The judge here has an almost equal powers as the Chief Judge of the state. There are several magistrate courts in virtually all the local government headquarters in the state. They are headed by magistrates and chief magistrates. The office of Chief Registrars, their deputies and registrars, are key to the effective and efficient running of the judicial system in the state. These are high ranking judicial officers, most of whom are eventually appointed as judges.. 22 Feasibility Study/Project proposal

23. GOVERNANCE STRUCTURE Apart from the courts and judicial officers directly under the control of the state government, there are other appellate bodies like the Supreme Court of Nigeria and Federal Court of Appeal which have obligatory jurisdiction, at statutorily defined stages over the tribunals that operate in the state. Other federal adjudicating bodies in Enugu State include, Federal High Court, National Industrial Court, Electoral Tribunals, Code of Conduct Bureau, Special Tribunals like the Disciplinary Body of various professional organizations, as well as Alternative Dispute Resolution (ADR) centres. Local Government Administration There are 17 Local Government Areas (L.G.As) in Enugu State. At the head of the administration of the local government is the Executive Chairman. They are elected to serve for two years, and can be re- elected for another two year tenure and no more. The executive chairman has a deputy, as well as councilors to run the affairs of the local government council. The councilors who are also elected, represent the various wards that constitute the local government area.. 23 Feasibility Study/Project proposal

24. GOVERNANCE STRUCTURE List of Local Government Areas Aninri Awgu Enugu East Enugu North Enugu South Ezeagu Igbo-Etiti Igbo Eze North UzoUwani Igbo Eze South Isi Uzo Nkanu East Nkanu West NNsukka Oji River Udenu Udi 24 Feasibility Study/Project proposal

25. GOVERNANCE STRUCTURE Communities and Traditional Rulers There are 440 communities in Enugu State. These communities are headed by traditional rulers known as Igwes. Most are elected by their people during their General Assemblies. Monarchy and hereditary assumption of leadership in these communities are neither common, nor popular in Enugu State, except in very few exceptions. Each Igwe who is the traditional custodian of the community’s culture and tradition, has a Council of Chiefs or Elders who assist him in the administration of the community in line with their traditional norms and values. There are also President Generals (PGs) in each of the communities. These PGs are assisted by members of their executives. Their functions and roles are complimentary, as well as advisory to that of the Igwe and his Council. State Council of Igwes Enugu State has a Traditional Council of Rulers(Igwes) that is appointed by the governor. At the head of this council is a chairman, assisted by three deputies nominated from the 3 Senatorial Zones in the state. It also has a Grand Patron and 2 Patrons The duty of the council is advisory. They advise the state government on matters pertaining to customary laws, cultural and inter-communal affairs. The councils serves for a period o three years before a new one is appointed.. 25 Feasibility Study/Project proposal

26. GOVERNANCE STRUCTURE GOVERNANCE STRUCTURE Representatives of the State at the Federal level In line with constitutional provisions, Enugu State has three senators, representing her at the Senate arm of the National Assembly in Abuja, Nigeria’s capital. Each senator represents a senatorial zone, of which there are three in the state, namely; Enugu East Senatorial Zone, Enugu North Senatorial Zone and Enugu West Senatorial Zone. Likewise, there are 8 House of Representative Members representing Enugu State at the National Assembly. Each of these House of Representative Members who are elected on the platform of their political parties represent a Federal Constituency. The 8 Federal Constituencies in Enugu State are, Enugu North/Enugu South, Nkanu East/Nkanu West, Udi/Ezeagu, Oji-River/Awgu/Aninri, Enugu East/Isi Uzo, Nsukka/Igbo Eze South,Igbo Etiti/UzoUwani, and Igbo Eze North/ Udenu. 26 Feasibility Study/Project proposal

27. ENUGU STATE ECONOMY Enugu State economy over the years has been driven by the Public Sector thereby making the State Government the highest employer of labour. This notwithstanding, much efforts are being made to lift the burden off the State Government by providing the enabling environment for the Private Sector to thrive and drive the economy. 60% of the State’s population are farmers, while about 18.8% are engaged in trading, and 12.9%, in services, while a small proportion engage in manufacturing. However, the State is making efforts to further develop agriculture, trade and services which are the major contributors to the State’s GDP to yield more revenue and expand the economy of the State. The current administration under the leadership of His Excellency, Rt. Hon. Ifeanyi Ugwuanyi had ensured continuity and sustenance of the reforms which the State witnessed over the years. These include massive infrastructural development, improving on public financial management and institutionalizing transparency, accountability and governance of all inclusiveness. The Government has also implemented various programes and projects in virtually all sectors, using realistic budgeting, perspective planning and robust procurement process as effective management tools. It is pertinent to note that about 66% of the resource envelope of Enugu State comes from Federation Account Allocation and VAT while the Internally Generated revenue contributes about 29% based on the actual revenue inflow to the State from 2007-2015. 27 Feasibility Study/Project proposal

28. 28 ENUGU STATE ECONOMY Feasibility Study/Project proposal

29. ENUGU STATE ECONOMY In exploring funding for plan/budget, the State optimizes its finances by partnering more with the private sector for capital projects, hence enhancing Public Private Partnership. The State is in the process of passing some bills to strengthen governance and improve the lives of the people. Among these bills are the Child Right, PPP, Investment law etc. In order to articulate and plan our Investment and Trade Policy, the State has established an Investment Agency (Enugu State Investment Development Authority). The State has recorded significant performance in realistic planning and budgeting. Its recurrent to capital expenditure ratios has been good over the years except in 2015 due to the massive drop in revenue inflow which was occasioned by the fall in oil price. State IGR contributes about 29% of the total resource envelop of the State. The State’s IGR grew from N4.7 billion in 2007 to N20 billion in 2013 and down to 17.6 billion in 2015. Enugu State IGR recorded 3 rd and 4 th positions out of the 36 States in Nigeria in 2013 and 2014 respectively, among the fastest growing economies. 29 Feasibility Study/Project proposal

30. ENUGU STATE ECONOMY 30 Feasibility Study/Project proposal

31. CASH FLOW ANALYSIS CASH FLOW ANALYSIS Enugu state cash flow analysis The financial analysis of Enugu State Government over the years has shown that the financial resources available to the State in the long and medium term were mainly from federation allocation and internally generated revenue. Enugu State is one of the least States in monthly FAAC allocation distributed among States of the Federation, nevertheless, the (FAAC) contributes about 70 percent of the total resource envelop of the State annually. However, the State Government over the years has shown sustained commitment towards improving the IGR, which recorded 17 percent average annual increase from 2010 – 2015, and ensured prudent financial management for implementation of projects and programmes in Enugu State. More efforts are currently in place to sustain and improve the IGR administration of the State in order to fund government projects and programmes for the medium term. 31 Feasibility Study/Project proposal

32. CASH FLOW ANALYSIS CASH FLOW ANALYSIS Source: Approved Budgets and Audited Financial Accounts 2010 - 2015 32 Feasibility Study/Project proposal

33. CASH FLOW ANALYSIS CASH FLOW ANALYSIS The above table shows that the main sources of revenue in the State has been unpredictable since 2010 including the Capital receipts. This is due to the volatile nature of the revenue items. However, the continuous fall of oil price in the international oil market and the insurgency in the Niger Delta area of the country which has drastically reduced the volume of oil production per day has contributed to the poor revenue inflow into the State. Notwithstanding, it is widely believed that the trend will surely change and improve for good, but, the State Government needs to channel more of its attention on increasing its internally generated revenue. A monthly internally generated revenue of about 2.5 billion naira to 3 billion naira would be a commendable achievement for the State. Sequel to the challenges faced by the State Government in carrying out developmental projects and programmes in the State owing to poor revenue from FAAC which barely takes care of recurrent expenditures, thereby leaving little or no income for capital expenditures, a move to acquire an additional credit facility had been initiated through the issuance of a bond which would be repayable over a period of seven years. Considering the uncertainty in the global oil market and other variables which has an effect on the revenue of the State, a projected inflow of revenue to the State for the next seven years is shown in the table below: Source: Approved Budgets and Audited Financial Accounts 2010 - 2015 33 Feasibility Study/Project proposal

34. CASH FLOW ANALYSIS CASH FLOW ANALYSIS Macroeconomic Projection – Enugu State Resource Framework 2016 – 2022 34 Feasibility Study/Project proposal

35. CASH FLOW ANALYSIS CASH FLOW ANALYSIS Fiscal Assumptions Statutory Allocation–this is estimated using elasticity based forecast with an oil price of $45 per barrel, naira-USD exchange rate of N190 to $1 and production benchmark of 2.2782 mbpd. The Naira-USD exchange rate and production benchmark per day are consistent with the benchmark contained in the federal government fiscal strategy paper 2015-2017. However, the oil price of $45 per barrel is slightly lower than $52 per barrel provided in the federal government fiscal strategy paper. The use of price benchmark of $45 per barrel is because the oil price has continued to nosedive in the international market. This revenue item also includes the Excess Crude proceeds which is not consistent with the monthly allocations. VAT–the estimate for VAT is based on a three-year moving average. When compared to other moving averages and elasticity based forecast, the three-year moving average gave a figure that was more in tandem with historical performance of VAT in Enugu State. Internally Generated Revenue (IGR)–between 2012 and 2013 the IGR increased astronomically as a result of reforms instituted by the State Government, in particular the inclusion of retained revenue from the MDAs. Though in 2014, the retained revenue was excluded, hence the drop in the 2014 IGR figure. The new administration has committed to a continuation and consolidation of the reform efforts instituted by the immediate past administration. It is therefore felt that based on these reforms, IGR will improve tremendously. However a projected percentage (own) of 1%, 2% and 3% was used for 2016, 2017 and 2018 respectively. 35 Feasibility Study/Project proposal

36. CASH FLOW ANALYSIS CASH FLOW ANALYSIS Grants–Grants are highly unpredictable and very difficult to estimate. It can only be estimated by the State through signed commitments with local and international donor agencies, institutions and governments. Consequently, the estimates for Grants were input into the MTFF manually based on Enugu State’s own estimates. Net Financing - This source of revenue is comprised mainly of internal and external loans which like grants, are also unpredictable, but to a minimal extent. However, consideration was made of the bond repayment to cover a period of seven years and caution applied in order to arrive at a realistic estimates in the model. Personnel–the previous administration introduced measures to consolidate the wage bill which stabilized personnel cost. The current administration is determined to sustain the trend. It is anticipated that the number of political office holders would be reduced. It is equally expected that the new administration would approve and implement the minimum wage. Consequently, a modest increase in personnel cost is projected for the forecast period. Overheads–the overhead involves government expenditures on running its activities in the State. It is distributed to various MDAs across the State in order to facilitate government businesses. The overhead cost projections reflects a slight annual increases for the years. Capital Expenditure–this is based on recurrent account surplus and capital receipts. The ratio of capital- recurrent expenditure since 2009 has been in the range of 43% to 55% respectively. However, the capital expenditure is expected to be above the recurrent from the year 2017 through 2022 and beyond as this guarantees economic growth and development. 36 Feasibility Study/Project proposal

37. CASH FLOW ANALYSIS CASH FLOW ANALYSIS Fiscal Risks It should be noted however that there is no budget is without risk. The ongoing implementation of the 2016 budget should be closely monitored, as should the security situation and impact of the fiscal and economic outlook. However, the challenge facing the realization of the budget includes but not limited to the following: 37 RISKLIKELIHOODREACTION Oil price volatility and vandalization of oil pipelines High The State is applying caution in forecasting because of the volatile nature of the oil price. The capital receipts estimates for grant in 2016, 2017 and 2018 might not be fully achieved if they are not backed by signed grants commitments. Medium The State is in the process of signing MOUs with various development partners coming into the State to ensure realization of the projected grants. The State is equally in the process of issuing a bond for 15 billion naira in order to finance infrastructural development. This would be payable over a period of 7 years. Security challenge in the State and Country in general Low According to the Inspector General of Police, from current Police records, Enugu State has the lowest crime rate in the country and is, therefore, the safest State in Nigeria. Inability to finance personnel cost, pensions and gratuities, and other allowances HighThe State has introduced measures to reduce the cost of governance through the verification of all public officers as well as pensioners in the State. This is to free more resources for developmental projects. Feasibility Study/Project proposal

38. CASH FLOW ANALYSIS CASH FLOW ANALYSIS Enugu State Debt Sustainability Analysis Enugu State Government has over the years acquired loans in order to finance its developmental projects and programmes in the State as a way of providing capital development which is critical for economic growth and development of any State or nation. The table below shows the debt profile of the State for 2014 and 2015 fiscal years. 38 Feasibility Study/Project proposal

39. CASH FLOW ANALYSIS CASH FLOW ANALYSIS The debt sustainability threshold is the international benchmarks/percentage earmarked for measuring State’s performance vis a vis the debt acquired for every fiscal year. That is to say that to maintain a good debt profile, the performance recorded by the State should not be more than the benchmarks. As at 31 st December, 2014, the State debt profile was good except for the domestic debt service to State IGR where the performance was more than the benchmark thereby recording 19.47% against the 10% benchmark. This was also high in 2015 which shows a 42% performance showing a decline in IGR and an increase in net financing. The benchmark for debts shows that the Total Domestic Debt to Total Revenue accruable to the State should not be more than 50%, but Enugu State performance for 2015 shows a 28% Total Domestic Debt to Total Revenue while the external debt profile was just 1%. Also the total domestic debt to IGR of the State for 2015 has not exceeded the benchmark. 39 Feasibility Study/Project proposal

40. ENUGU STATE MEDIUM TERM REVENUE AND EXPENDITURE FRAMEWORK 2016 - 2019 40 Additionally, the Public Private Partnership would be enhanced as a result of the just concluded Investment Summit which would attract more investors and transform the State from a Public to a Private sector driven economy. Enhancement of PPP model On the expenditure, the cost of governance would be reduced in order to free more resources for capital expenditure which is critical for economic development. Reduction of cost of governance The State cash flow analysis is robust enough to sustain repayment arrangements. Our books and projects listed for funding are open for inspection. Robust cash flow The MTEF (2016-2019) above shows the State’s projections for the medium term. The State seeks to increase its internally generated revenue thereby, reducing the dependence on federally collectible revenue. To increase IGR Reviewing of the tax rates as well as the computerisation of the tax collection system is ongoing, hence the State is expected to derive more revenue from Value Added Tax within the medium term. Computerization of Tax collection More importantly, due to the effort towards improving the State’s IGR, the loan portfolio of the State would be reduced both domestically and internationally. Loan portfolio to reduce

41. INVESTMENT OPPORTUNITIES UNDER PPP 41 State Government Industries for Privatization Commercialization of Agriculture International Conference Center Establishment of Industries/ Industrial Parks and Clusters Sunrise Flour Mill Ltd, Emene Niger Gas Company Ltd, Emene Niger Steel Company Ltd, Emene Enugu State Vegetable Oil Ltd (AVOP), Nachi Aluminium Factory Ltd, Ohebedim Presidential Hotel, Enugu Nigeria Construction & Foundation Company Ltd (NCFC), Enugu

42. INVESTMENT OPPORTUNITIES UNDER PPP CONTD.. 42 Equipping of State Diagnostic Center Airport Transit Cargo Area located close to the Akanu Ibiam International Airport in Enugu Waste Disposal and Management (Estb. of Waste Recycling Plant) Health Infrastructure & Medical Equipment Development Feasibility Study/Project proposal

43. INVESTMENT OPPORTUNITIES UNDER PPP CONTD.. Feasibility Study/Project proposal