A projected drop of over 33% in statutory allocations for Enugu State in 2016 will lead to a drop of 12% in the size the state government’s budget in the year. While it may be the lowest budget in the past few years, yet the budget of N85.18 billion announced by Hon Ifeanyi Ugwuanyi holds the big dream to take Enugu State to the next level.
Revenue from Federal allocation, including VAT, amounted to N66.17 billion for the state in the 2015 budget but this is expected to drop to N44.21 billion in 2016. Internally generated revenue is also expected to decline next year, which will result in a drop of as much as 35.2% in total recurrent revenue to a little over N63 billion. The purse is indeed lean but the dreams are big.
Ugwuanyi therefore has a big challenge ahead in 2016, which is to extract the big dream for Enugu State from the lean budget for the year. The man believes strongly that it is doable and he has a clear vision of what he is going to do. That, to me, is the platform for success in a year that has been made to look fearful for Nigerians.
The governor has defined the first step forward, which is to change the ways of doing things in order to achieve the expected results. His focus is clear, which is to positively touch lives of the generality of the people of Enugu State. He has made just one request, which is the collective commitment of all to the task ahead.
Ugwuanyi defined the main thrust of his 2016 budget as employment generation, enhanced social services and good governance, rural development, security and justice. His driving objective is to deploy government services to create fair and equal opportunity for every willing citizen to make a decent living, educate children and enjoy a peaceful and secure environment.
The key areas of vigorous pursuits have been identified, which are investment promotion, agricultural sector renewal, provision of critical infrastructure, human capital development and skill acquisition.
The Enugu State governor has one major leadership quality that is going for him and that is his ability to inspire hope where others are speaking despair. According to him, notwithstanding the lean resources across the country due to the nose-diving of oil prices in the international market “we will turn the present economic challenges into great opportunities to diversify our economy”.
Actualizing these great ideas at such an austere time calls for a new strategic thinking and action. Ugwuanyi agrees that “time has come for us to think outside the box and exploit fully the economic potentials of the state”. He is frantically preaching prudence and accountability as well as the support of the people for the lean budget of 2016 to make the biggest impact in the state.
With the generally poor level of budget implementation in Nigeria, one cannot but share Ugwuanyi’s tall dreams out of a lean budget. Going by our experience, it is not really the size of the budget that matters but how effectively even the smallest budget can be implemented.
By far the greatest obstacle to effective budget implementation across the states is lack of transparency and accountability. It is understandable therefore that Uwuanyi has made transparency and accountability a key element of the budget implementation strategies.
He is also going to implement a more effective expenditure supervision and control and ensure a more effective project monitoring and evaluation. Other implementation strategies include an institutional reform at state and local government levels as well as diversification of the state economy through private sector participation in economic development.
As can be expected, an aggressive drive for internally generated revenue is a key element of the 2016 budget for Enugu State. The state government plans to exploit all potential sources of internal funding. The revenue drive however carries with it the governor’s repeated promise that “it will be pursued in such a manner that it will not inflict much hardship on our people.
“We are determined to plug all loopholes for revenue leakages in the State in the coming year, and in this vein, we shall fully sustain the Pay-Direct system in all aspects of collection of Government revenue using the Treasury Single Account (TSA) model in the State”. This bears a ring of understanding that the capacity for internally generated revenue needs to be created or enhanced first for it not to be exploitative.
The aggregate expenditure for Enugu State in 2016 is N85.179 billion, which is a 12% drop from the 2015 budget figure of N96.735 billion. Ugwuanyi explained that the decrease was necessitated by the realities of revenue inflow from federal allocation.
The sum of N43.736 billion or 51% of aggregate expenditure is for recurrent spending. This is a slight increase from the N41.795 billion budgeted in 2015. A provision of N41.443 billion is made for capital expenditure, which is a drop from N54.940 allocated for same in 2015.
With total revenue of N63.097 billion expected for the year, it is therefore a deficit budget, in which 26% of the spending will be financed by borrowings, aids and grants and public/private sector partnership. In 2015, budget deficit was less than 12%. At N18.882 billion, internally generated revenue represents 29.9% of total revenue, an increase from 22.5% in 215.
In line with the pattern of 2015, economic sector will take the lion share of capital expenditure in 2016 at about N28.974 billion or nearly 70% of the capital expenditure. Social sector projects rank second in priority as in the prior year with a vote of over N8.866 billion.
With the early presentation of the budget, the task shifts to the state legislature for an early passage. The governor expects accelerated consideration and passage for him to begin to implement the budget provisions early next year. Analysts are impressed by Ugwuanyi’s great zeal to touch lives with the 2016 budget despite the revenue challenges.
ITEMS
2015 (N) 2016 (N)
Federation Allocation (FAAC)
N55.52bn N34.4bn
Value Added Tax (Tax)
N10.65bn N9,8bn
Independent Revenue (IGR)
N19.1bn N18.8bn
TOTAL RECURRENT REVENUE
N85.3bn N63.09bn
RECURRENT EXPENDITURE
Personnel Cost
N26.06bn N28.8bn
Overhead
N10.28bn N8.5bn
Subvention
N5.4bn N6.36bn
SUB TOTAL
N41.79bn N43.73bn
CAPITAL RECEIPTS
Transfer from Consolidated Revenue Fund
N38.020bn N19.36bn
Aids and Grants
N3.8bn N3.53bn
Public Private Partnership
N6.52bn N5,95bn
Domestic Loans/Borrowing Receipts
N2bn N7.9bn
International Loans/Borrowing Receipts
N4.59bn N4.69bn
TOTAL
N54.93bn N41,44bn
CAPITAL EXPENDITURE SUMMARY BY SECTORS
Administration Sector
N4,03bn N2,4bn
Economic Sector
N36,2bn N28,97bn
Law & Justice Sector
N752,14m N777.8m
Regional Sector
N471m N405.7m
Social Sector
N13.47bn N8.86bn
TOTAL
N54,93bn N41.44bn
BUDGET SIZE
N96.73bn N85.17bn
Obeta, a public affairs commentator writes from Abuja
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