We start by saying that we are impressed by the size of Cross River state government’s spending estimates for the 2018 fiscal year. The appropriation bill just presented to the state’s House of Assembly proposes a budget of N1.3 trillion. This makes Cross River the biggest state spender in the country. Previously, Lagos state held that record. This outgoing year, it budgeted N812 billion. And next year, it hopes to hit the N1 trillion mark too. The federal budget for next year is slightly over N8 trillion.
The size of the Cross River budget also puts it in the special league of the biggest state spenders. The older ones are Lagos, Rivers and Akwa Ibom. Of this number, only Lagos is not an oil producing state. The other 32 states present smaller budgets that average between N150 billion and N300 bn.
It is not just the size of the 2018 budget of the Cross River government that has caught our attention. The shift of emphasis is another. A hefty 70 percent of the budget goes for capital projects while a mere 30 is for recurrent spending, including public servants’ salaries. Two very critical capital projects are listed in the appropriation bill: a deep sea port and a so-called super highway. Gov. Ben Ayade said of the two projects: they would “create room for potential investors” and “drive the economy of the state to an enviable height”.
The shift of emphasis from recurrent expenditure to capital projects will, hopefully, kickstart Cross River’s industrialiasation and put it on the road to becoming economically viable. The unviability of most of the 36 states has raised questions over state creation. The states, with the exception of Lagos, are dependent on allocations from federal revenue receipts for survival. As it is, many are unable to pay the salaries of their workers for months on end, not to talk of pensions, also years in arrears.
If the Cross River government is able to finish work on the deep sea port and highway which, we have learnt, has started in earnest, demurrage and other tolls should boost its IGR, thereby enabling it to cut the financial apron springs of the federal government in Abuja. Today, the lion’s share of the state’ s annual buget is financed through its share of federal revenues, mostly earned from crude oil exports.
However, price volatility on the international oil market and recent production disruptions by militant groups in the oil producing delta region have reduced earnings from the “cash cow”. This also means less money coming into the coffers of the states. The case of Cross River is worsened by rising debts that have virtually wiped out its monthly allocations from the federation account since 2013, according to a recent NEITI report.
It is for that reason that we consider the state government’s decision to de-emphasise recurrent expenditure in favour of capital spending a courageous one. Surely, there will be social pains but, hopefully they will be momentary. The two big projects captured in the 2018 budgets should more than make up for the pains through new jobs and higher earnings.
Besides, the government has taken steps to ensure people of the state do not suffer unnecessarily. For instance, the budget, titled “Budget of Kinetic Crystallisation”, sets aside.
“N7 billion for the state’s job centre “with a view to helping us train our unemployed youths with marketable job skills.” This is in addition to the government’s plan to increase the number of apprentices in its garment factory from the present 1,000 to 3,000 in 2018 “as part of a drive to engage the unemployed in the state.”
However, in spite of the laudable things the budget has going for it, one important element that is missing is how the government intends to fund it. This is important because, with an almost zero allocation from the federation account, the only way out is increasing IGR. This is not mentioned in the appropriation bill before the House of Assembly.It is important the people of the state are told this and are persuaded that the government means to walk its talk. Otherwise, the governor will be seen as campaigning early for votes in elections due in 2019.