Unlike the previous practice in most states of the federation where recurrent expenditures take the lion share of their budgets, this year governors have placed a premium on capital expenditure.
Although some of the states have in the last two years prioritised capital projects in their budgetting system, the quantum of funds allocated to capital this year is unprecedented.
Economic and financial analysts, who spoke with LEADERSHIP on the refocusing of the states’ budgets on capital projects, linked the development to the forthcoming 2023 general elections.
According to them, most of the governors want to use the budgets to woo voters by citing projects in various constituencies, to influence the elections either for themselves or their anointed candidates.
They, however, asserted that if the states demonstrate the political will to faithfully implement the budgets, there will be increased economic activities across the country.
The experts said by investing in capital projects, the state governments would be creating direct and indirect jobs in the formal and informal sectors of the economy.
Of the 25 states assessed by LEADERSHIP, 18 of them prioritised capital expenditures while eight had recurrent expenditure taking a bigger share of their budgets.
The states that focused on capital projects are Kaduna, Bauchi, Katsina, Borno, Niger, Jigawa, Gombe, Rivers, Lagos, Delta, Enugu, Abia, Cross River, Imo, Edo, Osun, Ebonyi and Oyo.
In the recurrent expenditure list are Adamawa, Benue, Plateau, Ondo, Ekiti, Nasarawa and Taraba.
Meanwhile, an economist with Kaduna State University, Gabriel Ayuba, doubted the full implementation of the budgets by the federal and state governments due to economic challenge facing the nation.
In Kaduna State, Governor Nasir el-Rufai has continued to be among the leaders in the allocating huge funds to capital projects.
He recently signed 2022 budget of N278.58 billion into law.
The budget showed that N184.53 billion was allocated to capital expenditure and N94.05bn to recurrent, a ratio of 66:37 per cent.
In Katsina State, Governor Aminu Masari signed into law the 2022 budget of N323.2 billion. Recurrent expenditure took N102,800,756,244.00, or 30.15 percent while capital expenditure took N238,151,156,313.00 or 69.85 percent of the total budget.
The economic sector, however, tops the budget allocation with N124,490,966,430.00 equivalent to 52 percent of the total appropriation, followed by the social sector which has N98,664,435,432.00 with 41.40 percent.
Capital Expenditure got the lion’s share of the 2022 budget of Bauchi State with N112.418 billion, or 57 percent of the total budget. Recurrent expenditure is N85,057,580,518,58, or 43 percent.
A cursory look on sector-by-sector allocation of the budget shows that Works and Transport is allocated N43.544bn, accounting for 22.3 percent of the entire budget. Education got the second largest share of the budget with N29.931billion, which represents about 15.3 percent.
Professor Bala Sulaiman Dalhatu of the Department Accounting and Finance, Abubakar Tafawa Balewa University Bauchi, said that the chunk of the budget allocated to capital expenditure would give room for completing existing projects, thereby injecting money into the economy.
He expressed concern that over 35 percent of the budget will be financed through internal and external borrowing.
Sulaiman said interest rates to be budgeted will further deplete earnings of the state.
In Borno State, the 2022 appropriation law, tagged “Budget of Hope for Post-Conflict Stability “has a total of N267.921 billion, comprising N172.535 billion for capital expenditure, and N95.385 billion for recurrent expenditure.
In the said budget proposed by Governor Babagana Umara Zulum, 64 percent of the entire budget which is N172.5 billion was allocated for capital projects mostly physical constructions of infrastructure, houses, schools and others.
Education sector got the largest share of N38 billion, representing 20.22 percent of the budget size.
Zulum said the budget aims to fast-track ongoing reconstruction of destroyed communities for safe and dignified resettlement of IDPs, as well as the provision of livelihood and social support to citizens. The budget also aims to fund completion of all ongoing capital projects.
Zulum announced allocations for other sectors, setting aside N23.8bn for reconstruction of communities destroyed by insurgents, as well as the rehabilitation and resettlement of victims.
Justifying the budget which saw capital expenditure at about 64 percent higher than recurrent expenditure, Dr. Bukar Mustapha, a lecturer at the Department of Economics, University of Maiduguri, said the wanton destruction of houses and rebuilding of such houses, no doubt necessitated the Governor’s action, especially, now that the state government is closing most of the internally displaced persons (IDPs) camps in Maiduguri.
He, however, said the whole proposal might face constraints to implement should there be dwindling federal allocation since a majority of the budget proposals is hinged on the federal allocations.
He said the state may be forced to go back and readjust the budget to suit the realities of the day.
The Niger State Governor Abubakar Sani Bello last week signed into law a N211 billion budget, made up of capital budget of N131 billion representing 62 percent and recurrent budget of N80 billion, representing 38 per cent.
The economic sector has the highest allocation of N87 billion and the health subsector of the social sector has the highest ministerial sector allocation of N20 billion. In the recurrent expenditure the personnel cost has the highest allocation of N39 billion.
A financial management expert, Abdullahi Dauda, said the Niger State government will be able to attain the level of capital projection because of the component of capital receipts of N100.4 billion.
The 2022 Adamawa State budget of N163.629 billion signed into law by Governor Ahmadu Fintiri had N98.8 billion, representing 60 per cent, as recurrent expenditure far higher than capital expenditure of N64.7 billion, representing 40 percent, of the total budget.
Tagged ‘Budget of Sustainable Hope,’ the office of the Accountant General took the lion share of N22.7 billion
The commissioner of finance and budget, Dr Ishaya John Dabari, during breakdown stated that N21 billion would be spent on urban and rural roads, while the plan to reduce housing deficit in the state will be sustained by ensuring the completion of an ongoing 1,000 housing units project.
Yunusa Yau, a lecturer in the Department of Economics Adamawa Polytechnic, said need to better the lots of citizens especially in the area of human capital empowerment is major reason among differentials in the expenditures
He said fresh governors usually raise recurrent expenditure to seek votes to win a second term.
The Jigawa State 2022 budget assented by Governor Muhammed Badaru Abubakar on December 2021 has a total sum of N177. 795 billion projected for the year.
According to the document, the state government has earmarked over N91.4 billion for capital projects, representing 51 percent, while the sum of N86.7 billion, representing 49 per cent, was allocated to recurrent expenditure including salary and overhead coast.
The education sector took the lion share of the budget with allocation of N57/billion representing 32 percent of the budget while health sector received N28.7 billion representing 16 percent of the total budget.
Commenting on the sectoral budgetary allocation, the chairman of Civil Society Organisation known as Projects Monitoring Partners (PMP) Comrade Isa Mustaph said it is not something to hail government when its budgetary allocation to capital projects is higher than the recurrent, adding that the most important is for the budget to be purposefully and realistic.
“For example if you build infrastructure or education or health sector you need manpower to manage it, therefore the recurrent expenditure can be higher than capital. Equally if there is infrastructure deficit, it is expected to have more allocation to capital projects than recurrent” ‘ He revealed
In Gombe state, the capital expenditure was allocated a higher share than recurrent expenditure in the 2022 budget signed into law by Governor Inuwa Yahaya.
Our correspondent reports that of the N154.6 billion budget estimate, the sum of N69.1 billion, representing 44.7 per cent, was earmarked for recurrent expenditure while N85.4 billion, equivalent to 55.3 per cent, was proposed for capital expenditures.
In Benue State Governor Samuel Ortom has signed into law the 2022 budget of N155.6 billion, tag Budget of Economic Growth And Human Capital Development.
The governor said the 2022 Budget Estimates will be on programmes and projects that will take the State farther along on the path to becoming an economically self-reliant federating unit of Nigeria.
In the budget the recurrent expenditure stands N98,792 billion with personnel cost of N47,569,440,798.84 and overhead cost at N51.222 billion, while capital expenditure stands at N56.819 billion.
Based on the above, the recurrent expenditure is higher than the capital expenditure.
Speaking on the implications of allocating more funds to recurrent expenditure, an economic expert, who is also a senior lecturer in the Department of Economics, Benue State University, Màkurdi, Dr Terpase Nomor, said, “in reality we don’t have a budget in Benue State.”
According to him, “I said this because Budget starts with preparation and ends with execution and even evaluation, but in Benue State budget has become a ritual. I did a review of 2011, 2012 and 2013 and a particular item, which is building of MD house at the Benue State University Teaching Hospital Màkurdi, kept appearing with different figures, and even when the commissioner of finance gave a speech in 2012 that the budget was implemented 92 per cent, it still appeared as building of MD house with a higher figure in 2013.
“So, when you look at all these things you will be discouraged, that is why I have stop following the State budget because I feel there is no budget; what the people usually do is to copy, paste and edit to suit what they want.”
Plateau State Governor Simon Lalong signed the 2022 budget of N106.807 billion, with recurrent expenditure higher than capital expenditure. N70.819 billion, representing 66.31 percent, went to recurrent expenditure, N35.987 billion, representing 33.69 percent, is capital expenditure.
Speaking to our correspondent in Jos on the implications of allocating more funds as recurrent expenditure, Dr. Joshua Riti, a lecturer of the Department of Economics, University of Jos, said usually for an economy that is developing, more of the appropriation should go for capital expenditure because that will led to development.
Governor Abdullahi Sule of Nasarawa State signed a budget of N110.8 billion. The recurrent expenditure is N70.891 billion, representing 64.56 per cent of the entire budget, while the capital expenditure stands at N38.909 billion, representing 35.44 percent. Education got the highest vote of N31.83bn.
In the Ebonyi State of N145.410 billion, recurrent expenditure stands at N55.646 billion, or 38.27percent, while the capital component is N89.763 billion, or 61.73 percent of the total budget.
Governor Dave Umahi is focusing on capital projects development especially the completion of the ongoing projects in the state.
A Senior Lecturer in the Department of Banking and Finance, Ebonyi State University, Dr. Chinedu Egwu, said that since the creation of the state, the capital expenditure had always had more allocation than the recurrent expenditure with civil and public servants in the state suffering economic downturn as a result.
He said that though the state is in a hurry to meet up with infrastructural development, wages, salaries and other expenditure under the recurrent should also be given priority attention.
“We have gotten enough infrastructural development from the present administration; what the people need now is stomach infrastructure which should have made the recurrent expenditure higher than that of capital.
“The flyover bridges, the concrete roads, the tertiary institutions, the street lights are all laudable projects executed by the present administration but the economic situation in the state is becoming unbearable and there is need for urgent attention to wages, salaries and other entitlements of civil and public servants.”
Egwu noted that rather than build several tertiary institutions in the state that might be difficult to maintain by successive administrations, “the present administration should look into the plight of lecturers of the Ebonyi State University, employ people into the civil service and increase the wage bill of civil and public servants so that their take-home pay can actually take them home.”
The Rivers State 2022 Budget as passed by the Rivers State House of Assembly and assented by Governor Nyesom Ezenwo Wike is N483.173 billion.
The recurrent expenditure of the budget is N144.764 billion, representing about 30 per cent of the total budget size for 2022 fiscal year, while the
In a bid to deepen development and sustain the ongoing reform in the Edo State, Governor Godwin Obaseki-led administration in the state has a total budget size of N214.2 billion, with capital expenditure is N314. 903 billion, representing about 65 per cent, and N95.96 billion allocated to recurrent, or 32.96 percent.
Speaking on the budget evaluation yesterday, Mr Roy Oribhabor, a financial analyst and a social commentator in Benin, is of the view that the 2022 budget as passed is realisable and implementable.
According to him, “I have evaluated the budget and I’m impressed with the way and manner of the budget so far especially with regards to infrastructural development. If you look at the key area the governor was bothered about was the Upper Airport Road. Upper airport road is a viable project and if that can be constructed the government will be celebrated.
“People living around that area have not experience tarred road but for Obaseki to capture that aspect of the road after Ogba zoo is a welcome development and join it with Ekenwan road will broaden social economic activities along the road and the state.”
The Delta State Government has projected N425 billion for the 2022 fiscal year, with N284.14 billion for capital expenditure, or 60.5 per cent, and N185.36 billion, or 39.5 per cent, for recurrent spending.
According to Governor Ifeanyi Okowa, N158 billion, representing 59 per cent of the capital budget, is allocated to the economic sector while N55.18 billion is allocated to the social sector.
Governor of Enugu State, Ifeanyi Ugwuanyi, assented to the 2022 appropriation bill of N186.635 billion which was passed by the State House of Assembly on Wednesday, December 29, 2021.
Of the total budget, 38 percent is for recurrent expenditure while 62 percent is for capital expenditure.
Governor Okezie Ikpeazu of Abia State signed the 2022 Appropriation Bill of N147.282 billion on Friday, December 31,202.
A breakdown of the estimate indicated that the recurrent expenditure will consume N66. 831 percent of the total expenditure while N80.958 billion has been set aside for capital.
Speaking to LEADERSHIP, a financial expert, Chief Johnson Ibeakanma, said the state could go higher than the figure if the administration knew its onions.
However, the economist added that the budget is implementable if the government sticks to the outlay religiously, that is, “plan your work and work your plan.”
In Cross River State the capital expenditure for year 2022 stands at N225 billion, an amount which is higher than the amount for the recurrent expenditure at N188bn.
Bayelsa State Governor Douye Diri recently signed into law the N314.4billion 2022 Appropriation Bill.
The budget gave the Ministry of Works and Infrastructure the highest allocation of N51 billion to drive the critical infrastructure programme of the present administration.
LEADERSHIP gathered that, with the breakdown of the budget, capital expenditure would gulp N110.98 billion, representing 35.72 per cent of the budget, while personnel cost was estimated at N67. 413 billion, representing 21.69 per cent.
A senior lecturer with faculty of Engineering in the Department of Agriculture and Environmental Engineering, Dr. Domoyi Castro Mathew, said, “It is worrisome whether the impressive Bayelsa State 2022 budget will be fully implemented to the letter as planned, as Bayelsa State is currently heavily indebted, with a debit profile of over N150 billion as of June 2021, up from the N123 billion the current administration inherited on assumption of office in February 2020, according to the data obtained from the website of the Debt Management Office.”
The Imo State government has earmarked N96.746 billion for capital expenditure, representing 74.64 percent of the total budget.
Dr Desmond Echeta, an economist and lecturer with the Imo state University, stressed that the budget focuses more on capital expenditure, which is in line with the expectations of the citizenry. He submitted that this sector may likely witness an improvement in basic service delivery and substantial increase in the provision of the necessary decaying infrastructure in the State.
Echeta highlighted that if the Imo State Government cautiously follows the implementation of the budget judiciously, it is likely to realise the intent of the budget.
Lagos State has a budget size of N1.758 trillion for 2022 , making the budget the biggest ever by any state government in the country.
In the breakdown, N591 billion is meant for recurrent expenditure, while N1.166trn would be expended on capital expenditure in the budget estimate tagged budget of consolidation.
The capital expenditure is 66 per cent of the budget, while recurrent expenditure takes 34 per cent of the budget estimate.
In Oyo State, the 2022 budget size is N294.704 billion.
The sum of N139.526 billion, representing 52.97 per cent, was approved as recurrent expenditure, while N155.178 billion, amounting to 47.03 per cent, was approved for capital expenditure.
An economist, Dr Saka Ibraheem Ominiwe, said that the budget was implementable if only the government was honest, sincere, transparent and not corrupt.
Ekiti State Governor, Dr Kayode Fayemi, presented the 2022 budget estimate of N100.753 billion to the State House of Assembly.
The budget is made up of N60.686,914 billion recurrent expenditure and N40.067 billion capital expenditure, at the ratio is 60:40 in favour of recurrent.
A financial expert and economist, Mr Lanre Ojo, who spoke on the implications of the state government allocating more funds to recurrent expenditure in a fiscal year, said such has both positive and negative impacts on the economy.
He said earmarking more funds to recurrent expenditure may ensure availability of more funds for the running of government businesses but this may have little or no positive impact on the generality of the people outside government, especially those in the private sector.
“Apart from the regular payment of salaries, people want to see more roads being constructed and fixed, provision of potable water, electricity, qualitative and affordable health services, schools and other social amenities,” he said.
In Osun State, Governor Adegboyega Oyetola signed into law a total budget of N129.756 billion for the year 2022.
Out of the budget, N53.893 billion was allocated to recurrent expenditure while capital expenditure stands at N75.862 billion.
In Ondo State, a total budget of N199.282 billion was signed into law by the state governor, Oluwarotimi Akeredolu, for 2022.
Of this budget, the sum of N113.315 billion, representing 56.86 per cent, is earmarked for recurrent expenditure while N85.968 billion, representing 43.14 per cent, is for the capital development.
Speaking on the budget, however, an economist and a Chartered Accountant, Mr Ogunleye Rotimi Williams, noted that the kind of budget run in the state cannot bring the needed development.
Ogunleye said, “If you find out, in the last five years, you will notice that the recurrent expenditure has been on the high side leaving the capital expenditure on the lower side. It has always been a budget deficit.
“That means that the economy lacks power to generate money to fund the budget. In a state we have this kind of budget, you will notice that the development of the state will always be small throughout the year. “The capacity of our economy has been limited by its budget. It has also been limited by underdevelopment. That means we don’t have a manufacturing economy. This is also a process.
“The reason why the state is running this kind of low budget amidst the huge population is that our production capacity is low. It means with this kind of development; this is not the time that our economy can witness the growth that we desire.”
Business and Financial experts in Taraba State have said high budgetary allocation for recurrent expenditures as against capital expenditures for the past years was not healthy for the growth and development of the State.
The experts said the state government again missed the opportunity to correct the wrongs in the 2022 budget and allocated N79 billion to recurrent expenditures and N70 billion to capital expenditures.
Financial expert and journalist, Mr Justin Tyopuusu, told our correspondent that the state needs to invest more in infrastructure projects like roads, water, health care delivery, agriculture and mineral sub-sectors to boost the state’s economy.
“Taraba is a poor state that needs not be poor, giving the huge potential available in the state. The has a good climate for the production of virtually every crop.
“Good investment in road construction, agriculture, social justice that would see sustainable peace return in the state among others can transform the State into investors’ destination in Nigeria.
“The governor always said that Taraba can feed the nation with rice, which is true with the right investment climate. At present, most of the people doing dry season farming are not from Taraba. Government needs to support and encourage local farmers to produce the food that will feed the nation, but is not reflected in the budget.”