Edo’s Budget Of Progress By Nasir Ahmad El-Rufai

From a hopeless budget in the Bauchi of the Northeast, a
sensible one in Lagos of the South-West and an opaque
budget in Benue of the North-Central, our focus this week
is on the South-South state of Edo with a view to assessing
how self-reliant, fiscally prudent and accountable the state
is. It is one of the states where a Fiscal Responsibility Bill
has been presented to the state House of Assembly but
has not yet been passed into law. While the state benefits
from the 13% derivation fund as a marginal oil producing
state, this fiscal advantage does not translate to any
significant edge in financial transfers and key indices when
compared to other states in the Niger Delta region.
The Mid-Western Region was created in 1963 from Benin
and Delta provinces of the old Western Region, and its
capital was Benin City. It was renamed a province in 1966,
and in 1967 when the other provinces were split up into
several states, it remained territorially intact, becoming a
state. In 1976 it lost Ughelli to the new Rivers state and
was renamed Bendel state. Edo State was formed on
August 27, 1991 when Bendel State was split into Edo and
Delta States. Geographically, Edo is bounded on the north
and the east by Kogi State, on the west by Ondo State and
on the south by Delta State. It had a population of
3,233,366; 1,633,946 males and 1,599,420 females
according to the 2006 Population and Housing Census,
making it more populous than Botswana and the Gambia.
As a marginal oil producing state, one of Edo’s principal
mineral resources includes crude oil though in tiny
quantities compared to other Niger-Delta states. Others
resources are natural gas, clay chalk, marbles, granite,
limestone (an estimated 10 million tones reserve),gypsum,
feldspar (useful for glass production), kaolin(huge deposits
which have not been exploited) and a reserve of about 90
million tonnes of bentonite. While bentonite has wide
industrial usage, much of the required amount for local
consumption is still imported. These minerals are potential
revenue sources for the state. Agriculture is the
predominant occupation of the Edo people. The major
cash crops produced are rubber, cocoa and palm
produce. In addition, the State produces crops like yams,
cassava, rice, plantains, guinea-corn, and assorted types
of fruits and vegetables.
Col John Yeri served as first Military Governor of Edo state
till 1992. Others who governed the state include; John E.K
Odigie-Oyegun (1992-1993), Chief Lucky N. Igbinedion
(1999-2007), Prof. Oserheimen Osunbor (2007-2008) and
most recently Comrade Adams A. Oshiomhole. Oshiomole
was sworn into office November, 12 2008 after the appeal
court declared him the winner of Edo state gubernatorial
election of April 2007 under the political platform of AC.
Prior to his election as Governor he was the president of
Nigeria Labour Congress (NLC).
Oshiomole’s activism dates back to his days at the Arewa
Textiles Company where he was union secretary. He
became a full-time trade union organizer in 1975. In
1999, he became president of the Nigerian Labour
Congress. He was publicly recognized as man of the
people and openly challenged the government where
policies were not in favor of the workers. The emergence
of Adams Oshiomole as governor of Edo state came as a
delight to many who were familiar with his activities and
achievements as leader of the Nigeria Labor Congress and
believed he would make a difference by actively being in
government. Both Nuhu Ribadu and I broke ranks to
attend his fundraising dinner and supported his
candidature over the PDP candidate. Against this
background, Oshiomole had the popular vote and
naturally, the masses believed that his antecedents will
enable him to use the resources of the state judiciously
and in the best interest of the citizens.
Edo State Government’s budget totaled N150.9bn for the
2012 fiscal year; with N64.5bn (43%) recurrent
expenditure and capital expenditure slightly higher at
N86.4bn (57%). It falls short of the international standard
requiring about 70% of expenditure for capital projects,
but may be justified by Edo being an old sate with more
maintenance burden that new build-outs of infrastructure
and facilities. Edo’s personnel cost is 19% of the overall
budget and is higher than the state’s IGR of N23.9bn by
N4.8bn.This means that the state, if solely dependent on
its IGR would not be able to sustain personnel costs much
less invest in development projects. The state’s IGR of
N23.9bn is only a third of its recurrent expenditure of
N64.5bn and therefore insufficient to sustain those
expenditures. The state government needs to be shrunk in
size and cost.
The high recurrent expenditure cuts across the different
sectors in the state, with health and education as
understandable, but not in others. The Education sector
has N14.1bn allocated for recurrent expenditure while
capital expenditure for the sector is half that sum N7.7bn.
About N4.3bn is expended on recurrent costs within the
health sector in while the capital expenditure is slightly
lower at N4bn. Works is the only sector with a allocation
in favour of capital spending. It also got the lion’s share of
the budget (N36.5bn) and of that amount, only N190m is
for recurrent expenditure. Commendably, residents and
visitors to the state applaud the current government’s
effort at building roads in Benin City after a decade of
neglect under PDP governments.
Edo leads all other states in the South-South zone in
educational attainment in terms of numbers admitted to
Nigerian Universities in 2007/2008 with a total of 3,569
while Bayelsa had only 434. The 2010 National Literacy
survey statistics indicate youth literacy in Edo as 89.7%.
Edo however has the lowest percentage of adults literate
in English 73.5% in the south-south zone. Although the
state was previously recognized as the “miracle centre
state” because of the high incidence of exam malpractice
prevalent there, the state was adjudged best overall in
WAEC examinations in 2008 according to an advisor to the
Governor. Hopefully the increase in capital expenditure to
the sector from N5.6bn in 2011 to N7.7bn in 2012 would
be a step in the right direction in support of education for
the state.
Regarding health in the state, in 2011, Women Health and
Action Research Centre stated that out of 100,000 women
that enter labor rooms, 50 of them do not come out alive.
Studies including data from Edo state indicate maternal
mortality reflects the national average. It seems that
maternal health is currently not given the priority it
deserves by the state government. Of the N8.2bn
allocated to health, about half the amount (N4.3bn)
would be expended on overhead and personnel costs.
Despite Edo being a predominantly agrarian state, a paltry
N1.5bn (about 1%) is allocated to the sector. Only 0.9%
(N812.4m) of the capital budget is allocated to the sector.
How this is supposed to aid development in the sector is
an open question.This sector deserves to be given more
attention if the state is to boost its IGR, employment and
rural incomes.
Most of the state’s IGR is from taxes. The state increased
its IGR projections from N18.5bn in 2011 to N23.9bn for
the 2012 fiscal year but only made about 58% (N10.7bn)
of its projections in actual revenues. For 2012, approved
tax estimates are N16.9bn (71%) of the total IGR figure.
The amount has increased from N13.9bn estimated in
2011. However, the state fell short by about N5.4bn
(39%) of its projection in 2011. In 2011, the state
projected its statutory allocation to be N45.7bn but
received N22.4bn. In spite of all the above, it still
estimated receipts of N56bn for 2012.
It is evident, even to a layman that continuous over-
estimation of income that constantly falls short will surely
lead to a deficit budget. In fact, the Edo state budget has
a deficit of about 14% (N20.5bn). Its total receipts
amount to about N130bn, made up of N115.4bn
recurrent revenue and N15bn capital receipts while total
expenditure is about N151bn. The budget makes no
mention of how this deficit is funded. In 2011, the Edo
state government was only able to balance out its revenue
deficit by virtue of income which was not included in the
estimates but was paid by the Federal Government,
namely; excess crude oil reserve fund (N9.4bn),
multilateral debt refund (N3bn) and refund of 0.75
commission charged on Paris club debt refunds
(N436.2m). Perhaps that is what it expects to do in 2012.
The Edo State Government has attempted to correctly
prioritize its spending by allocating the bulk of the funds
to the major sectors of the economy as thus; Works
(N36.5bn), Education (N21.8bn), Health (N8.2bn),
Transport (N642m), Energy and Water Resources
(N2.0bn), Environment (N18.9bn) and Agric (N1.5bn).
Interestingly it categorically lists the state security vote as
N4.5bn which is highly commendable compared to
Bauchi’s allocation of a massive N17.6bn.
Edo ranks 21 in the ease of doing business rankings in
Nigeria. It ranks 16 of the 37 states in ease of starting a
business. On average, it takes 45 day and 60.5% of one’s
income to start a business in the state. Unemployment in
the state is 17%, below the national average of 21.1% but
considering that the state is home to two large
Universities which churn out graduates yearly, it is
imperative for the government to create a thriving
environment for SMEs which would not only reduce
unemployment and saturation of the state civil service but
will also boost the economy of the state.
In Edo state, 39.4% of the population is food-poor and
cannot afford proper meals daily, 47% are absolutely
poor, 57.9% relatively poor and a little below half the
population (47%) survive on less than a dollar a day.
Overall, Edo’s poverty ratings lie in the middle among the
south-south states with Akwa-Ibom, Rivers and Bayelsa
slightly better while Delta and Cross-Rivers are much
worse off.
The spending priorities in Edo indicate a high cost of
governance which is unsustainable given the state’s
earnings. The government is spending so much to
maintain its staff at the expense of developmental
investment. The situation is further worsened by falling
revenues and repeated “over-estimation” of its revenues.
The government incurs expenses without commensurate
revenue flows in the university it owns and several state
owned companies. A typical example would be education
which receives about N21.8bn but generates less than 2%
(N355.3m) in revenues through fines and fees. Virtually
all its SOEs return nothing to the government coffers and
should be privatized. The state should also aspire to be
like Lagos which makes every MDA a significant revenue
centre.
The present government of Adams Oshiomhole must be
commended for its efforts at improving the state
compared to the work done by its predecessors. But as
with everything in life, there is room for improvement if
continuity is sustained.The state is blessed with abundant
resources which have barely been tapped and converted
to cash-cows and apart from tax earnings which cannot
even sustain its recurrent expenditure, the states’ major
financing source is the Federation Account.
Without handouts from the Federal Government, will the
state exist in the form it does now? The answer is no. Has
the state provided a thriving environment for SMEs to play
an active role in its economy? It is trying but needs to do
more. Is the government investing in physical
infrastructure and human capital or is it just maintaining
what it has inherited? The state’s performance in
education and spending on roads answer this question
affirmatively.
As Edo citizens go to the polls in July to elect a governor, it
is my belief that the Oshiomhole administration has done
well enough to be re-elected compared to the previous
ten years of lethargic and violent PDP governance in the
state. We hope the voters will make the right choice and
the elections will be free, fair and credible. It is not too
much to ask after the needless murder of Olaitan
Oyerinde, may his soul rest in peace.

#CONSENSUS 2015