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EL-RUFAI ON FRIDAY

Gombe’s Realistic Budget

Nasir Ahmad El-Rufai

Our recent analysis of state budgets across the federation has stirred the interests of many who were hitherto uninterested in how much revenue states earn much less how these resources were spent. These analyses have brought to light the few governors who are performing reasonably well in terms of fiscal responsibility, accountability and transparency and exposed the many that are doing quite the opposite; spending the government’s resources as personal funds and giving no thought for the welfare of citizens who supposedly voted them in office. We have also seen those like Lagos that are running their states in a business-like manner rather than parastatals or orphanages like Bauchi, perpetually depending on charity and hand-outs of the Federal Government. It has brought to the fore seemingly insignificant issues like the non-existence of state government websites much less budgets being published online for the public being served to scrutinize. Approved state budgets are have disappeared and now guarded like high security documents. Accessing them has become excruciatingly stressful and almost impossible without the help of insiders. We have so far been unable to obtain the budgets of all the five states in South-East, and at least four states in the South-South zones of Nigeria.

In the light of the above, rather than focus on the South-East which should be next in our coverage of the six geo political zones, our focus this week is on the North-Eastern state of Gombe, the second in this zone under scrutiny. The state is currently governed by Ibrahim Hassan Dankwambo who began his tenure in May 2011. He took over from Mohammed Danjuma Goje who governed the state for 8 years. Dankwambo, who is a graduate of Accounting (ABU) and Economics (UNILAG), and chartered accountant by training worked with the Central Bank of Nigeria for over 10 years before his appointment as Accountant General of Gombe State. He was then appointed as Accountant – General of the Federation on 20 April 2005. He held this office until he resigned to start his campaign for election as Governor of Gombe State January 2011 under the PDP. Dankwambo is one of the northern governors that is educated, experienced and prepared for top-level leadership. Many are optimistic that he would do well and build upon Goje’s significant investments in infrastructure in the state.

Gombe State also known as “Jewel in the Savannah" was created in 1996 by the Abacha administration out of the old Bauchi State. It is bordered by Borno and Yobe to the north and east, Taraba and Adamawa to the south, and Bauchi to the west. Since its creation, the state has been growing fast, blessed with abundant physical, human and economic resources leading people to believe that it fulfilled the criterion of economic viability necessary for being a state. The 2006 census puts the population of Gombe at 2.4 million making it one of the least populated states in the country alongside Bayelsa, Ekiti, Kwara, Yobe and Taraba. Its population however is larger than that of Namibia (2.2million) which is the fourth-largest exporter of non-fuel minerals in Africa, suggesting that size is no constraint to achieving viability as a state or a nation.

Gombe has proven reserves of non-metallic mineral endowments such as Barite, Bentonite, Glass Sand, Crude Salt, Gypsum, Limestone, Granite, Mica, Diatomite and Graphite amongst others. Traces of Uranium used for production of nuclear fuel, explosives, and additive for glass have been found in the state. Gombe is home to AshakaCem, one of the most successful cement plants in the country. In addition, commercial quantities of gas were reportedly discovered in the state by British Gas in 2007 but somehow nothing has been heard since then.

Most of Gombe’s 20,266km2 landmass is cultivable. About 80% of the population is engaged in agriculture. A number of food and cash crops and livestock are produced in the state. They include: maize, soghum, rice, wheat, cowpeas, groundnuts, soya beans, bambara nuts, orange, lemon, mango, guava, paw-paw and a variety of vegetables. It also produces tree crops such as; gum arabic, kenaf, sugar cane, sunflower and ginger.

The North-East zone of Nigeria remains the poorest part of the country. According to the 2012 NBS Poverty Profile which studied poverty levels nationwide using data from 2009 and 2010, 75% of the region is relatively poor, 71.5% absolutely poor and 51.5% food poor meaning they could barely feed daily. Apart from the poverty levels, increase in income inequality between 2003 and 2010 is also predominantly high in the region with Yobe (59.3%), Bauchi (28.9%), Taraba (43%) and Gombe (15.5%). This is appalling compared to the South-West region which is less agriculturally endowed yet has lower poverty and income inequality levels. Osun state for instance had a 10.7% change in Gini coefficient between 2003 and 2010.

The North-East also has the highest levels of unemployment in Nigeria, with Yobe (39%), as the worst in the country closely followed by Bauchi (30%) and Gombe with 29%, compared with just about 8% in Lagos and the national average of 21%. Those refusing to link these indices with the roots of the Boko Haram insurgency are behaving like the ostrich and living in denial, and we fear that unless Dankwambo somehow demobilizes the murderous PDP thugs known as “Yan Kallare”, and convert them into peaceful and productive citizens, they are likely to be the anarchist insurgent group of the future.

Next to Lagos, Kaduna and Gombe have the most detailed and well-structured budgets amongst the states we have reviewed. This is commendable, but not surprising since all three governors are educated and experienced public servants. The Gombe budget for 2012 is N93.5bn - an increase of about 15% from the 2011 budget of N79.4bn. This amount would be financed with the FAAC allocations of N35bn, IGR of N4.6bn, external loans of N1.1bn, domestic borrowing of N20bn, capital receipts (VAT, FGN re-imbursement on projects, and transfer from consolidated revenue fund ) amounting to N50.4bn and grants of N2.4bn. About 23% of the budget (N21.1bn) will be financed through loans, a modest amount compared to Bauchi which consistently borrows over 40% of its total budget. The government diligently ensures that all recurrent revenue is spent on recurrent expenditures and the same for capital receipts and expenditures. Impressively, most of the 2012 projections were derived based on the actual expenditures for 2011 and not based on the unrealistic 2011 approved estimates. The Dankwambo administration is paying attention to how the monies are actually spent rather than concentrating on increasing the figures indiscriminately from previous year’s base. These are realistic budgeting practices.

Capital expenditure is N55.1bn (59%) of the overall budget falls short of the ideal budgetary requirement for developing countries, of 70% for capital expenditure while recurrent expenditure is N38.4bn (41%).The recurrent expenditure, excluding Consolidated Revenue Fund Charges is split almost evenly between overhead and personnel costs at N15.9bn and N15.2bn respectively. The IGR of N4.6bn is just about 25% of the personnel costs therefore the state would need to generate four times its current revenues to cover its personnel costs and if overhead costs are added, the state would need 8 times its IGR to service its recurrent expenditure. Clearly, Gombe is one of the many ‘parastatals states’ that do not generate enough revenues internally to even cover the N6.4 billion required running cost of its Government House!

Examining the major sectors, agriculture is allocated a meagre N4.4bn (5%) out of which about N3.1bn is for capital projects. This is grossly inadequate for a state where most of the population is engaged in agriculture. The state not only has the potential to feed itself but also to be a major exporter of food and earn income thereby. Works and infrastructure is allocated N15.2bn (17%) out of which over N15.3bn is for capital spending. A lot was done in terms of roads by the Goje administration which citizens of the state can attest to. The amount pumped into road construction has surely translated to extensive township and feeder roads across the state.

Education in the state is unfortunately a far cry from what it should be. The situation is so bad that Dankwambo had to declare a state of emergency in education when he came into office in 2011. In 2010, only seventeen out of the over 18,000 students that sat for WAEC and NECO, obtained five credits and above. This year, N16.2bn is allocated to the education sector. It is an increase by N4.4bn over the 2011 allocation of N11.8bn. Of the N16.2bn, 76% (N12.2bn) is for capital expenditure, including N220 million for local and overseas scholarships, while N4bn will be spent on recurrent costs. Hopefully the Dankwambo administration’s drive to boost education will yield positive results. The steps taken are commendable.

In the health sector, there has been tremendous improvement. Reports prior to 2003 indicated that there were only a few health centres scattered around the state which did not even perform functions that they ought to. The government has made attempts at building new and renovating existing hospitals and has also invested in healthcare to the extent that the state has been officially polio-free since 2009. The state also has the lowest maternal and child mortality rate in the North-east zone according to the National Primary Health Care Development Agency (NPHCDA). Accordingly the increase in allocation to health from N4.4bn in 2011 to N7bn in 2012 is laudable, understandable and in the right direction.

According to the World Bank, as at 2010, Gombe was the second easiest state to do business in Nigeria. It is much easier to do a business in Gombe than Ekiti which ranks 34 and was established the same year as Gombe. In terms of ease of starting business, Gombe ranked 4^th in Nigeria. On average, it would take 8 procedures, 24 days and 66.2% of one’s income to start a busniness in the state. This advantage can be leveraged by the state to attract SMEs and reduce unemployment, thus ensuring that the unemployed youth who are used as political thugs to fuel crises do not have the opportunity to cause greater havoc in the future as in the case of other states in the region such as Borno, Bauchi and Yobe.

The data and analysis of budgets of the Northern states indicate that rather than absence of resources, it is bad governance which led to hopelessness that constitutes the major impediment to peaceful coexistence and economic progress within the region. It is bizarre that this region, geographically endowed with arable land, hardworking and honest people, and mineral resources has been unable to make itself an economic powerhouse in the country. Instead the state governors all sit back and wait for pocket money to be handed down monthly as federation account allocations. Not much effort is directed at internally generating income. Worsening the situation is wrongful spending priorities, income inequality and poor investments in social services leading to the perceptions of injustice within the society, youth hopelessness and criminal violence. It makes one wonder if some of the states created actually deserve their existence given that they are neither economically viable without federal allocations, nor delivering any social services to citizens.

Overall, the Dankwambo administration seems to be getting its spending priorities right by focusing on the key areas in dire need such as Health, Education and Infrastructure. That notwithstanding, as is the case with most states in the country which are not fiscally self-sufficient, effort needs to be geared at slimming down the size and cost of government and internally generating revenue instead of just managing ‘free’ funds properly. The state has agricultural potentials, a good business environment, mineral resources, and tourism potentials which have not been converted to cash-cows. In order to justify its existence, Gombe would need to ensure its economic sustainability and viability. Unlike other governors, Dankwambo has the capability and capacity to do that. Personally, I will be disappointed if he does not.