Additional reports by Damilola Ojetunde and Victoria Nwaziri
Twenty states that have so far presented their 2018 budgets are proposing to spend a total sum of N6.1 trillion.
When the remaining 16 states present theirs, the proposed total expenditure by all the states would definitely be higher than the Federal Government’s N8.6 trillion budget.
The budgets of Cross River and Lagos states account for 38 percent of this N6.1 trillion, as they are the first states in the country’s history to hit a trillion threshold in the annual budget.
The concern in this seeming competition among the states to present higher budget is how they will get the money to fully implement their budgets, knowing their revenues either come from federation account allocation or internally generated revenue (IGR).
As of October, the combined total allocation to all the states from the federation account was N1.4 trillion, higher than the N1.3 trillion of 2016. The average allocation to a state this year is N38 billion while last year’s was N36 billion.
The IGR from all the states by the third quarter of this year was just 546 billion, while they made 801 billion in 2016.
As indicated by the federation account allocation and IGR in 2016 and 2017, the combined total revenues for all the states in 2018 cannot exceed 3 trillion. With this projection, the total revenues by the states will be less than 40 percent of their budgets.
Therefore, if the budgets of the states will be implemented fully, nothing less than 60 percent will be borrowed. This budget deficit is unrealistic..
All the states that have presented their 2018 budgets have a deficit but some states have taken theirs to absurd and unrealistic levels.
The most unrealistic budget is the N1.3 trillion ‘Budget of Kinetic Crystallisations’ presented by Ben Ayade, Governor of Cross River State. But what has changed in the state for such additional N1 trillion, given the state’s 2017 budget was N301 billion?
The total IGR by Cross River was N9 billion, as of the third quarter of 2017, while the state’s IGR in 2016 was N14 billion.
Cross River has received N18 billion from the federation account in 2017 and received N17 billion in 2016. The combined total revenues projection from federation account allocation and IGR for the state in 2018 is less than N50 billion.
In the past 10 years, from 2007 to 2017, Cross River State has only received N411 billion from the federation account allocation. Therefore, if the state borrows to spend N1.3 trillion in 2018, it may not earn this amount of money in revenue in the next 10 years!
Cross Rivers’ proposed budget is higher than Lagos, which made 302 billion from IGR in N2016 and had made N241 billion by the third quarter of 2017.
The states that have the lowest budgets for 2018 also have a huge deficit. Among the 20 states that have presented their budgets, Yobe and Ekiti have the lowest figures but they also have a high deficit.
Yobe’s 2018 budget of ‘Consolidation and Socio-economic Rejuvenation’ is N92 billion but the state’s revenue is less than N50 billion this year. The state has received N32 billion from the federation account in 2017, and it received N31 billion in 2016. Yobe’s IGR by the third quarter of this year is N2 billion and N3 billion in 2016.
Similarly, Ekiti’s 2018 ‘Budget of Accomplishment’ is N98 billion but the state’s revenue is less than N50 billion. The state has been allocated N30 billion this year from the federation account and also N30 billion in 2016. The IGR of Ekiti State by the third quarter of this year had hit N3 billion but was nearly N3 billion in 2016.
Based on their revenues, almost all the states have unrealistic budgets even if they are factoring allocation to local governments into their budgets. The total allocation to the 774 local governments from the federation account for 2017 is N1 trillion, with an average of N1.3 billion per local government.
The budget presentation has become an annual ritual for state governors to announce unrealistic figures. The budgets, although presented with fancy names, are never fully implemented.
From Adamawa’s ‘Budget of Hope and Empowerment’ to Oyo’s ‘Budget of Stabilisation’, the figures are not proportionate to their revenues. Probably, they are all going to borrow substantially to implement their budgets.
The reality is that not more than 15 states in the federation have the means to implement more than N100 billion annual budget but they will rather announce bogus and impressive budgets that are never implemented.