Budgets: Wrong Priorities, Pathetic Outcomes (2) By Nasir Ahmad El-Rufai

The paltry amounts allocated
to agriculture exemplified the
misplaced priorities of most
of the states’ budgets. Rural
Anambra budgeted less than
2% for agriculture, Bauchi
with 80% of its population
engaged in farming allocated
only 5.5% of its budget to
agriculture, Edo allocated
only 1%, and Gombe with its
arable land and 80% of its
population engaged in
agriculture allocated only 5%
to agriculture. These poor
allocations are in contexts of
high levels of poverty and
unemployment. In Kaduna
and Gombe the rate of
unemployment is respectively
25.7% and 29%, which are
above the national average of
21.1%. For states like these,
attracting businesses and
encouraging SMEs should be
the front-burning issue.
Increasing the budgets of
agriculture, mining and
tourism to address
constraints in the value
chains should be the
governors’ priorities.
The budgets’ analysis
therefore showed that most
states in the country are not
viable economic entities, and
the so-called ‘rich, oil-
producing states’ are far
more dependent on the
federation than the rest in
proportionate terms!
Standing alone, virtually all
states will be unable to
perform their basic functions
like providing education and
healthcare to citizens. Most
states in the country will be
illiquid in months without
federal allocations, which in
turn are largely derived from
oil and gas revenues. The six
Northern states in our
sample are engaged in
significant borrowing to
sustain their operations. An
example of this is Bauchi
where 40% of its 2012
budget is funded by loans.
To develop their states and
meet the needs of the
people, governors will have
to change their strategic
focus in a manner that will
enable them to increase their
IGR and reduce dependence
on federal allocation. Among
others, these will require
increased capital investment
in social and physical
infrastructure and to create
conditions to diversify their
economies, including
promoting manufacturing-
based industrialization.
Each state needs to develop a
blueprint for a post-oil
economy and identify and
promote investments in
sectors that will generate
jobs. Finally, as we can see
from states like Lagos,
developmentally-oriented
leaders are required to pilot
the affairs of the regional
governments that will emerge
from such political
rearrangement. With these
steps, may be our children
will have a nation that has
truly attained its potential.
Not only have the states
neglected the economic
sector but also the social
sector. It is generally
acknowledged that
investment in healthcare is
necessary to maintain a
healthy and quality
population. Similarly,
investment in education is
important for human
resource development. In
effect, education and health
sectors are necessary for
social and economic
development. A healthy and
educated population
enhances the competitiveness
of a nation. Unfortunately,
these two sub-sectors are
neglected by both the federal
and states governments.
Given the contribution of
education to development,
the United Nations
recommends that countries
allocate 26 percent of their
resources on education. In
2012 neither the federal
government nor state
governments meet this
budgetary target. The Federal
government allocated only 8
percent of its budget to the
education sector, which is
lower than comparable
African countries such as
South Africa (26%), Cote
d’Ivoire (30%), Ghana
(31%), Kenya (23%) and
Uganda (27%).
Like the federal government,
the ten states reviewed in this
column did not meet the
recommended benchmark.
Gombe – the best of the
sample – allocated about 17%
of its N93.5bn budget; Edo
(14%), Nasarawa (10%),
Lagos (10%) and both Akwa
Ibom and Zamfara (5%). This
poor funding partly accounts
for the deteriorating state of
Nigeria’s education system.
Using the 180-point
benchmark in JAMB amongst
the 10 states analyzed, Lagos
State had the best
performance of 80%
achievement improved upon
by the large number of
private schools in the
megacity, in addition to
investing a whopping N45bn
in public education. This
amount is over a third of
Zamfara’s entire 2012
budget. As expected,
Zamfara State which invested
least in education also had
one of the lowest pass rates
of 44%. What is striking is
that Nasarawa which invested
the second highest
percentage in education
(14%) in 2012 did so mostly
in response to poor
performance of the state
(43% pass) in the 2011 JAMB
UTME. An open ended
question here is, with our
paltry allocations to
education, is it possible that
we can be among the 20
most developed economies in
2020?
Budgeting for education is
one thing, getting
commensurate outcomes in
quite another thing. Most
state governments invest in
building schools and
classrooms instead of the
improvement of teacher
quality and welfare, providing
books and materials and
ensuring that children
remain in school. A free meal
daily, free transportation to
schools and back and
enhanced welfare and
incentive packages for
teachers improve academic
performance far more than
spending on lucrative
building contracts for political
party apparatchiks. In
education as in everything in
public finance, the quality of
spending is as important as
amount and proportion of
the total budget.
The health sector across
Nigeria reveals an area of
national life that is in dire
need of rescue through new
policies, regulations and
strengthened institutions. In
the two-part column titled
“No Health, No Wealth”, we
x-rayed these problems at
national level. Across the
country, treatable diseases
like malaria and cholera are
still killers, infant and
maternal mortality rates are
amongst the worst in the
world, while our life
expectancy seems to be
dropping. The state
governments have greater
responsibility for healthcare
than any other tier, being in
charge of primary and
secondary healthcare. We
had hoped that our states’
budgets would be more
effective, and higher in both
quantity and quality. Sadly,
that is not the reality the
budgets revealed.
The World Helath
Organisation (WHO)
recommends that 15% of
national budgets be allocated
to healthcare. The 2012
federal budget of N282.77
billion is just about 6%. With
many of the sampled states,
the budgetary allocation is
higher than the dismal FGN
number, though nowhere
near to the 15% benchmark.
For instance, the only
sensible thing about Bauchi’s
generally hopeless budget
was the allocation of
N13.7bn or 9.8% to health;
Gombe 7.4%; Lagos 6.7%;
and Nassarawa 6%. Edo’s
allocation is 5.5%; Kaduna
4.3%; Benue and Akwa Ibom
4% and Zamfara’s, a very low
3%. Zamfara in particular is
plagued by a tragic lead
poisoning crisis that has
claimed the lives of hundreds
of children and it would need
well above 15% of its budget
to sanitize its health sector.
With the widespread
dysfunctions in governance
that we are experiencing as a
country, the under-budgeting
for the sector is worsened by
the fact that actual releases
are usually far less than the
amounts allocated.
Additionally, effective
utilization of the little that
gets released is hindered by
the corruption and
incompetence that exist in
the public sector agencies.
We conclude with a brief
comment on the huge sums
state governments allocate as
security vote. The bulk of
these funds are usually
budgeted under the
Governor’s Office, the Chief
of Staff or the Secretary to
the State Government (SSG),
and spent at the discretion of
the governors. Take for
example, in a state like
Bauchi, its security vote
under the SSG’s office is
about N17.6bn (12.6%) of its
budget. This senseless
amount is higher than the
state’s allocation to each of
Agriculture, Health, Education
and Water Resources.
Indeed, the state’s combined
budgetary allocations of
N13.7bn for Health, and
N3.2bn (2.3%) for Water
Resources, would account for
12.1% of its budget, and less
than Yuguda’s ‘pocket
money’ called the security
vote. This is not the picture
of a government that takes
the interests of its citizens
seriously.
The situation is slightly better
in other states; happily my
state of Kaduna allocated
only N1.6bn (1%); Nasarawa
about N2bn (1.9%); Lagos
N2.4bn (0.4%); and Edo
N4.5bn (2.9%). Some other
states have hidden these
votes in their budgets, but
know where to find it. The
need to beef up security to
counter threatening forces
currently terrorizing our
states is understandable, but
Nigerians are aware that
security is mostly a federal
responsibility today. And the
solution to the rising wave of
insecurity is immediate job
creation, investing in the
future and transparent
governance, not bloated
security votes, which add
zero value to their state
governance.
In conclusion, the budgets’
analysis has exposed the
administrative and political
incompetence of many state
governments. We therefore
need to rethink the role and
size of states as constituted,
as units of governance and
economic development.
There is therefore an urgent
need for a constitutional
review that will among other
restructure the federating
units to give way to a smaller
number of states, regions
and regional governments as
political and economic
management units. This calls
to question the current and
senseless clamor for creation
of more states which would
be even more unviable!.

#CONSENSUS 2015