Kaduna's Not So Disappointing Budget


Nasir Ahmad El-Rufai



Over the last few weeks, we have analyzed budgets from four of the six geopolitical zones in the country: Bauchi from the North East, Lagos from the South West, Benue from the North Central, Edo in the South South, and now, the North Western State of Kaduna. Kaduna state is located at the center of Northern Nigeria and shares boundaries with Niger state to the West, Zamfara state, Katsina and Kano states to the North, Bauchi and Plateau states to the East and FCT and Nasarawa state to the South. Kaduna state occupies a land mass of 46,053 square kilometers and had a population of 6,113,503 people in 2006 distributed amongst 23 local government areas, with some of the major ethnic groups being the Hausa, Fulani, Bajju, Ham, Gbagyi, and Koro.

The state was birthed from the Northern region of Nigeria, which had its capital in Kaduna. In 1967 the north was split into six states, one of which was the North Central state, its name was changed to Kaduna state in 1976 by the Murtala-Obasanjo administration. Kaduna became a separate state in 1991, when Katsina province was carved out to form the present Katsina State. Since Nigeria’s return to democracy in May 1999, Governor Ahmed Markarfi governed the state for eight years, and was successful in uniting the disparate ethnic and religious groups to live together in relative harmony. Makarfi also registered significant strides in infrastructure development particularly the construction of intra-state roads.

Makarfi was succeeded by Namadi Sambo who governed the state from May 2007 until May 2010, when he was nominated and confirmed as Vice-President. Many citizens of Kaduna State believe that Namadi's tenure was peaceful but uneventful with unconfirmed rumors of huge borrowings. Patrick Yakowa succeeded him as governor of Kaduna state and initially registered improved transparency in governance. Under a virtual military occupation that facilitated massive rigging of elections, Yakowa was returned as governor on the PDP platform in April 2011. Yakowa is a decent man with sound education and record of successful civil service career spanning state and federal governments where he rose to cabinet minister and afterwards, federal permanent secretary. Expectations were therefore high that Yakowa would perform much better than his predecessor in office.

Kaduna is one of those older states that should have an advantage over others, or at least over all states in its zone. The fact is that in 1981, Nigeria's first inland petroleum refinery in the North was built in Kaduna, the state has various textile mills,  and the Peugeot automobile assembly plant, amongst other existing industries. The political significance of being the administrative headquarters of the Northern region during Nigeria’s colonial and immediate post-independence era, and its reputation as a leading educational, industrial, and military center in Africa are additional advantages.

Kaduna State is also blessed with an array of mineral resources which include, Kyanite, Kaolin, Columbite, Gold, Quartz, Mica, Clay, Asbestos, and Graphite. It has ample arable land which traverses the Sahel Savannah region among its agricultural endowments. The state produces huge quantities of Yam, Cotton, Groundnut, Tobacco, Maize, Beans, Guinea corn, Millet, Ginger, Rice and Cassava. The State has numerous tourist attractions like the Nok Culture, Arewa House and Museums; and comfortable large and boutique hotels like Hamdala Hotel, Crystal Garden and Asaa Hotels in Kaduna, Kongo Conference and Zaria Hotels in Zaria.

In spite of these, the results on the ground are disappointing. Kaduna state has an unemployment rate of 25.7% well above the national average of 23.9%, as against Kebbi state with 17.6%, Kano with 25.7%, Katsina and Sokoto with 27%, Jigawa with 28.6% and Zamfara with 33.4%. In the North-West zone, 51.8% of the citizens are food poor, 70.6% absolutely poor, while 67.4% live on less than a dollar a day. Kaduna State has 52.4% as core poor and 38.2% as moderately poor, the second highest incidence of poverty in the zone just behind Zamfara State. Income inequality as measured by changes in Gini coefficient between 2003 and 2010 is also increasing moderately by 9.2% in Kaduna relative to other states in the zone, behind the worst cases in Kano (25.1%) and Jigawa (18.1%).

The Kaduna state government has prepared ‘2012-2014 draft multi-year estimates' that hopes to drive economic and social development of the state through sound financial planning. However, the 272-page document falls short of boldly facing the real developmental challenges of the state as the capital expenditure plans for 2012 to 2014 are not up to the developing country target of assigning 70% of total budget. It is this statement of the government’s intentions that we will take analyze.

The 2012 budget for the state is N154,331,452,763, an increase of 13.01% or N17.7bn over 2011’s budget of N136,564,380,343. The 2012 budget has N85bn or 55% as capital expenditure, and N69.3bn or 45% as recurrent expenditure. Analyzing the recurrent budget further, N29.5bn or 19% of the total budget is for personnel costs, N26.5bn or 17% of the total budget is for overheads, while N8bn or 5% set aside for to service the state's public debt left behind by earlier administrations. The State has budgeted N950 million as the revenue contribution to local government councils, as required by law. Kaduna is the only state whose budget specifically provided for this. Governor Yakowa is also said to be the only governor of the state ever that does not divert local government allocations, and if true, should be strongly commended.

Kaduna’s IGR estimate for 2012 is N35.7bn, an increase of N22.9bn as against the states IGR of N12.8bn in 2011. Looking at the details of the budget, while it is not clear what factors will be responsible for this huge leap, a contributor might be the revenue from the ministry of lands and survey which is projected to increase from N409.9 million in 2011 to N6bn in 2012, and the state's Board of Internal Revenue which hopes to raise inflows from N9.4bn in 2011 to N24bn in 2012. The budgeted personnel costs of N29.5bn as against its IGR of N35.7bn demonstrates that Kaduna is capable of paying its staff salaries even without monthly federal allocations, so is not one of the "parastatal states", but with only N6.2bn left for overhead costs, it needs to slim down the size and cost of government and learn to live within its means.

The budget would be financed from N35.7bn as IGR, N48bn from federation account, N8bn as VAT, N500 million as privatization proceeds, and nearly N3bn from land related levies and other sundry sources. Kaduna State plans to borrow a total of N14bn from domestic and external lenders this year, and expects another N13.7bn as grants-in-aid from abroad and federal agencies like UBEC and ETF. Kaduna has enjoyed significant federation account allocations in the past: N39.5bn in 2011, and an estimated N48bn in 2012. Indeed over a period of 9 years from 1999 to 2008, Kaduna state received the second highest FAAC transfers of N232.49bn, amongst the states in the North. This is substantial and could yield results if prudently managed and well-spent.

The sectoral summary of the budget shows that capital expenditure budget apportioned the economic sector N30.2bn or 36%, the social sector N24bn or 28%, Regional Development got N16bn or 18% and General Administration assigned N14.7bn or 17%. The State Government needs to revisit these ratios to assign more money for the social sector - particularly health, education and scholarships for citizens of the state studying in higher institutions.

Kaduna state should quite easily lead all states in the North Western region in educational attainment; after all, the state is referred to as the ‘Center of Learning’, and it is. There are at least 20 institutions of higher learning and research in the state, including three premier military training institutions. The state has N10.9bn budgeted for education in 2012, as opposed to N11.1bn in the previous year including N500m for the expansion and rehabilitation of existing schools, a pathetic N94 million for Almajiri and CAN schools, a low N96 million for teachers' quarters and NYSC orientation camp improvement, paltry N5million for expanding libraries, and N967 million for the construction of 136 units of classrooms. According to the NBS 2010 National Literacy Survey, Kaduna has a youth literacy rate of 67.3% as opposed to Sokoto’s 33.1% and Kebbi’s 50.2%, an adult literacy rate of 53.5% as opposed to Sokoto’s 22.1% and Kebbi’s 29.1%. According to this survey, the North Central has the highest adult literacy levels with 56.4%, followed by the North East with 42%, and the North West with 31.7%.

Kaduna has budgeted N6.7bn for health in 2012 as opposed to N5.5bn in 2011. The health sector is relatively stable in the sense that the state has no cases of major outbreaks of infectious diseases, but tuberculosis, malaria, HIV/AIDS remain challenges. So there is a provision N441 million for Kaduna’s HIV/AIDS control program, N113.7m is budgeted for the purchase of medical equipment, and a paltry N21m for the construction of hospitals in Zangon Kataf and  Sabon Tasha. And there’s the state-of-the-art 300 bed specialist hospital that is being built via public private partnership at Kaduna Millennium City. In a bid to tackle maternal mortality, the state government also has a provision of N1.5bn for free medical services to pregnant women and children under five years.

For a state that recently has been rocked by attacks from Boko Haram, Kaduna State's security vote of N1.64bn is modest and just 35% of Edo State's, and only 9% of Bauchi's massive N17.6bn. According to the World Bank Doing Business rankings 2010, of the North Western states, Katsina now ranks first as the easiest for enforcing a contract, Kebbi comes in 2nd, then Jigawa, with Kaduna as 4th, Zamfara 5th, Sokoto 6th and Kano 7th with the most difficulty in enforcing a contract. Overall Kaduna ranks 22 amongst Nigeria’s 36 states and FCT in the ease of doing business. On average, it takes 31 days and about 9 procedures to start a business in Kaduna, and this discourages start-up of small and medium enterprises. In 2007, Kaduna ranked first in Nigeria on ease of doing business with the FCT being a very close second. Yakowa should investigate what went wrong under Namadi's watch to fall from first to near the bottom third.

Agriculture is the mainstay of Kaduna’s economy, with about 80% of its population actively engaged in farming. The sum of N8.62bn is allocated to agriculture, with N1.1bn to be spent on tractor purchases and N164.4m spent in support of the National Fadama 3 programme. The state reportedly produces over 180,000 tonnes of groundnut annually, and is the leading producer nationwide of cotton and the reason why ginneries are located in Zaria and several textile mills in Kaduna. Sadly, these industries have suffered decline due to infrastructure challenges, neglect and improper management. Governor Yakowa recently launched a commendable drive to seek federal assistance in restoring these industries to full employment and production.

The Kaduna State 2012 budget is at best average. The spending ratios can be enhanced in favor of capital projects. The state remains heavily dependent on Federal allocations and has numerous underdeveloped or neglected sectors that can drive its IGR rapidly upwards particularly agriculture, solid minerals, education, real estate and tourism. Lowering the cost of doing business will attract SMEs back to Kaduna from neighboring states and the FCT. Addressing the current security challenges more ingeniously without militarization could restore Kaduna's diminished glory. Governor Yakowa has a unique opportunity to improve security and social cohesion, security, transparency and deliver better governance. He has the experience, capacity and resources to do so, and the state has potentials for much more. If he fails, he would let many of us down that think him a perfect gentleman in the wrong political party.