FG, States Spend ₦5.3tr On Salaries, Overheads

Image source: Daily Trust

Nearly half of the federal and 36 state governments’ budgets of ₦12.2 trillion for the year will be spent on salaries and overheads, Daily Trust investigation has shown.

Daily Trust report continues:

Each of the two tiers has ₦6.1 trillion, but ₦5.33 trillion of the total (43.7 percent) will be expended on salaries and overheads.

This is coming at a time of concerns over the swollen recurrent expenditures in the face of dwindling oil revenues and low votes for development projects.

The total amount earmarked for capital projects by the central and the state governments this year is ₦5.04 trillion (41.3 percent); ₦3.3 trillion for the states and ₦1.75 trillion for the federal government.

The total budget carries   a combined deficit of ₦4.5 trillion (36.9 percent), which is made up of ₦2.3 trillion for the states and ₦2.2 trillion for the federal government.

The federal government’s budget of N6.06 trillion has recurrent expenditure component of ₦2.65 trillion (44 percent) and ₦1.75 trillion (29 percent) for capital projects. The remaining balance of ₦1.66 trillion (27 percent) was for debt servicing and statutory transfers.

Capital spending by the 36 states is ₦3.3 trillion, which is 54 percent of their total budgets, while recurrent gulps ₦2.7 trillion (44 percent).

The 19 northern states have a total budget of ₦2.5 trillion, of which ₦1.4 trillion (56 percent) was for capital and ₦1.1trillion (44 percent) for recurrent. The northern states have a total deficit of ₦1.3 trillion (54 percent).

The 17 southern states have a total of ₦3.5 trillion budget comprising ₦1.9 trillion (54.2 percent) capital and ₦1.5 trillion (44 percent) recurrent. The southern states have a total deficit of N1.1 trillion (31percent).

States with low budgets

Six states with the lowest approved budgets are Ekiti (₦67 billion), Niger (₦74.7 billion), Gombe (₦76.5 billion), Nasarawa (₦77 billion), Enugu (₦85 billion) and Yobe (₦88.9 billion). They have a total budget of ₦469 billion, comprising ₦261 billion recurrent expenses and ₦210 billion capital vote. Their total deficits amount to ₦126 billion.
States with high budgets

The big spenders are Lagos (₦662 billion), Akwa Ibom (₦423 billion), Cross River (₦350 billion), Rivers (₦307 billion), Kano (₦274 billion) and Delta (₦268 billion) with ₦2.3 trillion between them or about one sixth of federal and states budget combined.
Of this sum, N1.4 trillion is for capital projects and N859 billion recurrent. But they have a combined deficit of N774 billion.

State-by-state analysis

One of the states with swollen recurrent expenses is Osun whose Governor Abdulrauf Aregbesola budgeted ₦150 billion for 2016. Of this amount, ₦113 billion is for recurrent and  ₦37 billion for capital votes.

Another state in this league is Zamfara, where Governor Abdulaziz Yari, chairman of the Nigerian Governors’ Forum (NGF), budgeted ₦109 billion, out of which ₦69.8 billion is   for recurrent and ₦39.4 billion for capital expenditure.

In Taraba, Governor Darius Ishaku budgeted ₦100 billion for the year, setting aside ₦60 billion for recurrent spending and ₦40 billion for capital projects.

Niger State also has a higher recurrent vote, standing at ₦39.5 billion out of ₦74.7 billion, leaving ₦35.2 billion for capital expenditure.

Kogi State votes ₦99.9 billion, setting aside ₦58.2 billion for recurrent and ₦41.7 billion for capital spending.

Of the ₦76.5 billion Gombe expenditure, ₦42.5 billion is for recurrent and ₦34.4 billion for capital expenses.

Delta State Governor Ifeanyi Okowa budgeted N268 billion for the year.  Recurrent vote will consume ₦153 billion, leaving N114 billion for capital spending.

His Ondo counterpart, Olusegun Mimiko, has ₦123.7 billion budget.  While recurrent gets ₦69 billion, capital takes ₦54.5 billion.

Bayelsa State Governor Henry Seriake Dickson budgeted N170 billion, comprising ₦35 billion for capital projects and ₦135 billion for recurrent spending.

Of Oyo State budget of ₦173 billion, ₦100 billion was earmarked for recurrent expenditure while the remaining ₦73 billion is for capital spending.

In Nasarawa, Governor Tanko Al-Makura budgeted ₦77 billion, of which ₦43 billion is for recurrent expenses and ₦34 billion capital.

Gombe State which has the least budget deficit of ₦573 million has a former accountant general of the federation as governor. The former oil producing state of Cross River has the highest budget deficit of ₦283 billion in the country.

Other states with high deficits include Akwa Ibom (₦139 billion), Lagos (₦119 billion), Kano (₦117 billion), Jigawa (₦94 billion), Plateau (₦69 billion) and Bauchi (₦68 billion).
The total budgets   of the six states of the northeast (N676 billion) are about the same with that of Lagos (₦662 billion) alone. On the other hand, the northeast’s total budget deficit of ₦202 billion is almost double of Lagos’ ₦120 billion.

Geopolitical analysis

On geopolitical basis, the seven states of the northwest zone have a total budget of ₦1.12 trillion. The capital expenditure is ₦698 billion and ₦479 billion recurrent. The zone has ₦333 billion budget deficit.

The total budget for the northeast zone is ₦676 billion, with capital expenditure consuming ₦347 billion, leaving N326 billion for recurrent. The zone has a budget deficit of ₦202 billion.

The north central zone’s approved budget for the year is ₦684 billion. ₦385 billion is for capital and ₦343 billion for recurrent spending. This zone’s budget has a deficit of ₦194 billion.

On the other hand, the southwest zone’s budget for the year is ₦1.4 trillion, with recurrent spending consuming ₦695 billion, leaving ₦671 billion for capital component. The region has a budget deficit of ₦316 billion.

The south-south region has a total budget of ₦1.6 trillion, comprising ₦949 billion capital and ₦579 billion recurrent expenditures. The region’s budget deficit is ₦628 billion.
The southeast’s total budget is ₦490 billion, made up of ₦248 billion recurrent and ₦242 billion for capital projects. The five states of the zone have a total deficit of N115 billion.
High budgets, low IGR

Though the 36 states of the federation budgeted ₦6.1 trillion for the year, their combined Internally Generated Revenue (IGR) is just little above half a trillion naira.

Data from the National Bureau of Statistics (NBS) show that the IGR of the entire states dropped by ₦24 billion-from ₦707 billion in 2014 to ₦683 billion in 2015.

The total IGR of the 17 southern states is five times bigger than that of the 19 northern states in 2015. The northern states generated ₦111 billion, while the south got ₦580 billion.
Lagos state alone generated ₦268 billion in 2015, which is two times higher than the combined IGR of the 19 northern states. The Lagos IGR is also higher than the combined revenue generated by the oil-producing south-south (₦179 billion) and southeast (₦62.4 billion).

The northeast generated ₦24.2 billion, northwest ₦48.2 billion, north-central ₦38.4 billion, and southwest ₦340 billion, last year.

Some of the states with the lowest IGR are Yobe (₦2.2 billion), Zamfara (₦2.7 billion), Ekiti (₦3.2 billion), Borno (₦3.5 billion), and Kebbi (₦3.5 billion).

Other states with highest IGR after Lagos are: Rivers (₦82.1 billion), Delta (N₦40.8 billion), Ogun (₦34.5 billion), Edo (₦19.1billion), and Enugu (₦18 billion).

Poor IGR collection is not the only challenge the federal and states authorities have to grapple with. Daily Trust reported in February how centrally collected revenue shared by the federal, state and local governments dropped by ₦2.8 trillion between 2014 and last year.

Analysis of official documents from the federal ministry of finance shows that the three tiers of government shared ₦8.6 trillion in 2014 but the figure slumped to ₦5.8 trillion in 2015 due to the continuous global slide in crude oil price.

The revenue continues to slide this year as the three tiers of government shared a total of ₦281.5 billion for April, last week. As a result of their level of indebtedness, some states go home with little portion of their federal allocation after deductions.

Osun state, for instance, went home with ₦132 million only out of the ₦2.3 billion due to the state for the month of March. It is not clear how Governor Aregbesola will finance his ₦150 billion budget with an annual IGR of ₦8 billion and monthly federal allocation of ₦132 million.

Of its ₦2.4 billion federal allocation for March, Cross River got only ₦967 million after deductions. But the state has an annual budget of ₦350 billion with an annual IGR of ₦13.5 billion. How Governor Ben Ayade will fund his budget remains to be seen.