2020 BUDGET APPROPRIATION LAW - Budget Speech and Summaries
2020 Appropriation Bill
A Law to make provision for services of Rivers State for the year ending on the 31st day of December, (2020) Two Thousand and Twenty.
1. Four and half years ago, we initiated the NEW RIVERS VISION development blueprint to transform our State and create a cohesive, united, peaceful, resilient, secure and prosperous society.
2. After four years of stewardship and on the basis of our performance, the good people of Rivers State renewed our mandate for another four years. And so today, I have the honor to stand before this August Assembly to present the budget estimates for the fiscal year 2020, being the first budget in the second and final term of our Administration.
3. Mr. Speaker, before I proceed with my presentation, let me appreciate this Honorable House of Assembly, once again, for your support to the policies and programmes of our administration and thank you for your commitment to the progress of our State. We have worked together as a team with a shared vision and we all must also share in glory of our achievements.
4. Permit me to also thank our people, the good people of Rivers State, for their unceasing prayers and support, which kept us strong like a metal forged in fire, focused and confident of our capacity to deliver.
5. Four and half years ago, we were confronted with seemingly insurmountable challenges of development, including a national economy in recession and a State in helpless circumstances.
6. But we were not deterred. Our resolve and our spirit were unbreakable, and like a mettle produced through struggles, nothing could daunt or constrain us. It happened that our Government was unconquerable and our match to progress was equally unstoppable. Rather, we were inspired by the challenges that we inherited.
7. Today, in the first year of our second and final four-year term, our Government remains strong. Our economy has recovered and continues to grow. And our development policies, programmes and projects continue to impact positively on the State and our people.
8. For infrastructure, particularly roads, it has been some kind of a revolution. With deliberate focus and dedicated funding, we have delivered the biggest ever construction and upgrade of quality road infrastructure for our State. All eyes can see the reconstructed, new and improved roads and bridges interconnecting our State and our people into our communities, farmlands, markets and goods and services.
9. Local Government Areas such as Etche, Omuma, and Oyigbo, hitherto cut-off have been reconnected to the State while we have also ended the travel nightmare for our people in Opobo/Nkoro who are now accessing the rest of the State by road. These are memorable achievements that will accelerate developments in these Local Government Areas.
10. We have invested considerable funds in both hard and soft infrastructure of education, healthcare, security, sports development, economic growth and poverty reduction resulting in much improved access to quality education and healthcare delivery, security of lives and property, and positive economic growth.
11. By and large, the development effort of our government across all indices of our NEW VISION blueprint is clearly evident everywhere you go even as we admit that there is still much more to do to realize our collective aspirations and fulfil our destiny as a united, peaceful and thriving society.
12. It is on this optimistic premise that we have come to present the Rivers State Budgetary Estimates for fiscal year 2020 before the State House of Assembly for the consideration and passing into law.
13. Mr. Speaker, the 2020 budget is about effective resource mobilization, responsible management of available finances, living within our means and delivering efficient public services to our people. The budget has been prepared within the Revised Medium-Term Expenditure Framework (MTEF) 2020 – 2022 and our Fiscal Strategy Paper.
14. Going through the MTEF, you will notice a strong re-commitment to fiscal discipline and responsible resource management. We kept our revenue and growth assumptions within feasible limits based on reasonable assessment of the prevailing state of the domestic and national economies and opportunities for growth.
15. Above all, the budget underlines where we are and the strides, we intend to deliver to strengthen the foundations of economic growth, resolve the critical challenges of state-building and usher in a new era of infrastructural and socioeconomic transformation with measurable results for our State and a better future for our people.
2. Overview of budget performance for 2019
16. In 2019, we had a total revenue estimates of N480,411,324,684.00with the following funding plan:
(i) Opening balance = 4,662,073,844.92 billion;
(ii) Statutory Allocation (FAAC) = 73,169,813,022.00 billion;
(iii) 13% Mineral Fund = 145,070,991,780.00 billion;
(iv) Taxes (IGR) = 120,492,891,302.00 billion;
(v) VAT = 26,377,628,543.00 billion;
(vi) Budget Support/Paris Club = 27, 337,926,155.08 billion
(vii) Exchange gain/Forex Equalization = 8,000,000,000.00 billion;
(viii) Local and international credits = 75,000,000,000.00 billion.
17. At as end of October 2019, total net revenue collected between January and October was N261,074,352,792.23 representing about 64.4% of total revenue estimates.
18. Further breakdown shows that only N37,102,734,345.42 was collected as FAAC receipts; N79,794,256,970.19 as 13% Oil Mineral Fund, N90,923,318,238.78 as taxes, and 14,666,472,353.79 as Value Added Tax. Also, N600,000,000.00 was received as Paris Club Refund, N25,000,000,000.00 as local credits, while others, including exchange gain, forex equalization and excess bank charges amounted to N7,496,428,837.31
19. It is obvious from these figures that the 2019 budget under performed by about 36% on the revenue side. However, contributions from internally generated revenue is expected to peak at a much higher rate than what was projected for the year.
20. This was the direct result of improvements in revenue collection arising from the automation of the tax collection system, blockage of revenue leakages, intensive taxpayer education, as well as improvements in tax audits and enforcement.
21. Also, we embraced responsible fiscal spending, reduced corruption in the contract processes, ensured appropriate pricing of projects, goods and services and prioritized public spending mostly to the economic and social sectors to stimulate economic growth.
22. This approach sanitized public finances, enhanced accountability, restored fiscal stability to our economy and enabled revenue surpluses on our current account for the most part of 2019.
23. The performance with respect to expenditures was not that bad either. Actual recurrent expenditure on wages and salaries as at October 2019 stood at N52,973,815,645.07 as against N79,120,041,995.00 projected. Similarly, actual recurrent expenditure on overheads was 10,807,214,040.00 as against N17,749,674,245.00, while recurrent expenditure on pensions/gratuities within the same period was N11,363,996,328.82 as against the N32,490,396,813.00 projected for 2019.
24. Generally, we spent quite below the projected recurrent expenditure because of the savings made in several areas, including elimination of ghost workers from the payroll and cutting down on wasteful expenses, travels and ceremonies.
25. We also kept capital expenditure within the framework of available revenue and borrowed far less than 35% of what was projected to support project execution. Indeed, through ring-fencing and systematic application of resources, we completed a record number of key projects, carried several others to advanced execution stages, and kick-started new ones, including the simultaneous construction of three flyovers at Rebisi, Rumuokoro and Rumuogba. Some of the key projects we delivered in 2019 include:
· Hon. Justice Ndu (Elelenwo – Akpojo) dual carriage way and street lights;
· Rivers State University Teaching Hospital;
· Senior Civil Servants Quarters;
· Ogbum-Nu-Abali Fruit Garden Market in D/Line;
· Rumuwoji Market in Mile 1 Diobu;
· Government Craft Centre, Port Harcourt;
· the reconstructed Government Secondary School, Ubima;
· Nigeria Labour Congress Secretariat building;
· Rivers State University Students Union building;
· the Real Madrid Football Academy;
26. We also initiated and equipped the special security outfit, christened: “Operation Sting” with 76 patrol/operational vehicles fitted with communication gadgets; 4 armoured fitted gunboats, 2 Armoured Personnel Carriers and 450 hand-held mobile radios to fight banditry, armed robbery and kidnapping and ensure security of lives, businesses and property.
27. Mr. Speaker and Honorable members, it is noteworthy that although total revenue receipts were way below what was projected, we made tremendous positive impact with the implementation of the 2019 budget through careful and focused planning, prudent management and efficient deployment of available resources.
28. However, our performance could have been better but for the difficult national economic environment, including the escalated costs of things, high inflation, and drastic shortfalls in national revenue. These and other negative economic factors exerted serious pressures that constrained the productive capacity of our economy to generate adequate development revenues for the State.
29. We wish to reassure all that we will continue to drive our State on this progressive economic trajectory and deliver more development projects to our people in 2020 and the remaining years ahead for this Government. The peace, security and well being of our people are the reason we are in government, and we will not fail to deliver on these and other aspirations as we progress with the execution of the budget for 2020.
3. The State’s economic outlook for 2020
30. Mr. Speaker, Honourable Members, it is pertinent to bear in mind the state of the national economy when making projections about our own economy. Various forecasters, including the World Bank, have lowered the growth expectations of the national economy for 2020 to around 2.2% due largely to the volatility of the international oil price and the inability of the Federal Government to harvest sufficient revenues to fund the national budget.
31. However, while we have limited capacity to influence the direction of the national economy, we have not relented in our responsibility to protect the State’s economy from external shocks by creating conditions for building a robust self-sustaining and inclusive economy.
32. We started taking steps since 2018 to build and strengthen the sources of economic growth to enable us overcome the uncertainties of the national economy, including the over-dependence on federal allocations to fund our development. And these efforts have started yielding tangible results.
33. With catalytic public investments, we turned the construction industry into one of most important pillars of economic growth in 2019, and which is expected to maintain its dynamism and impact as the fastest growing sector of our economy for 2020, besides public and private sector investments in oil and gas.
34. Furthermore, with an expanding tax base and conducive business environment, the State Government is getting more tax revenues without overtaxing the economy and businesses. And so, with fiscal discipline, accountability, efficiency and delivering value through responsible spending, we now progressing within our means and driving our economy towards achieving our long-term vision of having a self-reliantand sustainable Rivers State.
35. Yesterday, we won back the Sokufield, which was illegally ceded to Bayelsa State by the Federal Government and the proceeds from this field, including the accrued refunds over the years will additional bolster our revenue projections for 2020.
36. We expect the onward economic growth to continue in 2020 peaking around 3.5% to 3.7% with significant improvements in foreign and domestic investment inflows to the different sectors of our economy, with the associated effects on job creation and other economic opportunities for our people.
37. Given therefore the fundamentals of our economy, which has remained sustainable with a steady growth rate since 2017, it is relatively safe to conclude that the economic outlook of our State for 2020 remains positive.
4. 2020 BUDGET ESTIMATES
38. Mr. Speaker, the total budget for Rivers State for the 2020 fiscal year is N530,813,357,619.00, which is constituted as follows:
· Total Recurrent expenditure. = N156,659,436569.00
· Total Capital expenditure = N374,153,920,743.00
5. The 2020 Budget objectives and thrust
39. The 2020 budget is intended to achieve the following development objectives:
· Strengthening the sources of economic growth;
· Building the infrastructure that matches our development vision;
· Enhancing food security, job creation and poverty reduction;
· Promoting sustainable, equitable and inclusive development;
· Advancing human capital development; and
· Ensuring sustainable security and social cohesion;
6. Financing the 2020 Budget
40. The budget will be funded from the regular revenue sources, including Statutory Allocation, 13% Oil Mineral Fund, Taxes and non-tax revenues such as feeds, fines, permits, rents, interests, dividends, licenses and domestic credit.
7. The 2020 Recurrent Expenditure
41. The total projected Recurrent expenditure of N156,659,436569.00 for 2020 is proposed to be spent to meet government’s financial obligations on salaries, wages and the day-to-day running of Ministries, Departments and Agencies.
42. The sum of N70,227,748,472.32 is earmarked for salaries and wages; N8,000,000,000.00 for the new minimum wage, while N18,429,375,634.45 is for overheads.
43. Also, N5,000,000,000.00 is set aside for new recruitments, N3,000,000,000.00 as counterpart fund for pensions, N900,000,000.00 for death benefits and N33,176,728,931.33 as monthly pensions and gratuities. Government has also provided over N400,000,000.00 as counterpart contributions for donor programmes.
44. Furthermore, N15,000,000,000.00 has been set aside for servicing of domestic credits, while only N25,000,000,000.00 has been earmarked for international credits.
45. By and large, we are satisfied that the assumptions of the recurrent expenditure for 2020 reflects the twin objectives of stimulating economic growth as well as keeping the State along the path of fiscal discipline by reducing deficit financing.
8. The 2020 Capital Expenditure
46. The capital expenditure for 2020 is estimated to be N374, 153,920,743.00, which constitutes nearly 70% of the total budget. The summary of sectoral allocations of the capital expenditure are as follows:
· Administrative sector: – 15, 061,008,000.00
· Economic sector; – 136, 444,523,766.60
· Law and Justice: – 2, 400,000,000.00
· Social sector -138, 558,553,322.35
· Special Head: – 57, 367,124,462.05
· Loan repayments – 24,322,731,192.00
47. The substantial increase in capital over recurrent expenditure, once again reflects and underscores our commitment to direct more resources to the growth and productive sectors of our economy.
48. What’s more, this Administration is poised to fulfill every promise it made to our people. Consequently, various expenditure portfolios have been allocated to all the relevant MDAs to fund capital expenditures and deliver physical and socio-economic infrastructure and development for our people.
9. Allocations to Programmes
49. The allocations of the 2020 budget to development programmes are as follows:
(i) Agriculture development
50. Mr. Speaker, the time has come for us to acknowledge that agriculture is very vital to the future progress and prosperity of our State.
51. We need to feed ourselves by ourselves with what we can produce with our vast farmlands, most of which have remained untapped.
52. We need to replace our aging, mostly subsistent farmers with our youths and modern commercial farming methods. We need to generate jobs, income and other economic opportunities for our people through agriculture.
53. And the fact cannot be denied that all these and more are possible with meaningful investments in agricultural development.
54. In the last couple of months, we’ve repeatedly spoken about our intention to revive agriculture in partnership with the private sector while leveraging on the incentives from the Central Bank of Nigeria and the s Federal Government.
55. We are now set to match this promise with viable actions with the provision of N40,400,000.00 billion to the agricultural sector for the 2020 fiscal year. In specific terms, we will apply these funds to:
(i) Invest and support the commercial production of cash and other crops to which we have relative advantages, such as cassava, palm oil, yam, plantain, banana, rice and vegetables for both domestic and export markets;
(ii) Revive the school-to-land programme and engage over 10,000 youths in commercial agriculture;
(iii) Establish farmer input support programme to provide farming inputs to farmers across the State;
(iv) Train and build the capacity of Rivers State farmers to engage in productive and profitable commercial agriculture, including farming in crops, poultry, piggery, and fisheries;
(v) Complete the Cassava Processing Plant at Afam in Oyigbo Local Government Area; and
(vi) Support and or partner with private investors to participate in the various agricultural development schemes of the Central Bank of Nigeria and the Federal Government.
56. Mr. Speaker, our children deserve the best education we can provide to equip and prepare them for the future, drive economic growth and contribute to the development of their localities. From the onset of our administration, we prioritized education because we recognized that knowledge is everything pivotal to achieving human progress and prosperity.
57. Building on the progress of the last four and half years, we will continue to ensure adequate funding for education in Rivers State. It is for this reason that we are proposing the sum of N49.471 billion to fund the education sector for 2020. This sum represents 20% of the total budget and is the highest ever budgetary allocation to education, reflecting the level of our commitment to investing in the future of our children.
58. In 2020, we will continue to ensure the systematic rehabilitation, upgrade and transformation of our primary, secondary and tertiary institutions and build new ones where the population demands to deliver a more conducive learning environment across schools in Rivers State.
59. For basic education, we will promptly access the contributory grant from the Federal Government and deploy same to improve access, standards and quality. We will also continue to improve access to ICT infrastructure, employ more teachers to further reduce the teacher/learners’ ratio, especially in English Language, Mathematics, Science and technology and ensure the training and retraining of teachers to deliver measurable results and outstanding outcomes in our primary and secondary schools.
60. By God’s special grace, we will strive to complete the ongoing reconstruction and remodeling of the following secondary schools in 2020:
· Enitonia High School, Port Harcourt in Port Harcourt City Local Government Area;
· Government Secondary School, Ogu in Ogu/Bolo Local Government Area;
· Community Secondary School, Rumuolumeni in Obio/Akpor Local Government Area;
· Community Secondary School, Rumuepirikom in Obio/Akpor Local Government Area;
· Bonny National Grammar School, Bonny in Bonny Local Government Area,
· Government Secondary School, Okarki in Ahoada West Local Government Area,
· Western Ahoada Central High School, Ahoada in Ahoada East Local Government Area,
· Government Secondary School, Abua in Abua/Odual Local Government Area,
· Government Secondary Schoo, Okporowo -Ogbakiri, Emohua Local Government Area
· Government Secondary School, Obuama in Degema Local Government Area;
· Community Secondary School, Omuanwa in Ikwerre Local Government Area;
· Model Secondary School Bakana in Degema Local Government Area; and
· Model Secondary School, Tombia in Degema Local Government Area
61. We will also continue to fund improvements in physical and learning facilities in all our tertiary educational institutions with our Education Infrastructure development grants, including the development of the Ahoada and Emouha Campuses of the Rivers State University, dedicated research funds, endowments, chairs and centres of excellence in our universities.
62. Furthermore, Government is committed to strengthening the institutional framework to consolidate the investments and advance the effective delivery of Technical and Vocational Education in the State.