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Kano State Budget of Economic Restoration and Development 2012
Kano State Government Budget 2012
Budget of Economic Restoration and Development
Background- The Kano economy:
Nigerias second largest non-oil sub-national economy has suffered de-industrialization
and steady decline with loss of competitiveness within the national economy. Industrial
production and sustained private sector growth have been constrained by high
production costs, cumbersome regulatory environment, general insecurity and
occasional communal strife. Today, approximately 70% of the States medium and
large-scale manufacturing establishments are non-operational, while the rest operate
at less than 40% capacity1. This has resulted in high rates of unemployment, depressed
incomes and low rates of economic growth. The unemployment rate, at nearly 26%2
, issignificantly above the national average. Youth unemployment [estimated at 67%!]3 is
endemic- leading to youth restiveness and negative social attitudes and practices, such
as indolence, street begging and indiscipline. Access to basic services-education, health
and water supply-is severely constrained and the poverty situation is particularly
worrisome with nearly 8 of the States 12 million people living below the poverty line. 4
It is the view of many analysts that Kano has fallen from grace to grass.
Determined to pursue policies and programmes that will transform our State
economically, socially and politically5
, HE the Governor presented the 2012 Budget ofEconomic Restoration and Development to the Kano State House of Assembly for
appropriation. Budget 2012 is intended to lay a solid, credible foundation for the
sustainable economic growth and development of Kano State and ultimately,
RESTORING the leadership position of the state in all sectors particularly
COMMERCE, INDUSTRY, EDUCATION, AGRICULTURE AND INFRASTRUCTURE6. It is as
much about the future as it is about the past: implicitly, the budget is viewed by the
administration as one of continuity and consolidation and is intended to build on
the projects, programmes and achievements of his administration from 1999-20037.
1Unpublished report of the Manufacturers Association of Nigeria, Sharada and Bompai Branches
2 NBS: Manpower Stock and Employment Survey 20103Daily Trust Newspaper Tuesday 7 2012 quoting the CBN Governor4
Poverty Incidence was approx 61 [2004]. New figures are: Relative 72.5, $ per day 66 and Absolute 65.6. See NBSNigeria Poverty Profile5 Budget Speech by the Governor6 Budget speech by the governor7 The Governor devoted the first part of the budget presentation to the SHoA to review of theactivities of his administration in 1999-2003.
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Table 1.0 Summary of 2012 BudgetItem 2012 appropriation 2011 appropriation Variance
Budget 221.6 124.4 [revised]66.85 [actual]
78%
recurrent 72.15 58.9 23%
capital149.47 65.5 127.9%
The budget is composed of a recurrent expenditure of N72.15 billion and capital
expenditure of N149.47 billion representing, respectively 33% and 67% of total
estimates. It is thus overwhelmingly developmental with an attractive capital-budget
ratio of 2:1-which, in the words of the Governor, underscores [our] desire to
emphasize capital development with a view to restore our lost economic glory and
to put Kano back on the path to prosperity.. The capital budget exceeds the 2011estimates of capital expenditure by N84 billion or 127.9% It is similarly in excess of the
combined capital spending in 7 budget years- 2003-2009 [approx N129 b] by N20.b or
115.5%! The major beneficiaries are Land and Physical Planning [45.2%], Works and
Housing [11.0%], Education [8.8%], Budget and Planning [6.3%] and Agriculture [5.9%].
[see fig 2]
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In contrast, the increase in recurrent expenditure and its components is modest:
Recurrent expenditure exceeds 2011 estimates by N13.6b or 23%, overhead costs are
only N5b or 26% more while the wage bill is increased by N6.7b or 18%. With close to
50,000 employees in the service of the State, personnel costs remain a key issue,
consuming 20% of total budget and nearly 60% of recurrent expenditure. In this fiscal
year, it is estimated that the State requires N3.6b monthly to pay its workers-although
IGR is less than N1.5 billion per month.
The main recurrent cost centers are the Govt. house/Deputy Govs office, office ofSSG, OHoS, SHoA which together are responsible for 23% of total recurrent expenditure
and 41% of total overhead costs! Others are Education 30.8%, Health 15% and Finance6.2%.
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To finance these, the State Government forecasts total revenue [including grants andloans] of approximately N221.6-matching therefore planned expenditure. Significant
contributions are expected from the Federation Account-including VAT [N72.44 billion
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and IGR [N46.4 b or approximately 21%]. The bulk [approx 62%] of the budget will be
financed with recurrent revenues which are projected to increase by nearly N33 billion
or 31% over 2011. IGR is a key component of recurrent revenues and is envisaged to
increase by 164% relative to 2011.
Table 2: Kano State Government: Sources of Funding Budget 2012
Item A
mount
% of revenue
Revenue Sources Amount % share in total revenue
Federation Account Plus VAT N72,438,611,427 32.7%
Internally Generated Revenue N46,360,422,861 20.9%
Other Receipts N19,698,000,000 8.9%
Total Recurrent Revenue N138,497,034,288 62.5%
Treasury Opening Balance N20,500,000,000 9.2%
Loans and Grants N57,766,715,827 26.1%
Miscellaneous N5,355,581,000 2.2%
Total capital Receipts N83,622,296,827 37.5%
Total Revenue N221,619,331,115 100%
The state makes one other generous assumption with regards to revenue:
Capital receipts [made up of largely of grants and loans will go up by N65b [or
360%!] from N18b in 2011 to approximately N84b in 2012. Specifically, it is envisaged
that grants-to the tune of N50 billion-will be the third largest contributor [22.5%] tobudget finance-after the Federation Account and IGR. It is similarly envisaged that
Loans to the tune of N8 billion or approx 4% of revenue will be accessed this fiscal
year. It is unclear why the two revenue sources suddenly assume prominence this fiscal
year or where the grants and loans are coming from. The States aversion to external
loan is well known: indeed, while signing the budget bill, the governor did emphasize
that government will not borrow a Kobo to implement its budget!
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One highly impressive feature of budget 2012 is that 9% of total revenue [N20.5b] are
savings from 2011 recurrent expenditure cuts- on account of which the governor was
voted as the most prudent by the Revenue Mobilization and Fiscal Commission.
Identifying Budget Priorities:
The stated objective of budget 2012 is to restore the leadership position of ALL
sectors-but especially Commerce, Industry, Education, Agriculture and
Infrastructure. The goals and strategies which are the critical vehicle to drive the
budget 2012 were identified as follows:
Revenue Generation
Infrastructure
Human Capital Development Civil service reforms
Urban beautification
Enhancement of welfare of teachers
Development of community based technical and vocational education
Food security
Water provision
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health care
It appears that budget allocations are made in line with these strategic goals: the
major beneficiaries of the budget-with combined budgetary allocations of
approximately N194 billion or 87%- are shown in table 3 and fig 7 below:
Table 3: budget 2012 top ten sectorsMDA/Sector Allocation [Naira, billion] Share in budget
Land and Physical Planning 69 b 31%Education 35.5 b 15.9%Works and Housing 17.9 b 8%Health 17.8b 8%Agriculture 11.3b 5%General Admin 7.5b 3.4%Rural and Community Dev 6.98 b 3.1%
Environment 3,74b 1.7%Water Resources 3.11b 1.4%
Based on this, government priorities appear to be:
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Infrastructure development [land &physical planning and works &housing]-with
total provision of N86.88 billion or 39% of budget.
Human Capital Development [education and health] with provision of N53.7b or
24% of budget
Real Sector Development [Agriculture & rural development and Commerce]:provision of N19.6 b or 8.8% a distant third
Are these newpriorities of a new regime? On balance it appears that Government
priorities have not changed radically over the years. Budget 2012 however makes
provision of infrastructure more visible. This can be seen from the following:
o In 2o11, the 5 top priority sectors, based on actual budget spending [or budget
releases]were: education, health, rural development, budget &planning and
infrastructure
o With the exception of the rural development sector, all of these remain among
the top 5 priority sectors in 2012.
o However:
In 2011 infrastructure with only 5.5% of the budget lagged behind
education which had 29%, health 15% and rural development 11%
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In 2012 although education and health receive more in absolute terms,
their share in total budget drops to approximately 16% [from 29% in 2011]
and 8% [from 15% in 2011] respectively. On the other hand, the share of
infrastructure in total budget shoots up to 39.3% from 5.5%
Similarly the education sectors capital estimates in 2012 [8.8% of total]
fall short of its capital spending [13.2% of total] in 2011.
Table 4a: priority sectors 2011 [based on budget estimates]
Sector Budget estimates [Nbillion]
% of state budget Rank
education 19.87 29.7 1Health 9.90 14.8 2Rural Dev. 7.35 10.99 3Budget and Planning 4.16 6.2 4Infrastructure 3.65 5.5 5
Rural and community development received the highest capital spending
[33.33%] in 2011. In 2012 the sector seems to have fallen out of favor: its
capital allocation of N6.98b is less than 5% of capital budget
Agricultural sector does not feature among the top five priority sectors in
2011 or 2012-although it continues to retain handsome allocation and
share of the budget
Table 4b Priority sectors 2011 [based on capital expenditure releases]Sector Capital allocation [N, billion] % share in total capital budget Rank
Rural and Comm. Dev 7.10 33.33 1Budget and Planning 3.76 17.60 2Education 2.81 13.19 3Gen Admin 1.75 8.2 4Works /infrastructure 1.73 8.11 5
Table 5: priority sectors budget 2012Sector Budget [N billion] % of state budget Rank
Infrastructure 87.0 39.3 1Education 35.5 15.9 2Health 17.9 8.1 3General admin 13.4 6.1 4Budget and planning 11.7 5.2 5
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For the period 2008-2011 the top priority sectors based on budget releases were
education, agriculture, infrastructure, health and rural development. [table 6]. Of
these five, three-infrastructure, education and health- remain top priorities in 2012
Table 6: priority sectors 2008-2011Priority sectors: 2008-2011
Allocation [Naira billion] Share in budget
Education 50.16 20%Agriculture 38.60 15.76%Infrastructure 36.40 14.88%Health 26.70 10.9%Rural Development 26.70 10.9%
The Social Development Sector: Education, Health and Water Resources
Kano State does not appear to have any coherent and clearly spelt out social policy.
The combined allocations to the social development sectors are by no means generous
and do not appear to be well targeted at specific problems. Education, Health and
Water Resources have a total of N57.9 billion or 26% of total budget of which
approximately 60% is recurrent. The three sectors contribute nearly 48% of state-wide
recurrent costs and only 17% of the capital budget.
Table 7: allocation to social development sectors
sector Recurrent exp
Capexp
Statebudget
Share inbudget
All sectors 72.15 149.6
221.60
-
Education 22.20 13.
1
35.3 15.9
% Basic andpost basic
Tertiary
14.907.30
9.23.9
0
24.111.2
10.9%5.1%
Health 10.60 9. 17.80 8.0
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2 %Water resources 1.69 3.11 4.8 2.2
%Three sectors 34.49 25.
41
57.9 26.1
%
Education: education has been a most favored sector over the years: from 2008-
2011 the sector received approximately N50b or 20% of all expenditure- putting it ahead
of all other sectors. As fig 9 shows, budget estimates and actual spending show upward
trends since 2008-with only a dip in actual spending in 2009.
The sectors current provision of N35.5 billion [nearly 16% of total budget] exceeds 2011
estimates by approximately N8 b or 28%, 2010 estimates by N16b or 76% and theestimates for the period 2003-2007 by approx N4 b or 13%. The basic and post-basic
education sub-sector receives N24 b or 68% while higher education gets N11.2 b
representing 32% of the education sector budget.
Governments stated objective is to address the apparent collapse of the
education sector but the budget contains no specific details of the numerous
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challenges and constrains it seeks to address. Nor does the budget provide details of its
strategy.or specific measurable targets and milestones. Governments focus seems to
be on the rehabilitation of dilapidated physical structures and the building of new
institutions. Its star programmes remain the provision of uniforms to and feeding of
primary school pupils.
Table 8: education sector major projects 2012
Programme Allocation Remarks
Rehabilitation of existingstructures, purchase offurniture and instructionmaterials
N2,000,000,000 6% of sector budget /15%of capital budget
Establishment of additional
tertiary institutions-including theNW University and Public
Health University
N1,500,000,000 17.6% of capital budget
Establishment of new secondary
schools
N900,000,000 6.9% of Capital Budget
Construction of new houses for
teachers
N700,000,000 5.3% of Capital Budget
Establishment of new
community primary and
secondary schools
N500,000,000 3.8% of Capital Budget
Provisions of uniforms to and
feeding of primary school pupils
Not indicated ..
Although education is a top priority, the shortcomings of the education sector budget
are numerous and include:
o The 2012 sector share in total budget [15.9%] is lower than that of
2011[22.21%], that of 2009 [19.6%] and 2010 [17.8%].
o Education sector share in budgets-except for 2011- has been consistently below
20% since 2003. It thus falls short of the recommended 26% needed to tackle the
myriad of challenges facing the sector
o Education sector budgets have traditionally been overwhelmingly recurrent.
Investment in education is very low and insufficient to tackle the challenges
of the sector. For example 63% of the 2012 sectors budget is recurrent
expenditure and 37% capital. Also while the sector contributes up to 31% of the
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total recurrent costs, only 9% of the capital expenditure goes to education.
Similarly:
Of the N50.16 b spent on education [2008-2011], N42.95 b equivalent to
86% was recurrent expenditure and only N7.203 b or 14% was investment
in education. That means for every naira spent on education only 14 kobo
represents capital investment
Capital investment of N7 billion over a 4-year period, amounts to an
average of less than N2 billion per annum and represents an Investment
per head of N583-assuming a population of 12 million
In the tertiary education sector, the sum of N15 billion has been expended
since 2008. Of this only approximately N900 m or 6% was invested. Thus
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Sc. And Tech Sch. 0% 0% 68.7%University of Tech - - 1.4%Kano Polytechnic - - 0%College of Educ. - - 26%Aminu Kano
College
- - 0%
Thus budget performance index varies from 0% to approximately 69%. In the majority ofcases, the index is abysmally low.
Health: Like education, the health sector in Kano is bedeviled by a myriad of challenges
and constraints: Inadequate coverage-[estimated at significantly less than 60% for
both urban and rural communities and perhaps less than 40% for rural communities and
urban poor]; dysfunctional, unreliable and inadequate equipment and materials,
shortages of health care administrators including doctors, nurses and midwives;
inappropriate orientation towards curative rather than preventive sources ofdiseases etc.
Here too, the budget sets no targets or milestones and seems to focus on infrastructure
rehabilitation and in addressing the problem of shortage of critical equipment in
hospitals and other health facilities 12
The sector is allocated approximately N18 b, of which N11b or 60% is recurrent, and
N7b or 40% capital. The sector allocation represents 8% of total estimates, about 15% of
state-wide recurrent and 5% capital expenditure. As previously indicated, the health
sector is, in terms of funds allocated, to be considered a priority sector.
Table 10: health sector key programmes budget 2012
Programme Allocation % of capital expenditure
General Rehab of selectedhospitals
N300,000,000 4.3%
Procurement of hospitalequipment
N500,000,000 7.1%
Establishment of three
new schools of Nursing
N500,000,000 7.1%
Construction of ICU atNassarawa Hosp
N250,000,000 3.6%
Renovation of AEU atMurtala Hosp
N50,000,000 0.7%
12 Budget speech of the Governor
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Other general features of the budget can be summarized as follows:
o Current estimates exceed 2011 by N6.6b or 59% and exceed 2010 by N6.7b or
nearly 60%. However, 2012 sector share in budget at 8% falls below 2011 and
2010 shares at 14.8% and 14.9% respectively
o Budget estimates and releases show generally an upward trend-with a dip in
actual spending in 2009
o Health sector share in total budget similarly shows upward trend since 2008:
6.2% [2008], 9.7% [2009], 14.9% [2010] and 14.8% [2011]
o Budget performance has been has been very encouraging over the years. The
best performance recorded was in 2008 with a performance index of 93% , and
the worst performance was in 2009 with an index of 48.6%
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o Investment in health sector is low: from 2008-2011 only N4.43 was invested.
This was equivalent to 16% of actual budget spending and represented an
investment per head of less than N400
Water Resources: The water project is said to be the most expensive single
undertaking ever embarked upon by successive regimes in the State. Water sector
share in state-wide capital expenditure has varied from 2.4% in 2010 to 10.6%% in 2009.
From 2008-2011 capital investment in the water sector was approximately N7b or 6% of
state-wide capital investment. [This was equivalent to the capital spending on
education and higher than the investment in the health sector over the same period].
Government had committed several billions of Naira-which do not seem to be reflected
in the budgets- for the rehabilitation of the Tamburawa Water Works and for the
construction of another water treatment plant at Watari, in Bagwai Local Government
area.
Yet, today, the fastest growing industry in Kano is water vending: either in sachets as
pure water or in 10/25 liter cans. In the metropolis 75% of households are served
with borehole water by water vendors in 25 liter cans. So are schools and hospitals.
It is estimated that up to 40.7% of households rely on unprotected well as main source
of drinking water, and up to 5.1% on unprotected spring. 22.8% of households rely on
tube well/borehole and 4.1% on protected well as main source of water. Only
approximately 12.8% of households have access to improved sources of water piped in
to their house (2.8%) or in to their yard (1.5%) or from a nearby public
tap(8.5%)13.
Table 11: the water sector budget estimates and releases 2008-2011
item 2008 2009 2010 2011 total
Rec. Exp [N b] 1.52 1.47 1.40 1.98 6.37Cap. Exp [N b] 2.40 6.09 1.51 2.81 12.81Budget Estimates [N b] 3.92 7.56 2.91 4.79 19.18Actual spending [N b] 4.01 0.337 1.16 2.13 7.64
Of which: Cap expenditure 2.82 1.89 0.639 1.22 6.57Budget performance % 1.02% 4.5% 40% 44.50% 39.8%
131
NBS: survey of socio-economic conditions
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In Budget 2012, the water resources sector was allocated 2.2% of total estimates- of
which nearly 65% is for capital projects. In absolute terms the sector is neither worse
nor better-off than it was in 2011- but its share in State budget drops to a little over 2%
this year from nearly 4% in the previous year
Budget performance is poor [table 11 above]: the water sector budget is not
implemented as intended. From 2008-2011 budget estimates amounted to a little over
N19 billion of which approximately N8 billion was released. Budget Performance Index
was thus below 40%. The best performance was in 2008 [102%] and the worst in 2009
[4.5%]. Index was below average in 2010 [39.8%] and 2011 [ 44.5%]
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State Economic Empowerment Programmes:
The State does not have a well articulated and coherent economic empowerment
strategy. Current programmes are spread across at least 10 MDAs and appear ad hoc
and haphazardly implemented. The Ministry of Agriculture leads the pack with at least
5 empowerment programmes with a budget of slightly more than N4 billion.
The star empowerment programme in the agriculture sector is the commercial
agricultural project for which N3.4 b is set aside. Other key programmes that could
impact on incomes and employment are:
o Establishment of 6 agric-related training institutes, envisaged to train an
unspecified number of women and youth in agric-related business activities. [N1
billion or 8.8% of agric budget]o Special focus on agro-processing and value-addition programmes to create
synergy between agriculture and small-scale industry-budgetary provisions not
stated
Under the Kwankwasiya Empowerment Programme [being coordinated from the office
of the Secretary to State Government] the budget sets aside N2.44 billion for the
execution of various women and youth empowerment programmes. This represents
approximately 1% of State budget. It is not clear how citizens can access the funds set
aside.
The Budget and Planning Ministry controls a chunk of the empowerment budget, to the
tune of N2.4 billion. This is set aside for and as MDG Conditional Grant Scheme and is
not expected to be disbursed to beneficiaries but for the rehabilitation and equipping
of Primary Health Centers, provision of solar boreholes and construction of small town
water supply as well as other related projects
[see tables A1-A3 in the Appendix for a list of State Empowerment Programmes and
funds allocated to each]
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Budget Implementation: The Revenue Connection
Will the 2012 budget be successfully implemented by the Administration? Will the State
reap the full benefits of the budget? Is the budget workable? Let it be said that even at
the best of times, Federal and State annual budgets hardly pass the simple tests of
credibility and efficiency in implementation or monitoring etc. At the end of the fiscal
year, there is almost always a huge performance gap, that is, between actual and
approved estimates.
Resource availability will undoubtedly determine the success or otherwise of budget
2012. First, to finance the budget, the state depends almost entirely on the Federation
Account-itself dependent on proceeds from the export of one primary commodity with a
highly volatile international price. Oil and gas contribute about 99% of Nigerias exports
and provide about 85% of government revenues that go into the distributable pool-theFederation Account. Thus any sudden, negative shocks which often characterize the
international oil market will increase the risks of non-implementation. Perhaps it was in
realization of this that the state moderated its expectations of revenue from the
Federation account by assuming that funds due to the state from Statutory allocation
will decline by 7.2 billion or 11.4% over 2011. However while its expectations are
moderate here, the state made several wild and not so easily tenable assumptions
about other sources of revenue.
Table 12: IGR-total revenue relationship 2008-2011
T Rr
Year 2008 2009* 2010 2011Rev 70.7 b 43.7 b 59.8 b 72.58bIGR (actual) N8.3 b 5.7 b 9.99 b 9.85bIGR (estimates) 18.8b 31.24b 27.28b 26.08IGR
(performance)
4.4% 18.3% 36% 37.8%
IGR/Rev
%
11.7% 13.0% 16.7% 13.6%
In particular, government identified IGR as one of the critical vehicle to drive the
budget 2012. According to the Gov: .we are guided by the belief in the centrality of
our human resources and a passionate desire to develop our state and make it self-
reliant especially in the area of Internally Generated Revenue [IGR]14. Accordingly
the state is expected to generate, internally, approximately N4b monthly and a total of
14 2012 budget speech by the governor
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N46b or 21% of revenue estimates. This requires that IGR increase by 164% over 2011!
This is undoubtedly a tall order given the following:
o Historically IGR have constituted only 11.7%-16.7% of total revenue- and had
an average growth rate of less than 20% per annum over the period 2003-
2009.
o There is a huge gap between actual and estimates of IGR: IGR collected has
been between 4.4% and 37.8% of estimates. In 2011 actual IGR was less than
40% of estimates and contributed less than 14% of total revenue
o The bulk of IGR up to 51% - is collected by the Board of Internal Revenue
[BIR] an inefficient and ineffectually managed government institution.
Although it occasionally exceeds its self-set [usually under-stated] revenuetarget [such as in 2008 when performance was 108%] or does well [ as in
2010 when it achieved 71% of target], the BIR is at best an average
performer [53.7% in 2009 and 53.9% in 2011]
o Admittedly, the Boards current efforts have been encouraging as monthly
collections have gone up from approx N500m in June 2011 to N1.2 billion in
early 2012. However the revenue collections mid-way into the fiscal year is a
far cry from the N4 billion monthly target. Other significant hurdles remain:
The BIR is not out of the woods yet in spite of the presence of a new
and determined executive chair: The Agency remains within the civil
service structure and no new structural changes have been
introduced in the Board;
There is yet no evidence to show a change in tax-payer voluntary
compliance rates: [currently 0-5%!] and the recent increase in revenue
is mainly from tax areas
Table 13: BIR performance 2008-2011
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Year Actual Estimates Perf.
2008 N4.27b N3.95 108%
2009 N3.49b N6.5b 53.7%
2010 N6.4b N9.0b 71.%
2011 N4.35b N8.07b 53.9%
o Budget also expects substantial revenue [N15.5b] from the Ministry of Lands and
Physical Planning and from other MDAs which, historically, have had poor outing
in revenue generationThe performance of the MDAs in revenue generation
ranges from 4% (Ministry of Education) to 21.5% (Ministry of Works and Housing).
For example in 2011, [table 14 below], the Ministry of Lands was only able tocollect approximately 8% of its revenue estimates-and the performance of the
education ministry was even worse. That certainly is not promising!
Table 14: revenue performance of selected MDAs
MDA Actual Revenue Estimates Performance
Land and Physical Planning N186m N2,337m 7.95%agriculture N35.8m N1,852m 1.9%commerce N18.1m N347.7m 19.6%Works and Housing N665m N3,088 21.5%
Education [basic] N67m N1,527 m 4%
o Finally Government envisages a 360% increase in capital receipts: namely loans
and grants. It is unclear where these are coming from: the easy sources are the
domestic commercial banks. However, a commercial loan will be expensive and
therefore counter-productive. Credit facilities from development finance
institutions will perhaps be more attractive but slow in coming given the
stringent conditions-as specified by the Fiscal Responsibility Commission and the
DMO.
o Two other factors are likely to affect the resource projections:
The current security challenges in and around the state have adversely
affected business activities and by extension, revenue collections: There
are reported cases of factory layoffs and a significant reduction in
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capacity utilization. Trading activities have similarly been adversely
affected with a noticeable reduction in human and vehicular traffic in and
around the major markets in the metropolis.
The new Fed Govt. policy on personal income tax is expected to lead to a
significant drop in revenue from PAYE tax. Kano expects a 40% drop in
revenue from that source.
Conclusions
1. The key attraction of the 2012 budget is its emphasis on investment. Capital
expenditure takes a lion share of the budget-and this is necessary for sustainable
growth and economic development. Of course, recurrent expenditures are
inevitable, but universally acknowledged is their limited capacity to promotegrowth, even when they are judiciously and responsibly incurred.
2. The flip side however is that bulk of the nearly N150 billion capital vote is being
applied in the execution ofeconomic infrastructure projects- especially roads
and urban beautification projects. In contrast, only 14% of the capital vote is
being spent on social infrastructure-education and health. The point should not
be missed that there is as much crises in the health and education sectors as in
the economic front. Public schools lack basic infrastructure like chairs and
desks, laboratory equipment, water and sanitary facilities etc. Class rooms are
congested and a significant number of teachers are unqualified to teach. In a
2010-2011 schools survey, a Pupil-Class room ratio of 246 in primary schools, 126
in JSS and 132 in SSS was recorded in a number of local government areas
including Kunci, Kumbotso and Dala. The study shows that up to 62% of primary
schools in the State lack toilet facilities and where available these facilities are
grossly inadequate: pupil-toilet ratio ranges from 68.5 in JSS to 85.6 in SSS and
200 in primary schools. Less than 40% of primary school teachers are qualified to
teach and the pupil-qualified teacher ratio could be as high as 570 in primary
schools, 74 in JSS and 73 in SSS15.
The health sector challenges are no less daunting: system coverage is low,
facilities are decayed or unavailable and there are severe shortages of health
care administrators-including doctors, nurses and midwives- Kano has only
15 Annual School census is carried out by ESSPIN in collaboration with Senior SecondarySchools Board. See also the Federal Ministry of Education Digest of Education Statisticspublished in 2011
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approximately 8.4 doctors per 100,000 population and 18 nurses per 100,000
population.
Human capital development holds the key to long-term development of the state
and Government must invest more to upgrade its social infrastructure.
3. Resource availability is the key to good budget performance: current resource
position remains precarious and many of the resource projections are at best
wild and untenable. Government has not presented any convincing case that it
can balance a N221 billion budget.
The focus on IGR is sensible: Kano with a population of nearly 12 million people
and a strong commercial base has the potential to generate more revenue
internally for economic development. To succeed, government must [1] reformthe tax collection machinery and more importantly [2] improve the delivery of
basic services to the citizens and demonstrate that tax revenues are being spent
judiciously.
The BIR remains in the mainstream civil service- a factor seen by many as a
primary impediment to efficiency. Many see it as a failed, ineffectually
managed institution, barely able to deliver on its basic functions. It needs to be
reformed and strengthened to make it more innovative and efficient in service
delivery. BIR should be a professionalized and mechanized organization that is
firm, but civil, accountable and transparent. There shouldnt be any more delays
in the implementation of the 2010 Revenue Law which gives the Board some
measure of autonomy.
4. Spending efficiency must be maintained. Governments bold initiative in this
regard led to a saving of nearly N20 billion between May 2011 to January 2012. It
was indeed a commendable effort but government needs to be a bit more
scientific in determining the level of recurrent expenditure: current allocations
are arbitrarily determined-using a 2003 benchmark! Withholding such
expenditures could harm some MDA operations
5. Government must explore other funding options to finance its budgets.
Increased IGR and expenditure controls will conserve revenues and narrow the
budget gaps. However, given the daunting development challenges, government
will still be unable to provide socio economic services on the required scale. The
state must therefore broaden its resource horizon by exploring other sources of
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finance such as the domestic capital market and the international development
finance institutions-the ECOWAS FUND, AfDB, IDB, and WB. One option is for the
state to utilize the opportunities in the domestic capital market by issuing a
bond to finance its hugely capital intensive projects- basic infrastructure like
roads, dams, water, electricity, industrial & housing estates, markets,
commercial office blocks and several other services-oriented, income-yielding
projects which can pay for themselves. Such projects can be undertaken in
partnership with the private sector-under PPP arrangements.
6. Government must design an empowerment strategy to lift the youth and women
out of poverty by providing them with opportunities to earn a living in productive
jobs. Studies have shown that growth performance of economies is not
sustainable without a conscious, determined effort to distribute gains from
growth and fight poverty. The States poverty index [72.5] and unemploymentrate are above the national averages. It is imperative to have a coherent, clearly
stated poverty alleviation agenda and strategy. The rural populace is particularly
vulnerable and Kano must therefore invest to provide support for the people to
engage in off-farm economic activities: the cottage industry and empowerment
scheme and the rural industrialization scheme should both be reinvigorated by
providing sufficient funds for on-lending. In the urban sector, government should
provide more support for the informal sector of the economy, build more skill
acquisition centers to mobilize the youth and enable them take initiatives and
exploit market opportunities as they present themselves.
7. Government should expedite the completion of the new Kano State Development
Plan and put an end to stand-alone budgets. Next and subsequent years
budgets should be linked to a defined vision for the State. In particular, sectoral
budget allocations should be made after a proper evaluation of opportunities
and must be linked to identified challenges and to overall state vision.
8. Government must pay particular attention to budget performance. The
budget performance index for capital expenditure from 2008-2011 averages
45%. The index was less than 30% in 2009 and only slightly above that in2011. Government should ensure realistic revenue and expenditure estimates
as well as timely releases of funds to MDAs
Table 15: budget performance [capital expenditure 2008-2011]
Year Estimates Actual [N,billion] Variance Index
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[N,billion] [N, billion]
2008 65.22 51.86 13.36 79.5%2009 72.07 17.80 54.27 24.72010 56.19 26.05 30.14 462011 65.59 21.31 44.28 32.52008-2011 259.08 117.02 142.06 5.6%
9. Improve the budget process by ensuring the full participation of relevant
stakeholders: Nigerian budget process is mostly viewed as an executive-
legislative affair. The general public lacks understanding of the process and
hardly gets the opportunity to make contributions in project selection,
implementation or monitoring. The government has found the Community Re-
orientation Committees [CRC] useful in implementing a number of itsprogrammes especially at the grassroots level-and there are no reasons why the
Committees should not be similarly employed in budget formulation,
sensitization and monitoring [for example use CRC to ensure that
communities participate in the selection of projects to be included in
budgets.
Table A1: State Economic Empowerment Programmes
Ministry Programme 2012 vote
Information, Youth
andCulture
Youth EmpowermentProgramme
N50m
WomenAffairs andSocial
WomenEmpowermentProgramme
N250mN20mN20m
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Development
People withSpecial NeedsEmpowerment
Orphans andVulnerableChildrenProgramme(OVC)
VocationalTraining,
RehabilitationandReintegration ofTraffickedChildren
N10m
Planningand
Budget
MDG ConditionalGrant Scheme
N2.4 b
Rural andCommunity Dev.
Local CraftDevelopment
N10m
Ministry Programme 2012 vote
environme
nt
Waste to Wealth
Project
N15m
Health Lafiya Jari Participatory
Learning andAction for
N50mN50m
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CommunityOwnership
Commerce
andIndustry
Rural
IndustrializationScheme
Small ScaleIndustry CreditScheme
N100m
Office ofSSG
KwankwasiyaEmpowermentProgramme
N2.44b
Table A3: State Economic Empowerment Programmes
MinistryofAgricultu
Programme 2012 Vote
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