BY OBINNA ORIAKU
HON. COMMISSIONER, MINISTRY OF FINANCE
The Honourable Speaker,
Honourable Members of the State House of Assembly,
Ladies and Gentlemen,
Today, I consider it a singular honour and privilege to stand before your revered presence in this hallowed chamber to present to you the breakdown of Abia State Draft Budget Estimates for the 2018 Fiscal Year. This assignment is to provide in detail the financial policies and proposals embodied in the Draft Budget Estimates the Governor, Dr. Okezie Ikpeazu, Ph.D. presented to you on 22nd December, 2017.
The 2018 Abia State Draft Budget is christened “Budget of Partnerships and Opportunities”. This clearly shows government’s direction in the present economic uncertainties facing Nigeria as a nation. Government and indeed Abia State citizens need to look beyond our borders in search of partnerships and endeavour to take full advantage of the opportunities such partnerships present to ensure economic development, growth and to be able to attain the Sustainable Development Goals and Targets in the State. In doing this it is important to show tenacity, frugality and transparency in our financial management style as partnerships can only be attracted in such financial management climate.
There is need to balance our priorities against available resources and also apply ourselves to partnerships to survive as a people. The Draft Budget is, therefore, focusing on the most effective means of allocating our scarce resources among identified critical programmes and projects and guided steps in the implementation when approved.
GOALS:
We are minded to drive the economy through the 5 Pillars and the enablers to provide critical infrastructure; enthrone fiscal responsibility and sustainability programmes, invest in public service and good governance to position Abia in the path of growth. Aba is still critical to our determination to improve and develop Abia. Government will therefore leave no stone unturned to put in place the concomitant infrastructure to make Aba give us better returns in terms of Internally Generated Revenue (IGR). We will also make Abia conducive for domestic and direct foreign investments and other partnerships. Priority attention will be paid to create the right business environment that will produce quantum expansion of investment in critical areas that will revitalize and explode the activities of the SMEs especially in the city of Aba. This will come with attendant job creation for the unemployed youth and increase the IGR of the State.
Review of 2017 Budget (January – September)
The year 2017 was a very challenging one. The distortions in Nigeria’s economy adversely affected our major source of revenue – FAAC. Nigeria’s economy depends largely on revenue from Oil. The fall in oil prices coupled with the hostilities in the Niger Delta, an already bad situation became worse. That was not all; the story of the performance of our secondary source of revenue, IGR was not better. These foregoing affected the Budget performance very adversely and compounded by internal leakages. Government is putting in place appropriate machinery to block the leakages and as well improve our revenue profile.
2017 Budget had a total outlay of N111,728,162,580 (One Hundred and Eleven Billion, Seven Hundred and Twenty-eight Million, One Hundred and Sixty-two Thousand, Five Hundred and Eighty Naira) only. The composition was as follows:
Capital Expenditure = N49,285,379,000; and
Recurrent Expenditure = N62,442,783,580.
THEME
The theme of 2018 Budget as we already know is “Budget of Partnerships and Opportunities”. This theme clearly shows government’s direction in the face of economic disequilibria. Government is determined to look beyond our borders in search of partnerships and endeavour to take full advantage of the opportunities such partnerships present to keep the State going and attain Sustainable Development Goals (SDGs) and the targets in the State. In doing this it is important to provide the right and friendly business environment as well as transparency in our way of running the government.
OBJECTIVES:
The targets of the Year 2018 Budget are in line with but not limited to achieving our 5-pillars objectives. They are as indicated hereunder:
to provide appropriate agro-input that will increase production and access to quality agricultural produce;
to provide the platform that will encourage agro industrial production ;
to grow indigenous entrepreneurs;
to develop SMEs with the right support (training, soft funding, etc) to stimulate the economy and create employment as well as revenue;
to provide qualitative and affordable health care that is accessible;
to access qualitative education with the right manpower;
to create the right business environment to make Abia State investors and investment destination;
to provide critical infrastructure to boost agriculture and trade; and
to ensure security for all which will rub off positively on commercial activities.
BREAKDOWN OF THE DRAFT BUDGET
The Abia State 2018 Draft Budget will be financed with projected Revenue of N80,083,177,854 (Eighty Billion, Eighty-three Million, One Hundred and Seventy-seven Thousand, Eight Hundred and Fifty-four Naira) only. This total estimated Revenue is made up of an expected flow of Receipts from:
Amount 👎 Percentage Contribution
Independent Revenue (IGR): N29,177,140,960 = 36.43
Tax RevenueN16,469,860,600= 56.4478
Licenses: 399,723,000= 1.37
Fees-General: 10,280,642,160= 35.2353
Fines-General: 268,270,700= 0.9195
Sales-General: 753,110,000= 2.5812
Earning-General: 811,074,500= 2.7798
Rent on Govt. Building General: 121,192,000 = 0.4152
Rent on Lands & Others General 64,500,000= 0.2211
Repayments General: 4,500,000= 0.0154
Investment Income: 3,435,000= 0.0118
Interest Earned: 273,000= 0.0009
Re-Imbursement General: - = 0.0
Miscellaneous: 560,000= 0.0019
Total N29,177,140,960
Expected Total Revenue from FAAC/VAT N50,921,036,894
*This represents 63.57% contribution from FAAC to the total Revenue, while Independent Revenue contributes 36.43%.
*Expected total Revenue including Capital Receipts is N97,939,691,765
RECURRENT EXPENDITURE:
The Recurrent Expenditure of government for the year 2018 is as follows: –
Personnel Costs=N32,377,433,770
Overhead Costs=N17,605,857,995
Consolidated Revenue Fund Charges=N18,495,900,000
Total=N68,479,191,765
This amounts to 48.59% of the total Budget outlay.
ESTIMATED RECURRENT BUDGET SURPLUS=N11,618,986,089
There is an expected flow of N11,618,986,089 from the Recurrent Revenue which will be transferred to the Capital Account to fund Government in Capital Projects.
THE CAPITAL BUDGET
In 2018, this administration intends to accelerate the completion of on-going infrastructure projects and embark on new initiatives that will deliver immensely on the economic growth of the State. As a result of this vision, government has proposed Capital Expenditure of N72,460,500,000.
The Capital Expenditure is to be financed by funds from the transfer from the Consolidated Revenue Fund and the Capital Receipts. The breakdown is as follows;
Transfer from Recurrent Revenue= N11,618,986,089
Grant from Donor Agencies= N17,618,513,911
Internal Loans= N43,000,000,000
Other Capital Receipts = N223,000,000
Total Capital Expenditure = N72,460,500,000
The Capital Budget of the State has the following main Sectors: –
Amount %tage of Capital Budget
Administrative Sector= N5,909,450,0008.16%
Economic Sector = N51,263,850,00070.75%
Law and Justice = N379,000,000 0.52%
Social Sector = N14,908,200,000 20.57%
TOTAL = N72,460,500,000
This amounts to 51.41% of the entire Budget outlay.
We have adopted sectoral allocations on programmes to help tracking, monitoring and evaluation and budget performance evaluation. The sectoral allocations are based on the following programmes:
S/No.
PROGRAMME
AMOUNT 👎
PERCENTAGE DISTRIBUTION
1
Economic Empowerment Through Agriculture
2,464,700,000
3.401%
2
Societal Reorientation
1,049,550,000
1.448%
3
Poverty Alleviation
1,566,000,000
2.161%
4
Improvement to Health
5,702,750,000
7.87%
5
Enhancing Skills Knowledge
4,714,500,000
6.506%
6
Housing & Urban Development
5,456,000,000
7.53%
7
Gender
34,500,000
0.048%
8
Youth
416,000,000
0.574%
9
Environmental Improvement
3,819,500,000
5.271%
10
Water Resources & Rural Development
1,323,000,000
1.826%
11
Information Communication & Technology
892,500,000
1.232%
12
Growing the Private Sector
838,238,000
1.157%
13
Reform of Government & Governance
17,851,262,000
24.636%
14
Power
734,000,000
1.014%
15
Road
25,592,000,000
35.318
16
Oil and Gas Infrastructure
6,000,000
0.008%
TOTAL
72,460,500,000
FUND ALLOCATION – CAPITAL EXPENDITURE BASED ON FUNCTION
FUNCTION
AMOUNT ALLOCATED 👎
PERCENTAGE OF CAPITAL EXPENDITURE
GENERAL PUBLIC SERVICES
18,597,362,000
26.6
PUBLIC ORDER AND SAFETY
586,000,000
0.8
ECONOMIC AFFAIRS
30,887,938,000
42.0
ENVIRONMENTAL
PROTECTION
3,397,000,000
4.6
HOUSING & COMMUNITY AMENITIES
7,428,500,000
10.2
HEALTH
5,623,000,000
7.7
RECREATION CULTURE AND RELIGION
275,500,000
0.4
EDUCATION
5,420,200,000
7.4
SOCIAL PROTECTION
225,000,000
0.3
BREAKDOWN OF FUND ALLOCATION – CAPITAL EXPENDITURE BASED ON FUNCTION
FUNCTION DESCRIPTION
AMOUNT 👎
%TAGE DISTRIBUTION
1.
GENERAL PUBLIC SERVICES
Executive and Legislative Organs
2,947,850,000
15.85%
Financial and Fiscal Affairs
254,800,000
1.37%
General Personnel Services
30,000,000
0.16%
FUNCTION DESCRIPTION
AMOUNT 👎
%TAGE DISTRIBUTION
Overall Planning Statistical Service
3,410,112,000
18.33%
Other General Services
11,938,600,000
64.2%
R & D General Public Services
16,000,000
0.09%
SUB-TOTAL
18,597,362,000
2
PUBLIC ORDER AND SAFETY
Fire Protection Services
262,000,000
44.71%
Law Courts
309,000,000
52.73%
Research and Development Public Order Safety
15,000,000
2.56%
SUB-TOTAL
586,000,000
3
ECONOMIC AFFAIRS
General Economic and Commercial Affairs
100,000,000
3.43%
General Labour Affairs
35,000,000
0.11%
Agriculture
2,384,700,000
7.72%
Coal and Other Solid Minerals
78,500,000
0.25%
Petroleum and Natural Gas
24,000,000
0.08%
Electricity
200,000,000
0.65%
Manufacturing
5,000,000
0.02%
Construction
25,100,000,000
81.26%
Road Transport
837,000,000
2.71%
Water Transport
416,500,000
1.35%
Distribution, Trade, Storage and Ware housing
68,238,000
0.22%
Multipurpose Development Projects
93,000,000
0.3%
Research and Development General Economic Commercial and Labour Affairs
580,000,000
1.88%
FUNCTION DESCRIPTION
AMOUNT 👎
%TAGE DISTRIBUTION
Research and Development other industries
6,000,000
0.02%
SUB-TOTAL
30,887,938,000
4
ENVIRONMENTAL PROTECTION
Waste Management
415,000,000
12.22%
Waste Water Management
521,000,000
15.34%
Protection of Biodiversity and Landscape
1,487,000,000
43.77%
R & D Environmental Protection
344,000,000
10.13%
Environmental Protection NEC
630,000,000
18.54%
SUB-TOTAL
3,397,000,000
5
HOUSING AND COMMUNITY AMENITIES
Construction
20,000,000
0.27%
Housing Development
5,280,000,000
71.08%
Community Development
692,000,000
9.32%
Water Supply
1,236,500,000
16.65%
Street Lighting
150,000,000
2.02%
Research Development Housing and Community Amenities
50,000,000
0.99%
SUB-TOTAL
7,428,500,000
6
HEALTH
General Medical Services
2,900,000,000
51.57%
Public Health Services
450,000,000
8.01%
Research and Development
2,273,000,000
40.42%
SUB-TOTAL
5,623,000,000
7
RECREATION CULTURE AND RELIGION
Recreational and Sporting Services
275,500,000
93.23%
Cultural Services
20,000,000
6.77%
SUB-TOTAL
275,500,000
FUNCTION DESCRIPTION
AMOUNT 👎
%TAGE DISTRIBUTION
8
EDUCATION
Pre-primary Education
–
–
Primary Education
810,100,000
14.95%
Upper Secondary Education
576,000,000
10.63%
First State Tertiary Education
1,904,000,000
35.13%
Second Stage Tertiary Education
500,000,000
9.22%
Education not defined by level
1,570,000,000
28.97%
Research & Development Education
60,000,000
1.1%
SUB-TOTAL
5,420,200,000
9
SOCIAL PROTECTION
Family and Children
10,000,000
4.45%
Social Exclusions
10,000,000
4.45%
Research and Development Social Protection
205,000,000
91.1%
SUB-TOTAL
225,000,000
THE FIVE-PILLAR INITIATIVE
We are limiting our development activities to the target areas of priority i.e. 5 Pillars. These areas we imagine will give us greater results on the wellbeing of the entire citizenry. This does not mean other areas of development (the enablers) will not be attended to. The budget process followed has helped us to reassess, accept or modify some ongoing or new recurrent activities or investment projects in line with our programme’s objectives. What is of utmost importance is the improvement on the wellbeing status of our people.
Government will concentrate efforts in maximizing the expected returns the 5 Pillars, the enablers, partnerships and the cooperation with the Private Sector will give us. We are determined to put in place virile and strong SMEs through Public Private Partnership initiatives that will drive the development of our economy.
The Breakdown of allocations to the Pillars is as follows: –
Agriculture: The Sustainable Development Goals (SDGs) Nos. 1 and 2 are: ensure sustainable food production, increased income and better livelihood and end hunger, achieve food security and improved nutrition and promote sustainable agriculture respectively. In order to achieve these, Government is poised to re-engineer the agricultural sector which is one of the five pillars. This will be by exploring conventional opportunities of improved technologies (biotechnology, genetic engineering and improved farm implements) as well as value addition to attract higher revenue. We have proposed projects in 2018 budget that will employ improved farm inputs, farming systems, and post harvest processing technologies to increase food production, create jobs and ensure food security.
Micro-credit to farmers (individuals and Cooperative societies) in the State will be sustained. Government will continue to assist farmers by the provision and distribution of high-yielding cassava cutting, maize seeds, cocoa and palm seedlings to farmers in the State. The provision and sale of fertilizers at subsidized rate to enhance yield will remain critical to Government. To achieve these stated goals, Government is ready to partner with relevant bodies at the national and international levels as well as the private sector. Budgetary allocation for Agriculture is N2,384,700,000 (3.29% of the Capital Allocation).
Health: In 2018 fiscal year government is determined to work and ensure healthy lives and promote well-being for all at all ages in line with SDG 3. We shall deeply integrate the health system using Ward Development Committees. Government is committed not just to provide high quality health care service for all but to make it effective, affordable and accessible with the right technology, infrastructure and manpower. The Budgetary allocation is N5,623,000,000 (7.76% of the Capital Allocation).
Education: Government is mindful of the importance of education in the areas of acquisition of relevant skills and competences for development of the individual and the society. Government also sees education as the foundation to improve people’s lives and sustainable development through relevant skills and competences for development of the individual and the society and especially now that economies are becoming knowledge-based. This administration is mindful of Goal 4 of the SDGs which is achieving inclusive and equitable quality education for all. Therefore, we will take human capital development as a critical issue in development. This accounts for why Education is one of the 5 Pillars and has a Budgetary allocation of N5,420,200,000 (7.48% of the Capital Allocation).
Commerce and Industry: We are geared towards meeting Goal 9 – to build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. Government is therefore taking seriously the issue of collaborating with a number of investment groups to increase investment through international partnerships in rural infrastructure by providing and increasing access of small scale industrial groups /other enterprises to affordable micro credit and their integration into value chains and markets. This sector, as you know, is one of the pillars and growth drivers of the State economy under the present administration and will be positioned to inculcate the spirit of entrepreneurship for accelerated economic growth and development. This will be done through increased encouragement to the private sector initiatives/partnerships to optimally participate in creation of wealth and reduction of poverty amongst Abians.
We shall also intensify effort to encourage both local and direct foreign investments in the State. The State, through the Ministries of Trade; and Industry, Science and Technology will encourage establishment of cottage industries, development of Small and Medium Enterprises (SMEs) which will stimulate growth in agriculture for large scale commercial farming, boost agricultural production and rural development. The State already has an agency in place (Abia State Small and Medium Enterprise Centre) – to help take care of the development needs of the SMEs especially the development of the various Leather/Garment Clusters in Aba, with access to alternative power and Resource Centre. The Budgetary allocation is N938,238,000 (1.3% of the Capital Allocation).
Oil and Gas: We have already entered into an understanding with Techno Oil and Gas Company, Lagos on oil prospection. Beyond this, it is expected that during the fiscal year, this administration shall intensify efforts in building resilient infrastructure, promote inclusive and sustainable industrialization for productive employment in the sub-sector through specialized manpower training in the area of oil and gas with the Ministry of Education in the area of Education for Employment (E4E). The Budgetary allocation is N30,000,000 (0.04% of the Capital Allocation).
EXPECTATIONS:
▪ Strengthened fiscal management discipline that is responsive to the principle of international best practices where prudence, transparency and probity in the application of resources are maintained as a standard;
▪ Well built human capacity resources that will help government in its resolve to achieve the Sustainable Development Goals:- Economic Development, Environmental Sustainability, Social inclusion, Positive Governance.
▪ Emergence of a conducive and friendly business environment with adequate infrastructure that will make Abia investors destination.
▪ Healthy population with reduction in morbidity and mortality rates that come through communicable diseases.
CONCLUSION:
Mr. Speaker, Honourable Members of the House of Assembly, Members of the Press, Ladies and Gentlemen.
The proposed 2018 budget represents this administration’s new resolve to totally re-engineer the economy in such a way that will elevate the socio-economic well-being of Abians. Our focus is to accelerate the development of the physical and human infrastructure for wealth creation and improved livelihood. This is where our spending proposals hinge upon. All the implementers/stakeholders are enjoined to ensure that while implementing the Budget they have the theme of the Budget at the back of their minds. As the flow of revenue is not quite predictable any more we all should keep our eyes on engaging viable partnerships and bring the opportunities derivable to give the State a life wire. Let me conclude by expressing my gratitude to all who are here today and have given me audience. We will implement the budget for the realization of the hope and aspirations of every Abian. I wish you a wonderful year ahead. Thank you and God’s blessings.
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