Edo 2010 Budget Is About The People - Oshiomhole

Mr. Speaker,

Honourable Members of Edo State House of Assembly

I am pleased by the opportunity to present The 2010 Budget Estimates for Edo State for the consideration of the Honourable House. May I start by placing on record my appreciation to Mr. Speaker and the Honourable Members for your cooperation towards the implementation of the 2009 Budget in particular, and in general, for your overall support. By and large, both the Executive and Legislature have struck a right chord in managing the challenges of the New Beginning in Edo State.
Certainly, there have been occasional tensions between the both arms. These institutional frictions are not unusual even in mature democracies.



The challenge of leadership across both arms is to ensure that the development agenda is placed over and above party loyalties or institutional chauvinism. I am happy that in Edo State, we have managed to forge consensus substantially around a common quest to reposition the machinery of government to deliver accelerated development to our people.
Our people legitimately expect so much from government, that as leaders, we cannot afford not to meet their yearnings. On my part, I wish to assure the Honourable House of my continuing partnership, which is founded on my belief that all arms of government must function in synergy on behalf of, and in the interest of the people.


A review of the 2009 Budget Performance
In Year 2009, we proposed a total of N44.97 billion recurrent revenue, made up of N29.77 billion from the federation account and N15.2 billion internally generated revenue. As at the end of October 2009, the total recurrent revenue was N36.45 billion. Of this amount, the revenue from the federation account stood at about N25.07billion, representing about 84% of our projected recurrent revenue for the year.



The internally generated revenue for the same period stood at about N6.39 billion representing about 50% of our IGR projections for the same period. We envisage that the IGR figure will attain N7.67 billion at the end of the year. The IGR increased by an average of 57.7% over the year 2008. This is one of the highest increases in IGR attained in the country in one fiscal year.
In the year 2009, we projected a total sum of about N6.0 billion as capital receipt derivable from value added tax. As at October 2009, we have realised a total sum of N4.11 billion as VAT representing about 82.20% of the projection from VAT for the period.


From the foregoing, it would seem that the performance of the total recurrent revenue was substantially realised. However, the truth is that we must continue our efforts to reduce our dependence on external sources. It is worth repeating that we cannot afford to tie the development of our State to revenue from unpredictable external sources.


2009 Recurrent Expenditure Performance
The total recurrent expenditure projection for 2009 was N34.01 billion made up of N17.35 billion as personnel cost, N9.26 billion - overhead cost and N7.4 billion consolidated revenue fund charges. As the end of the third quarter, actual total recurrent expenditure stood at N19.14 billion, which includes personnel cost of 10.89 billion, overhead cost of N4.95 billion and N3.29 billion consolidated revenue fund charges.


From the foregoing, total annualised recurrent expenditure for 2009 will amount to N25.52 billion. The import of this is that we have saved N8.48 billion from the total recurrent expenditure, notwithstanding the increase in the wage bill arising from fresh employments. I am happy to confirm that of this amount, my government has spent N6.05 billion as total overhead costs as at the end of October, compared to N10.6 billion expended by Prof Osunborís Administration over the same period in 2008. This represents a net saving of almost N5 billion.


Highlights of Implementation of the 2009 Budget
Mr. Speaker, in the course of the year, I have shared with you from time to time, much of the progress and challenges regarding the 2009 Budget. As you recall, it was a Budget of a New Beginning, which was designed to provide the foundation for our agenda of re-inventing people-driven governance in Edo State.


The budget took into account the harsh international, national and local political economic environment. As may be recalled, this administration assumed stewardship at a time of a severe global economic meltdown. The crisis was characterised by a sharp drop in global commodity prices, including crude oil, which is the main source of the countryís revenue. The immediate impact on Edo State was a drop in the monthly statutory allocation in the first quarter of the year, to almost half of what obtained in the same quarter of the preceding year.


The situation was compounded by our own local peculiarity, which was the wanton depletion of allocations received by the previous office-holders as well as the accumulation of a high debt profile, in the form of approved but unpaid vouchers and huge bank loan, which amounted to about N10 billion. Secondly, the State was widely acknowledged to have suffered from neglect, especially in the areas of infrastructure. Yet, we were confronted with an overwhelming popular expectation within and beyond Edo State. Thus, the conditions under which we assumed stewardship was entirely inauspicious.


However, with the support of the generality of Edo people, my government proceeded with cautious speed, with a strong will to confront vested interests, a new, creative and people-driven approach to development planning and above all, a constructive interface with the people. The 2009 budget, which was christened a budget of a new beginning, exemplified this new spirit.


It encapsulated a new development blueprint that addresses diverse objectives. Mr. Speaker, I am happy to report that we made substantial progress in the implementation of the core objectives and priorities of the 2009 Budget. I will proceed to highlight some of the key areas of our budget performance.


In my 2009 budget address, I had enunciated a need for proper and detailed planning. As I had argued in my address last year, we need to avoid the typical quantitative and publicity-driven approach to project execution. Therefore, we devoted much attention, resources and executive time to planning. For instance, in our approach to roads and flooding control, we undertook a detailed study and the generation of a new & comprehensive flood control master plan. This has paid off because we were able to identify and commence intervention projects based on informed knowledge, appropriate project designs and realistic bills of quantity. I appreciate the initial anxieties across the state over what was misconstrued as the slow pace of governance. However, I was convinced that it was necessary to adopt a holistic, knowledge-driven and planning-based approach, even at the risk of being misunderstood in the short-term by those who would rather prefer quick fix solutions and the rule of the thumb.


Furthermore, we have substantially improved the capacity of Edo State to resource her development through a substantial increase in the internally generated revenue. From a monthly average of about N300 Million at the end of the preceding year, we have raised IGR in the second half of the year to a monthly average of about N800 Million.


The increase in IGR was attained and sustained through our aggressive drive to block leakages, exploring new vistas in revenue-generation, strengthening the PAYE collection and widening the tax net beyond the formal sector through a progressive system that puts more responsibility on the rich. However, the ultimate strategy in our arsenal was the support of Edo people and their willingness to make sacrifice, once they were convinced about the genuineness of our intentions and knowing that their money would be in safe hands. Let me again thank the people of Edo State for their continuing support.


Of course, the current IGR profile is far lower than what we require in order to re-create Edo State. Therefore, we will strengthen the IGR machinery using modern ICT technology and other procedures. Above all, we will intensify the criminal prosecution of tax defaulters in the revenue courts, which will be strengthened in the 2010 fiscal year. One of the lessons we have learnt from the global response to the meltdown is that public authorities must be creative and aggressive in raising income through taxation, in order to finance recovery and development.


Consistent with our budget objective of fiscal prudence, we have eliminated much wastage in public expenditure management and have adopted a culture of prudence. This tight expenditure control enabled us to save N14 Billion within eight months to finance a wide range of capital projects, mostly roads across the State. This savings was made without undermining our recurrent obligations, particularly salaries, which had even increased because of the massive employment we carried out concurrently. Yet some other state governments are either retrenching or are owing workers and pensioners, while we have faithfully honoured our wage and pension obligations, latest by the 25th of each month.


In general fiscal governance, especially in procurement and contract-award, our government has conformed to global best practices as I did promise in my 2009 budget address. The Edo State Tenders Boards has been re-focused to ensure value for money, competitiveness, competence and capacity to deliver in the choice of contractors and consultants. In the 2010 fiscal year, we will insist that these values be carried through the entire public sector. Towards this, we are working with the World Bank to create a service-wide procedure for attaining value for money, prudence and transparency.


The challenge is for all arms of government is to key into this reform of public finance management, so that together, we can curb waste and confront corruption. We need to appreciate that as trustees of public funds, we are expected to demonstrate the highest level of integrity, fiscal responsibility and fiscal competence.


Mr. Speaker, we have carefully avoided the pitfall of the past, which was to spread resources too thinly over virtually all the traditional budget heads, in a way that undermined the capacity of government to make real impact in any area. In this regard, this administration has spent over 60% of the capital budget on the three priority areas of:
i. Roads;
ii. Flooding and Erosion control; and
iii. primary and junior secondary education.
The State Government now has the Benin Storm Water Master Plan based on which we can plan properly for dealing with the perennial flooding and erosion in the City. Within the period, we have also cleared blocked drainages and large sections of the Benin Moat, which has substantially mitigated the impact of the heavy rains.


Based on proper designs and the Storm water master plan, this administration has awarded contracts for the construction of the following road projects in Benin City:

• Two construction of additional service lanes on the Oluku-Ugbowo-Uselu-Dawson-Akpapkava Road Junction;
• The dualisation of the Airport Road
• The dualisation of Sapele Road
• The expansion of Akpakpava Road
• The expansion of Uselu-New Lagos Road-Akpakpava Road Junction
• The Five Junction and adjoining streets
• The dualisation of Siloko Road
• The Expansion of the Oba Market Road
• Dawson Road
• Stadium Road
• 2nd West Circular
• Costain-Isonoro Road
• The construction of primary drainage structure in Upper Siluko Road Area (Teachers House Area).
The road projects are based on proper designs that would ensure durability and functionality, while the contractors we have selected are reputable players in the construction industry.


My government has completed the award of contracts for construction of roads across the three senatorial districts.


We have also commenced the beautification of the Kingís Square and the rehabilitation and clearing of illegal structures along the adjoining roads, including Sakponba, Mission Road, Akpakpava Road, Airport Road and Oba Market Road. The immediate impact is the easier flow of traffic and the attainment of an aesthetic appeal befitting a 21st century capital city. The transformation of the King’s Square from a den of chaos into an organised and beautiful city centre is a metaphor for what Edo State can and must become with proper planning and collective resolve.


Furthermore, we have completed the rehabilitation of 32 roads in Benin City:
• Akenzua street
• Dawson Road
• Wire road
• Aideyan Street
• Benoni Street
• Omorodion
• College Road
• Agadagudu
• Boundary Road
• Uwa Street by 2nd East Circular
• Universal-Oghobaghase-Technical College Roads
• Giwa Amu
• Jemide
• Akhionbare
• Ihama road
• New Lagos road by Eghosa/Okhoro Road
• Okhoro Road
• St Saviour
• Oko Central
• Uwelu Road by Texaco
• Upper Mission
• Upper Sakponba Road by Welfare
• Ogida
• Orle river Bridge
• Ekenwan
• Ehakpen
• 5 Junction
• Mission
• Forestry
• Delta Crescent
• Adolor College road junction
• Kingís Square
• Airport Road


With respect to our third priority area, primary and post primary education, we encountered serious political bottlenecks. This prevented this administration from accessing the UBE facility required to finance the massive rehabilitation of schools in the 18 local governments, as originally planned. Having failed to access the federal component of the UBE Grant because of non-confirmation of my nominees into the SUBEB, we have now withdrawn the Edo State contribution, in order to address part of the problems the fund was meant to solve. Accordingly, we have awarded contracts for the supply of furniture to primary and secondary schools, as well as for the renovation of some premier schools across the three senatorial districts.
Mr Speaker, we have commenced new projects in the areas of health, which had long been neglected. In order to ensure State-wide implementation of this administrationís policy of free antenatal and post-natal care, we have awarded contracts for new antenatal clinics in the Benin, Auchi and Uromi central hospitals as well as for the renovation of labour and maternity wards in all 34 general hospitals in the three senatorial districts.


Related to our efforts in the health sector is the provision of portable water supply. In this regard, we have procured two heavy-duty drilling rigs. This will assist the drilling of boreholes, especially in parts of the State where the water table is very low. A major project embarked upon is the completion of the Upper Sakponba Water Scheme in Ikpoba-Okha Local Government Area. At the moment, there are 127 ongoing water projects, especially in rural communities across the State.


Security has remained a major challenge. One of the steps we have taken is the establishment of joint military and police outfit, known as Operation Thunderstorm. We have procured vehicles and have recently placed orders for communication and other logistics to empower Operation Thunderstorm to function effectively in combating organised crime, especially armed robbery and kidnapping. Already, it has recording major successes in the battle against kidnapping and has helped to check the menace of armed robberies. This is in addition to the funding and logistic support we have continued to give Police and military formations across the State.


Mr. Speaker, a well-acknowledged impact of the 2009 budget is in the area of sustainable livelihood through the creation of direct employment and the funding of a mass coverage micro-credit scheme. We have created 6,880 new jobs in the public sector. In partnership with the Bank of Industry, we have created a micro-credit scheme targeted at the lower income segment of the informal sector. This will positively affect the lives of many families and stimulate economic activities at the grassroots.


The ongoing capital projects, especially the beautification projects, have also created hundreds of new jobs and more economic opportunities, especially for small businesses.


With the lifting of a ten-year embargo on employment in the State, we have taken steps towards redressing the severe understaffing of public institutions, especially schools, hospitals and ministries.
In 2009 fiscal year, we took bold and sustained steps to address the crisis in the pension system in the public sector. On assumption of office, we met liabilities of pension and gratuities of those who retired voluntarily or those who were retrenched by successive governments from 1984 to the Year 2000. We have cleared much of the backlog through a consistent monthly appropriation. This will be sustained until all the arrears are liquidated.


This Administration has commenced the implementation of a comprehensive ICT programme aimed at attaining prudent use of resources, maximising efficiency and promoting accelerated and citizen-friendly administration.


We are now using ICT tools to capture the size and data of the workforce and pensioners, in order to eliminate wastages and abuses in salary and pension administration, but also to enable us plan more effectively. This is being extended to land administration, vehicle registration and tax administration.


The 2010 budget Proposal
Mr. Speaker, having used the policy tools in the 2009 budget to stabilise the State, we have now generally laid the foundation for accelerated development, especially in the areas of infrastructure, governance ethics, proper planning and institutional capacity. In so doing, we have not only restored the hopes, confidence and pride of our people, but we have also empowered them to be active development agents through their fiscal constitutions and their voice in governance. Today, I am proud to proclaim that Edo state is no longer a ready example of bad governance or of the abandoning of the people by government.


Whereas we have already recorded some immediate reliefs and gains, the impact of most of the projects and policies would be felt over a longer-term period. Therefore, the primary objective of the 2010 Budget is to consolidate the foundations already laid in the year 2009 across the sectors I have highlighted. In effect, the 2010 Budget will further empower Edo State to address the infrastructural challenge in order to facilitate economic growth, wealth creation and the overall welfare of the people. Thus, this is a Budget of Consolidation.


In the 2010 budget year, the projected expenditure is N99.25 billion made up of a capital projection of N60.54 billion and a recurrent estimate of N38.71 billion.


A sum of N61.358 Billion is proposed as recurrent revenue. The breakdown is as follows:
• The IGR is N18 billion representing 29%
• Statutory allocation is N29.75 billion representing 48%
• Excess Crude and other oil revenues is N13.60 billion representing 22%.
The balance of N37.89 billion will be funded through VAT (N6.6 billion), Grants (N9.23 billion), Loans and the opening balance from the current 2009 budget. In addition, this administration will explore the opportunities of the Bond Market in order to access long-term finance, which is the best way to fund infrastructure on a sustainable basis.


Mr. Speaker, as you can observe, our projected IGR is quite ambitious. This is consistent with the reforms being undertaken to boost our Internally Generated Revenue (IGR) and our desire to reduce our reliance on statutory allocation from the federation account. Accordingly, all revenue generating agencies (RGAs) will be re-engineered and mobilised to redouble their efforts to meet revenue targets.


The 2010 budget size exceeds the 2009 budget by N18.66 billion (or 23%). This is to enable us sustain the high capital component in our quest to re-engineer the budgetary process towards concrete development rather than recurrent spending. Consistent with the policy of shrinking recurrent expenditure to free more resources for fixed investments, a total sum of N60.54 billion or 61% of the total budget size has been earmarked for total capital expenditure. The proposed capital budget figure is 13.96 billion more than the 2009 capital appropriation, representing a 30% increase.


This is a radical growth-oriented approach to achieve economic sustainability and make meaningful impact on the people. This is a paradigm shift in budgeting in Edo State, aimed at investing in infrastructure as the springboard to massive and sustained generation of wealth.


Capital priorities for 2010
The priority areas in the 2010 budget remain Roads, flooding and erosion control and primary and secondary education. The combined proposed allocation to Roads and Erosion/Floods control and environmental beautification is N32.6b, which constitutes 54% of the total capital budget.


In the 2010 budget, while we would sustain the primacy of Benin City in terms of the construction of roads and flooding control, we are widening the scope of road construction and rehabilitation across the 18 Local Government Areas. All the roads to be constructed are based on proper designs.


In the 2010 budget year, we will commence the construction of a new primary drainage system within Benin City that will properly channel floods into natural tributaries based on the new Benin City Storm Water master plan.


Additionally, we are upgrading the Benin Moat through
stone-pitching to enhance its durability for the purpose of flood control and for its preservation as a tourist heritage.


The erosion challenge at Auchi, Queen Ede, Ogbeson and Iruekpen are beyond the resources of the State Government and we have already made a strong case to the Federal Government to make funds available from the Ecological Fund.


Consistent with our concern about the environment, Government will embark on a massive aforestation programme in 2010, starting with the raising of one million tree seedlings. This will represent a major progress in our environmental renewal effort and will increase Nigeriaís Carbon Sink credit.


The sum of N7.5 billion is being proposed for the construction and rehabilitation of infrastructures in the education sector.


In addition to these priorities, government will pursue new initiatives in other sectors.
As I mentioned earlier, this administration is now set to improve land administration throughout the State. An initial allocation of N1 billion is being proposed for a comprehensive land reform exercise.
In the area of Agriculture, we have allocated N120 million for the purchase of additional tractors and implements to support farmers and farming communities, in addition to other key initiatives in the sector.


Consistent with our commitment to strengthen the Justice Sector, we have allocated funds for the re-construction of the burnt High Court, rehabilitation and furnishing of other courts as well as acquisition of journals.


The Edo City Transport Service will be strengthened through the acquisition of a new fleet of mass transit buses, to ease the pains of commuters. This arrangement is in partnership with the private sector. The initial Edo State counterpart funding of N372 million is provided in the 2010 budget. In addition, we propose to set up a Traffic management and Accident Rescue Corp. As a nodal State prone to accidents and road traffic emergencies, we are overdue for a major institutional initiative of this nature. We will seek the cooperation of the House of Assembly to pass the enabling law for this institution.


In order to develop capacity to cope with other emergencies, we propose N250 million for the purchase of emergency relief materials.


Major improvements will be carried out in the Dr Samuel Ogbemudia Stadium starting with the building of an Astro turf pitch of international standard.


We have also set aside N120 million for the rehabilitation and development of markets as seed capital. We will seek further partnership with other stakeholders and collaborate with the local governments in this regard. The primary objective is to relocate street traders and expand opportunities for enhancing of commercial activities.


The second phase of the renovation of the Oba Akenzua Cultural Centre will be carried out.
In the energy sector, we have earmarked over N670 million for intervention in each local government with special attention to rural electrification and upgrading of existing systems.


As I promised last year, we will strengthen the capacity of the Edo State Broadcasting Service and the Nigerian Observer. In the 2010 estimates, we propose N100 million for the purchase of OBS vans and other facilities to improve the performance of the EBS, while the Nigeria Observer will allocated N70 million to acquire state of the art printing equipment.


2010 Recurrent expenditure
The sum of N34.76 billion is proposed as recurrent expenditure. Details are as follows:
We envisage a substantial increase in the recurrent receipts in the year 2010 mainly arising from higher wage obligations.


We remain committed to the welfare of workers and the re-engineering of the public service. As the major facilitator of the implementation of public policies, the public service needs to be re-tooled and driven towards sustained efficiency. We are determined to achieve this through re-training, recruitment and re-orientation. I appeal to our workforce to justify the investments we will make in welfare, equipment and training.


Conclusion
Mr. Speaker, as I hinted earlier, the depth of infrastructural deficits and the resultant poverty of a majority of the people require a holistic and radical approach. With the best of efforts, the Government alone cannot deal with this challenge. Therefore, we are exploring the Bond Market and other funding options to raise long-term finance to fund infrastructure. I wish to appeal to all Edolites all over the world as well as the private sector to support this effort, once we have consolidated the arrangements.


In the current fiscal year, we have re-engineered the machinery of governance based on transparency, fiscal discipline and a sound financial management system. In addition, we have brought in private sector expertise and technocratic acumen to assist in our efforts to re-position the State. Therefore, we now have an environment that is conducive for sustainable partnership with the private sector and other development players.


May I add that development partners need to appreciate that Edo State is key to the South-South. Whatever is injected in Edo State invariably has a propelling and catalytic effect on the Niger Delta.
This budget is not about mere figures, but is about the people. The budget represents a new level of engagement of the development challenges and the welfare and interest of the people. I solicit your support and cooperation, so that its objectives can be realised.


May I again thank Mr. Speaker and the House for your support. In particular, I want to place on record the goodwill, encouragement and support of His Royal Majesty, the Oba of Benin, who has demonstrated profound moral leadership befitting his status as the Father of our people. I place on record my appreciation for the support of traditional and community leaders, Organised Labour, the studentsí movement, civil society, the business community, organised private sector, religious leaders and bodies, market women and men, professional bodies, community development associations, Edo people in the Diaspora, the youth, the media and indeed, the generality of Edo people.


I sincerely appreciate and celebrate the people of Edo State, for the wonderful understanding and overwhelming support for our efforts over the last one year. As the Chief Steward of Edo State, I cannot wish for better masters than the people of Edo State across all segments. Our policies have continued to receive acceptance and support because they meet popular aspirations. I assure you that the peopleís government will remain focused, humane and result-driven, so that it will help to lift the generality of our people out of the poverty cycle.


At this point, it is important to specially acknowledge the enormous goodwill of Mr. President, Alhaji Umaru Musa YaríAdua, and the Federal Government. On behalf of the people of Edo State, I wish our beloved president speedy recovery and join the rest of Nigerians to pray for his safe return.
Mr. Speaker, Honourable Members, Members of the State Executive Council, Distinguished Ladies and Gentlemen, I am pleased to present to you, Mr. Speaker, the Year 2010 Budget Proposal, to consolidate on the foundations laid in 2009.


I thank you for your attention and wish you and your families a Merry Christmas and a Happy New Year. God bless Edo State, God bless Nigeria.
Government House
Benin City
Thursday, 17 December 2009