REBUILD IMO – BUDGET ONE.
MY ADDRESS ON IMO STATE GOVERNMENT 2020 BUDGET PRESENTATION TO THE IMO STATE HOUSE OF ASSEMBLY, OWERRI, IMO STATE, NIGERIA.
Wednesday, November 27th 2019.
Today marks a very significant step in our Rebuild Imo Project. I am therefore, honoured to appear in this hallowed chambers and before this Honourable House to present the maiden Budget of this administration. The Budget has been appropriately tagged “Rebuild Imo – Budget One.”
2. Mr. Speaker, Honourable Members, the State of colossal ruins this government met upon the inception of our administration is no longer news. It was an all-round devastation spanning every facet of infrastructure, public utilities, health, education, industry and the public service to mention but a few. Imo State was like a pariah state avoided by investors, ignored by international donor agencies and denigrated by national agencies. Last year, the State was among few States in Nigeria that could not qualify to receive $18m World Bank grants due to absence of transparency and accountability in governance. Reports upon reports lamented the unwillingness of the then Government to work with constitutionally approved structures of governance, its lack of due process and resort to ad hoc and episodic approaches to governance. This came along with it a huge loss in investor confidence and absence of international development assistance.
3. Consequently, at the momentous event of our inauguration nearly six months ago, we pledged to rebuild the state and to restore the old glory. Equally, we affirmed to serve the good people of Imo State with honesty, transparency and the fear of God. We also expressed our abiding faith in the fundamental tenets of democracy which includes separation of powers, checks and balances as well as respect for the independence of the three arms of government.
4. Mr. Speaker, Honourable members, I am glad to report that we have not wavered on that pledge. Consequently, I am here today, in keeping with the Constitutional requirement to present to this Honourable House, the Budget proposal for 2020. As you are all aware, prior to our inauguration, we began by harnessing our huge human and economic resources to set a clear path in the rebuilding process. We had set up a high-powered Transition Technical Committee (TTC) comprising very distinguished ladies and gentlemen from both within the state and the diaspora. These resource persons met and articulated a possible development path.
5. Consequently, government set out a vision to elevate Imo to become one of the top three state economies in Nigeria by 2025 and ranked within Africa’s top ten economies by 2030. To this effect, we are leveraging the abundant human capital and natural endowments of the State to build an economy anchored on good governance, accountability, wealth creation, rule of law and sound management of state resources. We have also mapped out a Short-term Plan involving, some quick-wins, particularly restoration of critical infrastructure, public utilities and security. In the same vein, we activated the State Health Insurance Scheme.
6. Furthermore, we have set up a structure for transparency and accountability in the governance process. On this score, I signed the Executive Order 005, known as Treasury Single Account (TSA) Order. The essence is to consolidate all government revenues under one account. Similarly, we have signed to implement the International Public Sector Accounting Standards (IPSAS). These measures are designed to plug leakages and increase Internally Generated Revenues (IGR) in the State coffers.
7. Mr. Speaker, Honourable Members, I am very glad to inform you that works have commenced on 25 critical roads across the State. Also recently we awarded portions of five major roads leading into the State capital. These roads are the Owerri-Orlu Road, Owerri-Okigwe Road, Owerri-Obowo Road, Owerri-Aba Road and the Owerri-Port Harcourt Road. Notably, these roads are federal roads but impact the ease of movement and doing business in the State hence our intervention. In all, about N40Billion is being committed to these projects. Likewise we have awarded contract for the construction of Oguta link road to connect the Oguta Lake Resort to enhance access to this international tourism haven.
8. Mr. Speaker, we have also paid attention to the rural road construction. Essentially, we have harnessed resources and paid N500Million counterpart funding to the World Bank and so attracted N13.5 billion from the Bank, under its Rural Access and Mobility Project (RAMP). A cumulative distance of 380.7 kilometers are already under construction across 26 local government areas under this programme.
9. Similarly, we have given priority attention to the security of lives and property in the State. The Operation Iron Gate is on course and has significantly brought down the level of insecurity we met at the inception of this administration. In this regard, we have directly engaged special units of security agencies including anti-cult and anti-kidnapping units. We have also held security summits on flash points in the State and mapped out special policing strategies for the areas. Likewise we have activated an emergency call centre which has enhanced rapid response to security alerts. In the same manner we have acquired special gadgets to help forestall the menace of these undesirable elements in our society. Currently, we are effectively participating in a collaborative manner with sister states in the South East towards strengthening regional security. Tellingly, we are coordinating this effort.
10. As a government and a people, we have lofty plans for sports development in the State. This is borne out of the well-established pedigree of Imolites as national sporting icons. We are also mindful of the huge sporting potentials amongst our people and are determined to mine these talents to the overall benefit of the State. On this score, we are investing heavily in upgrading our sports infrastructure such as the rehabilitation of Dan Anyiam and the Grasshoppers’ stadia. We are also partnering with the local governments in the construction of 27 mini-stadia in the Local Government Areas. Drawing from these investments into sports infrastructure, we would be bidding to host the National Sports Festival for 2022.
11. As I indicated in my inauguration address, we have commenced the rebuilding and upgrading of the four technical colleges in the State under our Technical & Vocational Education Training (TVET) programme. The beneficiary institutions include Government Technical College Owerri, Ahiara Technical College, Government Technical College Okporo, Orlu and Government Technical College, Osu, Mbano. Our target is that by 2020 we should have hit 60 percent mark of post-Basic students as enrolees in the TVET system.
12. In the same vein, we are giving attention to capacity building in technology. For instance, we facilitated training of 200 teachers in Microsoft office and basic internet skills by Digital Bridge Institute – a training arm of the Nigerian Communications Commission – NCC. Similarly, we are in collaboration with Leo Stan Eke Foundation for the training of 5400 Imo Youths in information technology. So far 2300 youths from 13 Local Governments of the State have benefitted from the training. An additional 3100 beneficiaries for the remaining Local Government Areas would proceed for the training in due course.
13. Other investments in this sector include training of 250 women in partnership with Microsoft on Computer Coding and Web development, most of whom have already gained employment. Others include 100 Imolites on artificial intelligence and machine learning in partnership with 6-Factor, a California-based tech company. Similarly 2000 youths have been trained on financial technology, in collaboration with e-Transact and Iwuanyanwu Foundation. These programmes are meant to make our people acquire globally competitive skills and therefore more employable. So far, 500 Imo Youths have been trained in sustainable agricultural skills.
14. Mr. Speaker, Honourable members, I am glad to inform you today that what seemed impossible a few months ago has been resolved. Here, I refer to the pension debacle. We have reformed our pension administration system, developed a credible pension data-base following a painstaking verification exercise. Notably, this action has saved Imo State approximately N280m monthly. Accordingly, we have commenced payment of pension arrears.
15. It is pertinent to state that payment of salaries and pensions remains the bulk of our recurrent expenditure. Indeed about N3.5b (70% of an estimated N5b from the monthly FAAC receipts) is spent on salaries and pensions. These figures are significantly higher than what was expended by the previous administration, primarily because while they paid workers a reduced sum based on an arbitrary percentage of their earnings and owed pensions, we have not only commenced payment of pension arrears, but also full payment of workers entitlements.
16. My fellow compatriots, following these various strategic reforms and fiscal responsibility interventions, Imo State is now in the Open Governance Partnership League. This thus qualifies us for performance-based grants of the World Bank States Fiscal Transparency, Accountability and Sustainability (SFTAS) programme. As a result of these measures, Imo State has gained positive image in the international community and multilateral development institutions.
17. PROFILE OF THE 2020 BUDGET
Mr. Speaker, Honorable members, having reviewed the activities of our Government thus far, may I at this point present to you the year 2020 budget dubbed “Rebuild Imo – Budget One”. Clearly, the 2020 budget will be our first full year of the commencement of the “Rebuild Imo” project.
18. MAJOR POLICY THRUST OF THE 2020 BUDGET
The 2020 budget proposal, which encapsulates government’s political, economic and social development and strategies, therefore aims at giving the citizenry a sense of belonging. The proposal is aimed at restoring confidence in Government and our people, rebuilding our dilapidated infrastructure and putting the State on a pedestal for sustainable economic development. This will focus on road infrastructure, improving on the ‘ease of doing business’ and social infrastructure – education, health services, water, sanitation and the like.
The 2020 Budget is anchored on our manifesto, the TTC report as well as recommendations of the various Commissions of Enquiries that have turned in their findings.
At this point, I reiterate that our Administration owes as a duty the prudent and judicious use of State resources, respect for rule of law, as well as ensuring accountability and transparency in all projects, programmes and activities.
19. FOCUS OF THE 2020 PROPOSED BUDGET
The 2020 budget is six-pronged, thusly:
• Rebuilding Infrastructure – especially roads and smart electricity sub-sector.
• Agriculture – by laying the groundwork for sustainable agriculture.
• Health delivery – with focus on health insurance, primary healthcare and cleaner environment.
• Human Capital Development – especially technological advancement, technical education, Women and Youth empowerment etc.
• Ease of Doing Business (EoDB).
• Job/Wealth Creation and Youth Empowerment.
These six-planks of the budget will be achieved through:
• Enhancement of Internally Generated Revenue (IGR)
• Aggressive road reconstruction programmes
• Enabling environment for private sector investment
• Smart Public Private Sector Partnerships
• Capacity building especially for the youth, provision of Agricultural inputs and development of agricultural infrastructure.
• Mutually beneficial State – Local Governments partnerships
• Health insurance, primary healthcare and cleaner environment.
20. Basic Assumption of the 2020 budget
A. MACRO-ECONOMIC ENVIRONMENT
Mr. Speaker, Honourable Members of the State Assembly, the 2020 Budget is predicated on the following assumptions:
• FGN’s Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
• FGN’s adoption of an oil price benchmark of US$57 per barrel, daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per US Dollar for 2020.
• National Growth of 2.93% in 2020, driven largely by non-oil output, as economic diversification accelerates, and the enabling business environment improves. However, inflation is expected to remain slightly above single digits in 2020.
• FGN’s increase of the VAT rate from 5% to 7.5%. As such, the 2020 Appropriation Bill is based on this new VAT rate. The VAT Act already exempts pharmaceuticals, educational items, and basic commodities, which exemptions we are expanding under the Finance Bill, 2019.
I. Given the very fact the IGR is the sine quo non to budget success, the 2020 Budget has a total budgeted recurrent revenue of N140,330,473,912, representing 71% of the budget.
C. RECURRENT EXPENDITURE
Very much unlike the 2019 budget that has N15,304,901,626 as personnel cost for Ministries , the proposed 2020 budget has N 8,949,496,411 as its personnel cost which represents a 41.5% reduction in Personnel Cost.
The overhead cost in the proposed 2020 budget will relatively increase to N 34,702,219,005 from the N17,112,658,110 that was approved in the 2019 budget. This is also as a result of increase in government activities, restoration of full workers’ salaries, allowances and the observance of the principle of separation of power between the three arms of government. We also restored the autonomy of the Local Government Administration. However, stringent measures will be taken to cut expenditures by Ministries, Department and Agencies (MDAs).
In summary, the Recurrent expenditure is N 91,377,822,129 . However, this figure includes the repayment to FGN on debts including bailouts funds and rescheduled service of bonds.
Our capital expenditure is N 106,229,450,200 which represents 53.8% of the proposed budget. This is a welcomed development in an era where many other administrations have well below 40% in capital expenditure. It goes without saying that capital expenditure drives development and growth.
The Consolidated Revenue Fund Charges (CRFC) will remain the same with the 2019 budget provision at N 16,303,247,101.
21. SUMMARY OF THE 2020 BUDGET
Mr. Speaker, Honorable members, after a painstaking review of impactful variables, a total budget of N 197,607, 272,328 (One Hundred And Ninety- Seven Billion, Six Hundred And Seven Million, Two Hundred And Seventy-Two Thousand , Three Hundred And Twenty-Eight Naira) Is proposed. The budget is appropriately dubbed “Rebuild Imo – Budget One”.
(A) 2020 RECURRENT REVENUE IN COMPARISON WITH THE 2019 APPROVED BUDGET
S/N RECURRENT REVENUE ITEMS 2020 PROPOSED BUDGET 2019 APPROVED BUDGET
1. Internally Generated Revenue 36,460,473,912 25,576,653,662
2. State share of the Federation Account 58,700,000,000 50,000,000,000
3. Value Added Tax (VAT) 13,000,000,000 12,000,000,000
4. JAAC (Imo State Universal Basic Education Board)
5. Excess Crude Nil 3,000,000,000
6. 13% Derivation Fund 10,000,000,000 6,000,000,000
7. Others 3,170,000,000 1,113,395,185
TOTAL 140, 330, 473,912 97, 690, 048, 847
(B) 2020 RECURRENT EXPENDITURE IN COMPARISON WITH THE 2019 APPROVED BUDGET
S/N RECURRENT EXPENDITURE ITEMS 2020 PROPOSED BUDGET 2019 APPROVED BUDGET
1. Overhead Costs 34,702,219,005 16,931,032,103
2. Personnel Costs (Ministries) 8,949,496,411 15,339,776,626
3. Subvention Costs 31,422,859,611 13,602,316,397
4. Crfc (*) 16,303,247,101 16,303,247,101
TOTAL 91,377,822,128 62,176,372,227
(C) 2020 CAPITAL RECEIPTS IN COMPARISION WITH 2019 APPROVED BUDGET
S/N CAPITAL RECEIPTS ITEMS 2020 PROPOSED BUDGET 2019 APPROVED BUDGET
1. Internal Loans 18,970,909,061 50,000,000,000
2. Development Partners 37,353,389,355 127,439,222,965
3. Grants 952,500,000 1,688,800,000
TOTAL 57,276,798,416 179,128,022,965
(D) 2020 CAPITAL EXPENDITURE IN COMPARISON WITH 2019 APPROVED BUDGET
S/N SECTORS 2020 PROPOSED BUDGET 2019 APPROVED BUDGET
1. Ministry Of Works 41,318,250,095
2. Economic Sector 23,249,659,233 96,482,956,846
3. Social Services Sector 21,089,598,734 49,579,341,403
4. Admin Services Sector 16,425,907,270 58,888,999,396
5. Counterpart Funds Exp 4,146,034,868 9,690,401,940
TOTAL 106,229,450,200 214,641,699,585
The proposed 2020 Capital Expenditure is thus N 106,229,450,200 which is 53.8% of the budget. As already stated, this is a healthy development given that quite often, what you have as capital expenditure is below 40%.
22. PROPOSED BUDGET SIZE
S/N REVENUE AMOUNT
1. Internally Generated Revenue 36,460,473,912
2. Statutory Allocation 58,700,000,000
3. Value Added Tax (VAT) 13,000,000,000
4. 13% Derivation Fund 10,000,000,000
5. Other external revenue 3,170,000,000
S/N EXPENDITURE AMOUNT
1. Recurrent Expenditure 91,337,822,128
2. Capital Expenditure 106,229,450,200
S/N RECURRENT EXPENDITURE AMOUNT
1. Personnel Cost (Ministries) 8,949,496,411
2. Overhead Cost 34,702,219,005
3. Subvention Cost 31,422,859,611
4. CRFC 16,303,247,101
Total Recurrent Expenditure 91,337,822,128
S/N CAPITAL EXPENDITURE AMOUNT
1. Ministry of Works 41,318,250,095
2. Economic Sector 23,249,659,233
3. Social Services Sector 21,089,598,734
4. Admin Services Sector 16,425,907,270
5. Counterpart Funds 4,146,034,868
Total Capital Expenditure 106,229,450,200
On the strength of the foregoing, I am pleased to give assurances of our commitment to ensure value for money and to implement the Budget in prudent, accountable and responsible manner. This is a new dawn and the days of imperial governorship are over. We have put our hands together on the Rebuild plough. Our eyes are fixed on the horizon and we see the silver-lining behind the dark clouds once again. God is on our side. I can, therefore assure this great House that the outlook of our State is bright. We are witnessing increasing investor confidence while our national and international profile is rising.
On this note, it is therefore our sincere honour and delight to formally table the Imo State 2020 Budget revenue and expenditure estimates for your consideration and according appropriation.
Mr. Speaker Sir, Honourable Members, distinguished and patriotic Imolites, Thank you all for your respected audience.
Long live the Federal Republic of Nigeria
Long live Imo State
Rt. Hon. Chukwuemeka Ihedioha, CON
Governor, Imo State