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2022 provides strong foundations for delivering Vision 2070 – Obiano

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An address by the Governor of Anambra State, His Excellency, Chief Willie Obiano at the presentation of the 2022 budget estimates to Anambra State House of Assembly on October, 2021.

Protocol:

Your Excellency, the Deputy Governor,

The Honourable Speaker, Honourable Deputy Speaker,

Principal Officers of the House and other Honourable Members of the Anambra State House of Assembly,

The Chief Judge of Anambra State,

The Secretary to the State Government,

The Chief of Staff,

The Head of Service,

Honourable Commissioners,

Special Advisers to the Governor,

The Clerk of the House,

Permanent Secretaries,

Principal Officers

Senior Special Assistants to the Governor,

Special Assistants to the Governor,

Members of the Press,

Distinguished Ladies and Gentlemen,

  It is with humility that I stand before you today to present my administration’s draft budget estimates for the 2022 Fiscal Year, which is the last of my eight years as Governor of Anambra State.

  Mr. Speaker and Hon. Lawmakers, the year 2021 has proved the saying that tough times don’t last, but tough people do. The Nigerian economy posted a surprise rebound in the second quarter of 2021, which turned out to be the fastest GDP quarterly growth rate since 2014.

According to the report released by the National Bureau of Statistics in August, the country’s GDP grew at 5.01% (YoY) in the second quarter of 2021 (Q2’21), up from 0.51% in the previous quarter and -6.10% in Q2’20. The strong growth posted indicates that business and economic activity may have started to climb back to pre-pandemic level.

  Recall that in 2020, the global economy slumped into recession on the back of COVID-19 pandemic induced lockdown, disruption in trade flow, shut-down of domestic and international flights and restriction of intercity travels. Nevertheless, it is of interest to note that this administration weathered the storm that rose from the twin shocks (COVID-19 pandemic and low oil price), by maintaining a strong focus on our economic blueprint. We remained committed to our vision to ”make Anambra State the First Choice Investment Destination and Hub for Industrialization and Commercial Activities” and our mission “to make Anambra State a socially stable, business friendly environment that would attract both indigenes and foreigners to seek wealth creating opportunities.”

  Mr. Speaker and Honourable Lawmakers, just when we thought there was a glimmer of light at the end of the tunnel, the South East and the nation in general slid in violence. My team and I rose to our feet to adopt measures that would minimize the threat and preserve the widely acclaimed security architecture of our dear state.

  Mr. Speaker and Honourable Lawmakers, I will use this medium to specially thank this hallowed chamber for working with us to stem the tide of violence in the state.

  Meanwhile, I also take this opportunity to thank you for the quick consideration and approval of the 2022-2024 Medium-term Expenditure Framework and Fiscal Strategy Paper. Bearing in mind that this is an election year, our hope is that the State Assembly under your leadership will continue to collaborate with the Executive by ensuring that deliberations on the 2022 draft budget are completed in record time.

  This will be the last annual budget of this administration to be passed by this hallowed chamber. Thus, we have designed it to consolidate, sustain and build on the gains of our administration over the last eight years, even as a new administration comes into office on March 17, 2022.

At this juncture, Mr. Speaker and Honourable Lawmakers, please allow me to state that this budget is in sync with the aspirations of the Anambra Vision 2070, a 50-year development plan that will guide development in the state to the year 2070. The Anambra Vision 2070 is a plan which successive governments can rely upon for strategic directions of policy, programmes, and regulations, and may also serve as a veritable tool to evaluate future governments.

  You will recall that on November 21, 2019, I inaugurated a 60-man Development Plan Committee for the Anambra Vision 2070, chaired by Prof. Charles Soludo, a former Governor of the Central Bank of Nigeria, and charged it to draft a 50-year development plan for the state. I am happy to announce that the plan is completed, following series of high-level stakeholders’ consultations and submissions, and shall be launched soon. 

A Review of the 2021 Fiscal Year

  Mr. Speaker and Honourable Lawmakers, Nigeria is currently emerging from a very difficult economic challenge. The COVID-19 pandemic had placed Nigeria at a critical juncture. The country slid into the COVID-19 crisis with falling per capita income, high inflation, and governance challenges. Nevertheless, the nation is recovering from weakening macroeconomic conditions occasioned by the pandemic which compelled economic lockdown and hitherto a sharp decline in oil prices.

  Nigeria’s Gross Domestic Product (GDP) grew by 5.01% (year-on-year) in real terms in the second quarter of 2021, marking three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020, according to the GDP report released by the National Bureau of Statistics (NBS) in August 2021.

The steady recovery observed since the end of 2020, with the gradual return of commercial activity as well as local and international travel, accounted for the significant increase in growth performance relative to the second quarter of 2020 which was marked by nationwide restrictions.

In the current fiscal year, and in the last few years, we have made great efforts to sustain year-on-year growth. Our economy grew from N4.0 trillion in 2017 to N4.2 trillion in 2018 at the rate of 5.75%, and it is expected to hit N4.5trillion in the 2020 GDP report going by the preliminary estimates from the State Bureau of Statistics.

  Accordingly, our budget size of N143.65 billion for 2021 fiscal year to the state House of Assembly was approved. The budget tagged budget of “Economic Recovery and Consolidation” was to help sustain past performances and ensure the state maintained its status as a hub for business and a destination for new investments. N86.9 billion was earmarked for capital expenditure, translating to 60.5 per cent of the budget, while N56.8 billion went to recurrent expenditure, translating to 39.5 per cent of the budget.

However, we are mindful that due to the security challenges occasioned by the gubernatorial election tussle witnessed in the current fiscal year, it is likely that our domestic economy may contract, thereby leading to general reduction of economic activities and a significant loss’ on most sectors of our economy.

  Mr. Speaker and Honourable Lawmakers, our efforts at tackling the COVID-19 pandemic to contain and prevent it from becoming a frightening medical emergency have been topnotch. The state-wide COVID-19 Response Committee with the Secretary to the State Government as its coordinator, implemented measures in line with international standards, toward reducing the COVID -19 spread in the State.

Working with the State Ministry of Health, the committee developed new measures like COVID-19 testing Mobile teams that visited religious canters in the state and offered counseling on the need for residents to go for voluntary tests, as well as the Drive-through COVID-19 Testing where public samples were collected while residents went about their normal businesses.

  Mr. Speaker and Honourable Lawmakers, I am delighted to announce that our dear state did not record new COVID-19 deaths this year. This is even as we ensured that over 60,000 Anambra residents got vaccinated.

We have also sustained our efforts in the area of offering health insurance to Ndi Anambra. It is interesting to note that the Anambra State Health Insurance Agency (ASHIA) covers about 100,000 beneficiaries. In addition to that, in less than three years of its existence, ASHIA has become a reference point in mass health insurance in Nigeria.

 It’s “Adoption Model” strategy which enables public spirited individuals to pay for health coverage for the poor has become a benchmark in health insurance in Nigeria.

  Mr. Speaker and Honourable Lawmakers, in the Agriculture sector, we launched the 2021 Farming Season and continued with the distribution of free inputs to farmers including rice seeds, cassava stems, maize seeds and okro seeds. Fertilizers were provided to farmers at a subsidized rate as part of efforts to boost agricultural production. We sustained our collaborations with NIRSAL/SMEDAN/CBN to empower farmers and provide access to single digit loans to improve production through various programmes, including the anchor borrower programme. Through these interventions, additional 20,000 direct and indirect jobs are estimated to have been created.  We also commenced the building Mega Fish Farms with 50-bed capacity hostel in each of the Senatorial zones of the State, and presently at more than 70% completion.

  In the area of MSMEs, we commenced another round of disbursement of N2 billion CBN/ ASBA Micro, Small and Medium Enterprises Development Fund (MSMEDF) to over 20,000 beneficiaries with a recovery rate of over 90%, building on the success of 2020 where Anambra recorded the highest recovery rate of 87% in this programme nationwide. We have also established a One Stop Shop and Shared Multi-Function and Digital Industrial Machines Facility at Osile, Ogbunike in Oyi Council Area.

The modern SME facility is a partnership between the Federal Government and the Government of Anambra State and the project was commissioned in August 2021 by the Vice President of the Federal Republic of Nigeria, Prof. Yemi Osinbajo. Moreso, we have ensured that shoe makers with disabilities benefit from the newly commissioned facility through the issuance of shops and provision of tools to this special group of citizens.

  Mr. Speaker and Honourable lawmakers, in the transportation sector, the state government has constantly engaged in activities aimed at improving the transport system. Thus, we sustained our digitalized traffic management & control, emergency response and rescue services and citizens’ feedback through the continuous maintenance of the State’s Transport Command and Control Centre (TCCC).

It is of interest to note that the centre has enabled prompt response to traffic gridlocks, accidents, emergencies and other road incidents on a 24 hour basis in addition to monitoring, coordinating, and controlling road traffic and transport activities in the State.

  In the Educational sector, we have continued to lead the pack, coming first in nearly all the national exams both at senior and junior levels. Our teachers have not been left out as we have consistently won the greatest number of awards at the national teacher’s award programs.

My administration signed off with another glorious performance last week when Team Anambra won 4 awards at the President’s Teachers and Schools Awards for Excellence in Education in Nigeria where we also won the overall Best Teachers’ Award.

We have also increased our investments in technical education by revamping 12 technical schools across the state, remodeling existing buildings, purchase of new equipment and construction of 700-bed capacity hostel in 12 technical schools. We have also built new classroom blocks across primary schools in collaboration with FG under the Universal Basic Education scheme.

At tertiary level, we have invested heavily in infrastructure development (intra-school roads, buildings, science laboratory equipment and hostels) across state-owned tertiary institutions.

  I am extremely delighted to report that we have pushed our Internally Generated Revenue (IGR) from a monthly figure of N2.1bn in 2019 to approximately N2.5bn in 2020. Also, we have sustained our efforts at plugging revenue leakages and growing the taxpayers’ database by enforcing mandatory registration of Anambra Social Service Identification (ANSSID) as a prerequisite for any services provided by the state.

  Mr. Speaker and Honourable Lawmakers, we have also instituted a wide range of reforms in Public Finance Management in the State. This has helped us benefit a lot under the FG-World Bank supported State Transparency, Accountability and Sustainability (SFTAS) Program for Results (PforR). We have set out a work-plan to ensure the sustainability of these reforms at the end of the SFTAS program.

  Not surprising, Anambra was listed as one of the top 3 states in the BudgIT 2021 Fiscal Performance Ranking behind Rivers and Ebonyi States, indicating that its fiscal fundamentals, compared to others in the country, were more prudently managed.

 The report also listed Anambra, Rivers and Lagos, as the only three states in the country that could meet their operating expenses obligations with a combination of its Internally Generated Revenue (IGR) and Value Added Tax (VAT).

Legacy Projects

  Mr. Speaker and Honourable Lawmakers, I am happy to report that work is almost completed at the Anambra International Cargo and Passenger Airport Umueri.  At 3.7 kilometers long and 60 meters wide with 1 km racers each side, the Anambra International Cargo and Passenger Airport which has the second longest runway in Nigeria, next to only Murtala Muhammad International Airport Lagos.

  Mr. Speaker and Honourable Lawmakers, it is a thing of pride that the airport is ready for public use, little over one year after construction commenced on the site. Since the test-landing of two commercial aircraft belonging to Air Peace and a corporate jet conveying the chairman of the Anambra State Investment Promotion and Protection Agency, Ike Chioke, to Anambra International Cargo/Passenger Airport on Friday, April 30, 2021, the whole nation has been ecstatic about the incredible progress at Nigeria’s most modern airport.

 Apart from being the first-time jet planes have ever landed in Anambra State, the airport has drawn national attention on account of its being built up to global standards in just 15 months without any financing from any institution anywhere in the world.

  We are now at the verge of getting approval from the Nigeria Civil Aviation Authority (NCAA) to kick-start commercial operations from October 21, 2021.

Also, work is in top gear at the International Conference Center which can sit 10,000 persons and at the same time, the Awka City Stadium project is at about 90% completion at the moment. These are not only some of the outstanding legacy projects of my administration but also great initiatives that will change the physical and economic landscape of our dear state.

  Mr. Speaker and Honourable Lawmakers, here is our unaudited half year account as at June 30, 2021:

  Despite the disruptions in economic activities occasioned by the sit-at-home campaign by non-state actors, we achieved a recurrent expenditure half year budget performance rate of approximately 35.4% while our capital expenditure half year budget performance stood at approximately 59.6%.   This led to an aggregate half year budget performance of 50.0%. However, a return to normalcy in the latter periods of the current year is assured. Thus I expect our overall budget performance to improve to approximately 75%

  Mr Speaker, you will agree with me in before this administration stepped into power, Anambra State ought to be among the high earning states from IGR from markets, but a lot of businesses which ordinarily should be contributing into this have not been captured in the tax system. It has been worsened by irregularities in the tax system, which has diminished revenue collection and promoted diversion of IGR to individual pockets by so called revenue agents.

But since the advent of my administration and the ongoing digitisation of the tax process, many of the irregularities are being curbed.   Currently, the Internally Generated Revenue (IGR) of Anambra State has tripled under our administration. There has been a significant rise from N9 billion at the end of 2013 to N28 billion for the fiscal year ended 2020.

  We plugged most of the leakages by bringing into the tax system all, particularly those businesses in the informal sector that formed the bulk of businesses that our people are engaged in.

  We have also captured more through the floating of the Anambra State Social Service Identification (ANSSID), numbering platform to Ndi Anambra to facilitate their active participation in meeting their civic responsibilities in tax payment. Thus far, the internal revenue service has registered not less than 40,000 businesses and enrolled no fewer than 300,000 people.

  In addition, Anambra launched the state revenue stamp in November 2019 and this has given a boost to stamp duty tax in the state. Before the end of my administration, the Geographical Information System will be in place and this will improve revenue from land administration and management.

  All these efforts led to the increase in the state’s IGR from N9bn in 2013 to N28bn in 2020. 

  However, fiscal shocks induced by the COVID-19 pandemic caused a slowdown in the state’s year-on-year IGR growth which increased by 6.22% from N26.37bn in 2019 to N28.01bn in 2020, compared to a 36.59% growth witnessed between 2018 and 2019 when the state pulled in N19.31bn and N26.37bn, respectively in both years.

  Nevertheless, Anambra state prioritized investment in capital infrastructure over investments in operating expenses in 2020. At N43.77bn, Anambra had one of the five smallest operating expenses for running the state government amongst all 36 states. It cut its overhead component of its operating expense by 22.11% from N23.55bn in 2019 to N18.34bn in 2020. Other states to achieve this feat in 2020 are Ebonyi, Rivers, Cross River and Kaduna, according to BudgIT State of States Report 2021.

  The report states that out of Anambra state’s N110.33bn 2020 spending, 57% or N63.23bn went for capital expenditure while operating expenses gulped N43.77bn and N3.32bn on loan repayments. The state’s 2020 capital expenditure of N63.23bn represents a 27.71% increase from the N49.51bn capital spending in 2020 making it one of the 19 states in the country to increase their capital expenditure even as COVID-19 pandemic dealt blows, to varying degrees, to all states.

  Without a doubt, COVID-19 ravaged the revenues of many Nigerian state governments and the need to explore options for building back better cannot be overstressed. Thus, a critical first step for our State is to rapidly block any financial leakages that could further drain the available revenue or future revenue. Regarding the plugging of leakages for revenue savings, the state was able to achieve the use of biometrics in payroll management, being one of the three critical SFTAS results relating to optimal public finance management at the last assessment done for states.

  We are aware that procurement processes are one of the biggest areas through which revenue leakages can occur. Hence, we have adopted open contracting principles to minimize instances of inflated contracts and other forms of procurement and procedural fraud. It is important to note that the new process under the Bureau of Public Procurement has saved the State over N14.5Billion in inflated contracts since its inauguration in June 2020. 

  Furthermore, to complement efforts in raising revenue and blocking revenue leakages, we have ensured a rapid build-up of capacity in deploying custom and innovative Public-Private Partnership (PPP) models to deliver on critical infrastructure projects and programmes. This is especially in key sectors like Health, Education, Housing, Agriculture and FY2022 Annual Budget Estimates

  Mr. Speaker and Honourable Lawmakers, for the 2022 fiscal year, we are proposing a budget size of N141.9bn. This budget is based on realistic projections of all sources of revenue, both external and internal, taking into consideration, the state’s revenue and expenditure trend.

While recurrent expenditure is projected to gulp 43% of the total budget size, translating to N60.9bn, the remaining 57% which translates to N81.0bn is for capital expenditure. This is expected to drive the 2022 budget theme of Continuity, Sustainability and Development of a New Anambra. This budget will be geared towards sustaining our past performances over the last seven years and ensure that we maintain our status as a hub for business and a destination for new investments.

Basis and Assumptions for the Draft FY 2022 Budget Estimate:

  We adopted the following macro-economic assumptions for the Budget estimates:

a) A crude oil price benchmark of US$50/bbl and an average daily production of 2.23m barrels, translating to a projected annual FAAC of N41.9bn as against the 2021 figure of N45.3bn.

b) Value Added Tax revenue projection is pegged at N19.8bn annually, which is 18.8% increase from the 2021 figure of N15.5bn.

c) Internally Generated Revenue is projected at N3.35bn monthly and N40.36bn annually for 2022, compared to  N3.04bn monthly and N36.6bn annually for last year. We plan to achieve this through instituted reforms as well as continuous strengthening of our enforcement initiatives and sustaining the growth of our tax database. We have no plans to increase taxes or levies in the coming year.

d) Capital Receipts (including grants, other FAAC transfers, counterpart funds, aid and concessionary funding) are estimated at N23.38bn compared to 18bn of 2021.

e) Personnel costs are estimated at N1.8bn monthly which is about N21.67bn for the year compared to N1.56bn monthly and N18.8bn for 2021. This figure will ensure that new hires are accommodated into the civil service, including the replacement of retired teachers and staff promotions.

f) Total Overheads are estimated at N1.98bn monthly and N23.78bn for 2022 as against N1.36 monthly and N16.4bn for the 2021 figure; while Social Benefits and Contributions including Pensions, Gratuities, group life insurance and loan repayments are projected at N18.3bn for the fiscal year 2022 compared to N16.4bn for year 2021.

g) We have provided N13.4bn for domestic debt financing. This comprises of a single digit concessionary programme lending for interventions in Healthcare, Social Investments, Agriculture, Manufacturing and Youth Entrepreneurship.

  Bold, decisive and urgent action will be required during FY2022 budget implementation to stem the tide of revenue under-performance in the State as the issues are more around optimizing efficiency and enforcement of extant laws and administrative circulars.

Highlights of our Sectoral Capital Plan:

Road Works & Infrastructure

  Since the onset of this administration, Roads and Bridges have remained a major focus area. It is therefore estimated that out of a total sum of N23.0bn earmarked for roads and bridges, N12.16bn will be spent on the construction of new roads as well as the rehabilitation of existing ones. Plans are underway to complete over 30 on-going road projects in the three senatorial zones of the state, as well as construct more roads to open access to agricultural communities and boost food production in the state. We have set aside funds to the tune of N871m for effective road rehabilitation and maintenance in the State by the Anambra Road Maintenance Agency (ARMA).

  Meanwhile, we have earmarked N10bn for the completion of the Anambra International Airport, Umueri and N2.86bn for the completion of the International Convention Centre, Awka. Similarly, the sum of N700m has been earmarked for the completion of the Awka City Stadium and the development of thestadiums in Ekwulobia and Otuocha.

Agriculture and related Sectors 

  In agriculture, we intend to maintain our achievements over the past seven (7) years. We shall continue to support cluster farms in the three senatorial zones of the state on comparative crop advantage basis, so as to empower the youth and women under the Commercial Agricultural Credit Scheme (CACS) and Accelerated Agricultural Development Scheme (AADS) programmes supported by the Central Bank of Nigeria.

  Our collaboration with the Central Bank of Nigeria and development partners under various programs like FADAMA and IFAD, RAAMP to support increased farming activities and access to farmlands will be sustained in the coming year and N3bn has been allocated to this sector to continually ensure that our programmes and policies are effectively implemented.

Education

Our investment in Education shall continue with the overall goal of achieving globally competitive education. To realize this, we have made projections of a total capital expenditure of N3.23bn to be spread across the following areas: N3.37bn has been earmarked for Basic Education and special projects in secondary schools. N201m is allocated to Anambra State Universal Basic Education Board (ASUBEB), while N1.67bn has been allocated to infrastructure and capacity improvement in state-owned universities, colleges and polytechnics.

Environment

  N3.42bn has been allocated to Environment. From this sum, N1.79bn was set aside for the establishment of waste management facilities and a fraction of the budget for the procurement of refuse moving equipment as well as the establishment and upgrading of existing Parks and Gardens.

Youth Empowerment & Creative Economy

  The spate of youth restiveness across Nigeria, and in the region in particular, has compelled a rigorous review of our plans for Anambra youths. Indeed, my administration has a great regard for Anambra youths, with over 70% of my appointees being youths. Thus, N2.08bn has been allocated as aggregate funding to Youth Entrepreneurship & Empowerment Programmes across all Ministries, Departments and Agencies in the state. We have also allocated over N778.5m to empower youths through vocational, agricultural and artisan training programmes as well as N82m for the establishment of creative centres, Innovation Hubs and ICT related projects.

Health

  We agree that “a healthy nation is a wealthy nation.” Therefore, we have set aside the sum of N5.88bn for the sector to continue the implementation of strategic initiatives that will help fill identified gaps in our health system which the COVID-19 pandemic has exposed and to further improve healthcare delivery in the state.

Small & Medium Enterprises Development

  Out of the N2bn Commercial Agriculture Credit Scheme facility, N1.0bn will be spent to fund micro entrepreneurs through cooperatives in the three senatorial districts. Disbursement will be 60% to women and 40% to men. The balance of N1.0 billion will be disbursed and managed at single digit interest rate to Small and Medium Enterprises. The COVID-19 response program with the World Bank which will provide an additional $5 million to support capacity building programmes and start-up funding for young entrepreneurs is expected to kick off by the end of 2021.

  Furthermore, it is our hope that the World Bank Nigeria’s COVID-19 Action Recovery and Economic Stimulus (CARES) palliative will support MSMEs across all sectors in the State, develop community projects and support households with conditional cash transfers.

Water Resources and Public Utilities

  Ndi Anambra can attest to the improvement in security aided by the “Light-Up Anambra Programme” and other rural and urban electrification schemes. As a result, we have earmarked an additional budget of N2.01bn to sustain the programme as well as other water and sanitation programs across the State.

Community Social Development Program

  The “N20 Million Community-Choose-Your-Project” initiative has continued to produce impressive results across the 181 communities in the State. Therefore, N1.4bn has been allocated to communities that have completed the second phase of the Project to enable them commence the third phase. It’s also heartwarming to report that the Community and Social Development Agency (CSDA) with the support of the World Bank has started delivering critical amenities to poor and vulnerable communities.

Disability and Inclusion Progammes

  Persons Living with Disabilities (PLWDs) have been transformed to subject of rights and no longer objects of charity. Our desire is to help Persons Living with Disabilities in a manner that preserves their self-respect by empowering them to do for themselves those things people do for them.

  Mr. Speaker and Honourable Lawmakers, this budget seeks to consolidate and sustain the development aspirations of Anambra State. It is our hope, therefore, that it will be given a speedy consideration and passage to ensure a sustained and steady advancement of our dear state.

  It is with great pleasure therefore, that I lay before this hallowed Assembly, my administration’s draft budget estimates for the 2022 Fiscal Year. 

  I thank you most sincerely for your attention.

Chief Willie Obiano

Executive Governor

Anambra State

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