November 30, 2021

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Udom, Ayade Have Made Mockery Of Budget Estimates – Activist

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In this interview, Tijani Bolton-Akpan, executive director of Policy Alert, a Non-Governmental Organisation, analysis the 2022 budgets of Akwa Ibom and Cross River States and came up with some shocking revelations.

Excerpts:

What do you make of the 2022 budget of Akwa Ibom State?

The proposed 2022 budget of Akwa Ibom State is bold, ambitious and reform-centric in some ways, yet weak and impractical in other respects. For instance, the budget proposals and the character of its formulation and presentation reflect some commitment to reform. For the first time in at least 15 years, the state is basing its budget on a Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Papers in response to demand from stakeholders, including organisation. The MTEF/FSP 2022-2024 provides a framework to guide annual budgeting based on multi-year outlook, rather than the short-term, single-year approach that has characterized our budgeting for some time. The 2022 proposed budget document was also published online on the website of the state budget office a few days after it was tabled before the legislature. Hitherto, the budget was never published online; we pushed and pushed and got to the point where the approved budget and other related documents were published online. But we kept asking that pre-budget documents and proposed budget be published online too. We are excited about this. It is actually a first for the state, and reflects a going commitment to some measure of transparency.  Another positive take-away is the share of capital spending in the budget proposals. For at least 14 years, the state has consistently prioritized capital budget over recurrent spending, which is quite commendable. In the 2022 proposals, 55.3 percent of the entire budget outlay of N582.12 billion is proposed as capex.

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However, the budget items do not sufficiently align with the estimates in the MTEF and the legislature needs to ensure that this alignment happens before the budget is passed. In any case, we are not aware that the legislature actually approved the MTEF 2022-2024, and this needs to be done before the budget is considered so we don’t end up putting the cart before the horse. Another thing that we were disappointed about is that the governor did not provide recurrent revenue estimates in his budget speech, so it was difficult to tell how much government is hoping to raise from, say, Value Added Tax, internally generated revenue or even 13 per cent derivation. So, up until this moment, it isn’t yet clear how the budget will be funded, beyond capital receipts. Also, comparing the budget speech of the governor with the line items we subsequently accessed on the appropriation bill and detailed budget, I would say the proposed 2022 budget of Akwa Ibom State is high on policy thrust and ambition but short on the specifics needed to actualize those stated priorities. And I’ll give a few examples. The governor actually said this budget is focused on creating more jobs and that it intends to achieve a sizeable number of the SDGs targets, while addressing key sectors under his eight-point agenda. But looking at the budget line items, we see that some of these key SDG targets such as education, health and water, sanitation and hygiene or WASH, have been neglected. Even agriculture, which is key to reducing hunger and creating jobs in a predominantly agrarian state such as Akwa Ibom, has not received the priority it deserves. When we compare the capital budget of these key sectors with some of the biggest capital items in the budget which do not directly impact the lives of citizens, we find a clear misplacement of priorities.

We are also worried that the provision for youth development is insufficient to address the challenges of youth development and especially youth entrepreneurship. For five years, young people in the state have been pushing for a youth development fund. The bill was passed by the state legislature before but could not get executive assent. We were hoping that this budget would offer a glimmer of hope in that direction by allocating some take- of funds, pending the establishment of a legal framework sometime during the next fiscal year. If the government is serious about creating jobs for youth, then the youth development fund will be a game changer. From all these, you can see that the government isn’t actually putting its money, where its mouth or stated priorities are.

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Your organization, Policy Alert recently did some analysis on the budget. What were the most shocking things you discovered in the budget?

As you rightly noted, Policy Alert has been at the centre-stage of ensuring that citizens play an active role in sub-national budget processes. Making budget data more appealing and accessible to citizens is part of our focus. I wouldn’t say there is anything shocking in the budget, because this issue of wrong budget priorities has become something of a trend with most state governments. What I can say for sure from the feedback we’ve received is that most citizens of the state were disappointed when they saw the items on the top priority list of the state government. For instance, we have seen how government intends to spend N2.5 billion on the already inaugurated 21-storey building and how that much-hyped building will be drawing N300 million as facility management fees for next year. The risk in this is that we are about to start spending to service a building that we don’t really need, an egoistic monument that we fear may never be put to real use. Another misplaced priority is the N5 billion proposed for servicing the state’s aircraft. In 2022, the federal government intends to spend N12.5 billion for maintenance of the entire presidential air fleet of ten or more aircrafts. Others are the N5 billion to be spent on the controversial worship centre, the N9.9 billion to be spent on purchase of motor vehicles by the Office of the SSG and the N10.9 billion to completely replace the old perimeter fence at the Victor Attah International Airport. In Agriculture, about 20 per cent of the entire capital spending will go to the controversial coconut plantation and refinery project, leaving little else for creating the jobs the governor harped about.

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Such humongous funds could be channelled into other important areas that need urgent intervention. Indeed, when you compare these proposed spending items with other critical human development areas, it gets even more disappointing. The Akwa Ibom State Primary Health Care Development Agency will get N1.092 billion. The same amount was voted for the Agency in 2021 and we discovered that no releases were made to this agency as at September, 2021. Imagine the fate of our primary health centres that serve as the first port of call to citizens in the rural areas. The rest of the health sector got a capex proposal of N11.06 billion, a far cry from the huge needs of the health sector. Again, another critical sector that has been constantly neglected is the WASH (Water, Sanitation and Hygiene) sector as a paltry N228 million has been budgeted for this sector. In 2021, N190 million was budgeted, but again, as at September of this year, zero naira had been released for WASH services which remain a top priority for sustainable livelihoods and preventive healthcare. The education sector should also be of great concern to the government. A state of emergency was declared last year but the volume and quality of investment in this budget, N7.65 billion as capital spending, does not appear like an investment to address an emergency. In the course of our work across the state, we see primary and secondary schools all over the place that are in a terrible state of disrepair. For a very long time now, issues of bursary and scholarships for students have been forgotten. Sadly, the state scholarship board got a zero allocation for the year 2022. Recently a group of youths visited the governor and smiled back home with 500 thousand naira each for praise singing and yet bright minds in our educational institutions are not being encouraged to excel. There is also this neglect and huge gap in investment or attention to the state-owned institutions responsible for training the state’s health care personnel. Many of them have decayed infrastructure and lack laboratory facilities and the 2022 budget has failed to address these human development priorities. We understand that no single budget can address everything but when you compare the proposed investments in elitist projects against some of these core social sector imperatives, you’re left wondering where our priorities actually lie as a state.

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If you were to query provisions in the budget, what aspect of the budget would you rate as worst?

As I highlighted earlier, some of the worst aspects of this budget have to do with the elitist projects that have been prioritized over areas that can trigger human development and lift citizens out of poverty. Again, the state currently has a very high debt servicing to revenue ratio yet it intends to further spend 8.6 percent of the overall 2022 budget outlay on debt servicing. This is more than double the capital outlay for education, health and agriculture combined. Currently, Akwa Ibom is the most indebted state in the country in per capita terms. To worsen matters, there are plans to accumulate massive new debts, about N63.9billion from external and internal sources. This is even more disturbing when you consider that Akwa Ibom State was recently in receipt of N171.2 billion as first tranche of its N920 billion share of refunds from production sharing contracts arrears as a result of a recent court decision. With that quantum of inflow, the state has what it takes to plan and navigate the debt landmines. We can’t afford to treat it like a windfall, exposing the receipts to corruption risks and further exposing the state to the volatility of the oil economy. Already, over 53 per cent of our budget in 2021 was dependent on the 13 per cent derivation, which makes us highly vulnerable. One of the things we advised the government to do is establish a future generation fund, to ensure that current wealth is sustained for the future, in line with the principle of inter-generational equity. We have also pushed for the establishment of the Akwa Ibom State Oil Producing Areas Development Commission, so that receipts from oil derivation could be channelled into the development of oil and gas host and affected communities, in line with the intention of the crafters of the derivation principle.

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Do you think State governors are sincere and serious about budget implementations? Specially, are Akwa Ibom and Cross River serious with budget issues?

State governors are humans and since you can’t read their minds, an answer to that would be largely subjective. Rather it is the implementation of budgetary reforms and how realistic their budgets are that will really speak for them. One common expression we usually hear from the executive when it comes to budget implementation is that budget is an estimate and as such, implementation will be determined by availability of funds. Yet hardly do they come out to tell the citizens when there’s been availability of sudden funds. For Akwa Ibom state, the government has shown considerable interest in fiscal reforms even though it is a late starter in this regard. However, that has to be matched by improved budget credibility as well as matching policy rhetoric with budgetary allocations. For Cross River state, there has been substantial roll back in budget openness and the seriousness that government accords to the budget process. Just a few years ago, Cross River used to be among the star performers when it came to citizens’ participation, transparency and accountability in public budgeting. But all that has changed now. Budgeting has been reduced to child’s play. Beyond the farcical budget titles, up until last year there was still the other problem of unrealistic budget size, with the state being somewhere around the bottom of the federal allocations table. For instance, out of the more than N1 trillion budgeted for 2018, only N57 billion or less than 5 per cent was realised as revenue. In 2019 again, more than N1 trillion was budgeted, yet only N77 billion or less than  8 per cent of the budget was realised as revenue. So we were kind of excited that, with the advent of Covid19, some realism got hammered into the state’s budgeting in the last two years. The N1.1trillion budget of 2020, for example, was slashed to N147 billion and in 2021, we saw a budget of N240 billion. This year, a budget of N276 billion was presented.

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What is it that has shocked you the most when it comes to budgets presented by the Cross River State government?

I would say it’s the consistent display of disrespect by the executive arm of government to the legislature, the cavalier attitude of the governor to budget presentation. Budget presentation is a solemn ceremony, the annual budget being the most important law any legislature would consider after the constitution. But for several years running, Governor Ayade has been presenting budgets before the Cross River State House of Assembly without a budget speech and without a proper appropriation bill. I challenge the House of Assembly to disprove this. The House, in fact, has allowed the executive to rob its hallowed chambers of the dignity it deserves. On the other hand, sadly, I would say that the unseriousness with which the governor conducts the business of budgeting is a reflection of the low value he has placed on the legislature as an institution.

The other thing that’s so shocking about the budgets of Cross River State is that the state continues to incur loans even when it has been a struggle to service its current debt. The state’s total debt size has grown from N141 billion in 2015 to N170 billion in 2021. In terms of domestic debt, Cross River State is the fifth most indebted state and the most indebted state among those states that do not receive 13 percent derivation. The speed of loan approvals by the legislature has been, to say the least, disturbing. We have to wait for the budget details to emerge to see what proportion of the proposed 2022 will need to be funded by debt.

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