585 views | Emmanuel Ado | November 5, 2019
“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”
Joe Biden From the 2016 Budget of Sacrifice, Restoration and Change to the 2020 Budget of Progressive Renewal, Nasir El- Rufai, the Governor of Kaduna State has been unambiguously consistent as to the critical developmental objectives he wants to achieve, which as captured in the Kaduna State Development Plan(SDP) 2016-2020, includes an orderly, planned and coherent development of Kaduna State. And the vehicle for the achievement of these ambitious goals – enhanced service delivery to the good people of the state and infrastructural development, has been the annual budget. Without doubt,the goals and objectives of the SDP would have amounted to nothing, without a realistic and clearly communicated budget that is also timely prepared and implemented.
The bane of budgets of most states and especially at the Federal Level which have made the realization of the “lofty” objectives of good roads,modern healthcare facilities,good schools, reduction in the unacceptable high level of unemployment and the poor standard of living unrealizable year in, year out , is the late preparation and lackadaisical implementation of budgets, which is the actual expenditure or application of public funds in carrying out the activities of government as captured in the budget. While budget preparation in Nigeria is an elaborate process – budget implementation is treated with utter contempt and it’s always scandalously in favour of recurrent expenditure,because the public service has no shame taking care of itself, to the detriment of the larger population. The Audited accounts of the Federal Government, the 36 states, and the Federal Capital Territory bears testimony to the fact that the budgets of most states are self serving.
The situation has unfortunately remained unchallenged,clearly due to the absence of political will by the political leadership. On assumption of office, El-Rufai like most other governors met a budget that was consistently skewed in favor of recurrent expenditure – 30%:70% recurrent to capital ratio,but unlike them he took the bull by the horn and tackled the issue headlong,because that’s the only way he would deliver to the people,who are dear to him. So while states like Bayelsa and Delta in 2019 for instance, had a staggering recurrent expenditure of N200 billion and N137 billion respectively,Kaduna State which is more populated than both states,since 2016 has had a much lower recurrent expenditure.
In 2016, Kaduna State had a recurrent expenditure of N62 billion and a whopping N171.7 billion capital expenditure a 36%: 64% recurrent to capital ratio. Encouraging is that progressively the state has continued on the path of implementing budgets that focuses on socio-economic development of its people. In 2017 the N214billion had a N131.45 billion capital expenditure as against N83.46 billion recurrent expenditure, a 61:39% capital to recurrent expenditure ratio. And in 2020 it intends to spend N190 billion on capital and N67.87 billion on recurrent expenditure, an unprecedented capital to recurrent ratio of 73.7% :26.3%. Thus El-Rufai has consistently over the past 5 years ensured that the people are at the center of his budget implementation with the increase in allocation and implementation.
The pertinent question is what did El-Rufai do to achieve the feat,that the others haven’t done? First, is his commitment to help the citizens of his state achieve their full potentials and much more critical is the political will to embark on the reforms of the public service and the budgeting process,that freed the resources for capital development . Kaduna State is one of the few states that has implemented IPSAS in the preparation and implementation of its budget and that has fully subscribed to the Open Government Partnership (OGP), which demands transparency and accountability in the entire budgeting process. Also key is the realization by the El-Rufai administration that governments are not risk free and that failure of fiscal management will have serious impact on the economy of the state , especially as it relates to efficient service delivery,which is another thing the other states haven’t focused on.
The BusinessDay Governance and Competitiveness Award for ease of doing business, and the Institute of Chartered Accountants(ICAN) Award that were freely conferred on the state is a recognition of the tremendous reforms that the governor and his team,most especially the Budget & Planning Commission and the Finance Ministry have put in and are continuing to put in to ensure that the budget works for the vast majority of the people rather than the public servants. The various awards which are definitely not whimsical,has rather than decrease, increased the appetite of the Team El-Rufai to further deepen the reforms.
For instance, the state determined to maintain its Number one position in the World Bank Ease of Doing business, in 2020 intends to establish a Small -Claims Court, that will handle commercial disputes, shorten to five days from the current twenty-one days approval for building plans. And moving forward, integrate the databases of the Kaduna State Geographical Information Service(KADGIS) and that of the Kaduna State Urban Planning and Development Agency (KASUPDA), to ensure that no building approval is granted without valid title documents. The import of this is that unplanned development would be checked at the point of approval. Very interesting is that the state seems poised to surpass the world bank yardsticks in the ease of registering a new business, obtaining business licencing, favourable tax regime, ease of obtaining land and title documents etc as it aggressively markets the state as the ultimate business and tourism destination.
In 2015, only the cerebral El-Rufai had the economic sense to correctly read the ominous signs that Nigeria was heading into a recession and more importantly possessed the needed political will to act. From the outset he drastically reduced the number of political office holders and the number of ministries,savings that were deployed to building of schools,rehabilitation of the primary healthcare centers etc. El-Rufai equally knew that he faced clear choices – reform or perish and that key was improving the internally generated revenue (IGR) which was an abysmal N800 million a month when he took over, an amount that was grossly inadequate to cover the overhead expenditure of the public service.
Working with the one time Chairman of the Federal Inland Revenue Service (FIRS), he reformed the Kaduna State Internal Revenue Service(KADIRS) by making cash collection illegal and by streamlining the taxes. And the resources that hitherto ended up in private pockets started flowing into the coffers of the government for the execution of the myriads of projects he embarked upon. The government also implemented the Treasury Single Account (TSA) which stopped the practice of government borrowing from it self and at scandalous interest rates. By that singular action the state “gathered” about N25bn scattered in more than 470 bank accounts into the TSA account with the Central Bank of Nigeria.
Though kaduna State is currently ahead of oil states like Delta and Akawa Ibom in Internal Revenue Generation(IGR) from figures released by the National Bureau of Statistics (NBS),it has nevertheless maintained a lean administrative structure in a bid to control expenditure, while poorer states without the financial power of Kaduna State are ballooning theirs to accommodate all manners of interests. El-Rufai has also introduced measures to ensure the integrity of the public service payroll by instituting a continuous biometric verification system designed to weed out “ghost workers” and workers with altered biographic records. Because he interrogates the system, he is aware of the actual half – year spending in 2019, which has further convinced him that overheads can be further limited in 2020 and the money diverted to capital expenditure.
By day the state continues to reap the benefits of its reform agenda,which has made it possible for it to pay the new national minimum wage while others were still dilly dallying. And that decisive decision contributed in a significant manner in forcing the hands of the states. El-Rufai deserves praise for implementing an aggressive public service revitalization programme that right-sized the bureaucracy to an affordable structure , but more for injecting vibrant youths and women into the government, thus improving the quality and vitality of the service and raising the level of ICT penetration. Always the pacesetter, while he has accelerated the public service and revitalization Programme , he has equally introduced a performance incentive line item in the budget to motivate and reward productive public servants.
Kaduna State Government has confirmed that budgets can work and that it is a tool for change,if the needful are done. Because Kaduna State considers budget implementation critical, it ensured that issues revolving around it,that would help it achieve performance are frontally addressed. For the fifth straight year, the new financial year for the Kaduna State Government will begin on the first day of January, which has placed the state in a unique position in achieving full alignment of the calendar and fiscal years over fifth consecutive budget cycles,a feat the federal government is struggling to achieve.In 2020 it has fixed its sights on aligning the budget of the 23 local government councils to that of the state,which will greatly benefit the two tiers in terms of planning.
So what Kaduna State has going for it, is a reformed public financial management system,adoption of the Zero-based budget, a transparent and disciplined budget implementation that is predicated on realizable revenues, unlike Cross River State which in 2019 had a budget estimate of N1.04 trillion,but ended up spending less than N93 billion.
So while Kaduna State with strategic budget objectives that emphasizes fiscal realism, achieves its key objectives of funding to conclusion priority ongoing projects and reduction in backlog of inherited liabilities; maintaining a favourable proportion of Capital to Recurrent Expenditure; and expanding the revenue generation capacity of the State,states like Cross River would continue to drift.
Postscript: The other states should like El-Rufai declare “We should cover recurrent expenses from our own internal revenues. This would leave us better placed to devote to urgent capital investments resources we attract from other sources.”