In the 2017, Cross River State governor, Prof. Ben Ayade threw common sense economics overboard to launch a mind-boggling N1.3 trillion 2018 budget. It was a giant, some would say, suicidal, leap from a more realistic, but still largely unattainable N300 billion 2017 budget.
For a state, which with a yearly internally generated revenue (IGR) of about N18 billion and annual federal allocation of less than N48 billion, bringing total annual revenue to about N66billion, one of the least revenue earners in the country, even a N300 billion budget was an overstretch. But to propose N1.3 trillion defied logic.
Yet despite the outrage it triggered, the governor pressed on with it. By year end, however, it was evident, from available spending and projects on ground that not up to 10 percent of the estimates was met. It had been a budget of smokes and mirrors.
Not deterred, the governor in 2018 presented yet another N1.043 trillion budget for 2019. Like the year before, there was nothing to suggest it was met by any stretch. Already a routine, on Thursday last week, Ayade returned to his drawing board and emerged, as can be imagined, with another N1.1 trillion budget for 2020 which he presented to the state assembly.
The irony of one of the least earning states in the country presenting about the highest budget is stark. Only Lagos State, the country’s economic hub comes anywhere near at N1.17 trillion, being the budget proposed by Governor Babajide Sanwo-olu for next year.
But Lagos has an annual IGR of about N500 billion – an amount analysts believe is grossly understated – and an annual federal allocation of about N120 billion. The two combined, comes to N620 billion, to compare to Cross River’s N66 billion. Yet both states have budgets in excess of N1 trillion.
Tagged budget of Olimpotic meristemasis, the Cross River budget is pegged at N1,100,167,507.09. A breakdown of which shows that N911 billion representing 82 percent will be for capital estimates while N188 billion representing 17.2 percent will be spent on recurrent expenditure.
N911 billion for capital projects in a state like Cross River could see it, if implemented, leap from a third world to a first world country-state. But this, by all accounts, is unrealistic. And even more so are some of the capital projects for which the governor budgeted such huge sum.
Shortly after taking office in 2015, Ayade announced plans to build a 275 kilometres superhighway, with a width of over 250 metres, which will take about 5,200 square kilometres of land affecting over 600,000 people in 185 communities, from Calabar through Benue to elsewhere in the North. It was launched same year by President Muhammadu Buhari.
Originally budgeted at ₦800 billion, the highway was to pass through the state’s national park which provides habitat for wildlife. The plan, however, triggered protests from conservationists worldwide, as well as local land owners. The governor was forced to reduce the buffer to 140 meters. The budget was also revised to ₦200 billion.
Last year work officially commenced on the highway, amid protests by local communities demanding compensation for their lands. As would be expected, work has been slow, with the government most probably short of funds.
He had argued that the project will create economic opportunities and boost the economy of the state. But it’s difficult to see how. The superhighway is not the only one. There is the elaborate Spaghetti Flyover at Odukpani, the Industrial Zone, among others. Huge projects, big ideas. But reality is different.
He had also initiated healthcare law tagged “Ayadecare,” which is to cater for all kinds of medical needs of every adult and resident in the state with a mandatory monthly fee of N1000.00 per person, paid into a stipulated account. It was again in the news last week.
“The governor is just initiating white elephant projects here and there, without completing anyone,” said an analyst based in the state who declined his name being in print for ‘security reasons.’
“Meanwhile, the roads are becoming bad. The major road projects in the Calabar axis are being done by NDDC. I don’t understand what he is doing.”
The big budgets and big projects, inevitably have led to one outcome. The state’s debt profile is rapidly rising. At the moment, Cross River with foreign debt of $148 million as at July 30, 2019, according to Debt Management Office (DMO) figures, is the third most indebted state after Lagos and Edo states in the foreign debt category. On the domestic front, the state has a debt profile of N168 billion, again, one of the highest in the country.
To achieve 10 percent of the budget, the governor would have to accumulate further debt. To go beyond that will be a tall order. One, perhaps, not lost on the governor who has gone spiritual. Speaking to reporters after presenting the budget, he noted that it was about “rapid growth driven from a spiritual thrust.”
The budget of Olimpotic meristemasis, he said it was a “complex metaphysical realism that when you have an ambition and it is not driven by reason; it is not driven by economic and financial analysis. It is driven by a spiritual force beyond the normal.”
Asked how the previous projects have performed, he quipped: “Excellently! It is the ones that have prepared us for this next velocity we are entering into.”
He regretted, however, that “Nigerians don’t see the intellectual value in a very ambitious budget,” noting that, “even the federal government itself doing a budget of N9trillion” may end up achieving less than 30 percent.
Apparently, he appears to be the only person who has the intelligence to understand the importance of such ambitious budget as his. For analysts, there is hardly any sense in it.
“Budgets as plans must be seasoned with reason and tempered with foresight, as General Gordon Sullivan of the United States Army once said: ‘hope is not a method,'” noted economist and entrepreneur, Surajudeen Akinyemi, chief executive officer of Surak 713.
“Huge capital expenditure outlays have been a consistently strong suit of the Cross River state government in the past few years, without much doubt. But with its low industrial base, straggly commercial economy and its heavy public sector dependence, recurrent expenditure tends to exceed budget provisions.”
The new style of huge deficit budgeting defy economics sense, even at the basics.
“Optimism is a good thing, but to fly a kite on a playground and to do so in public office are two separate issues; while on the playground it is fun, in public office it is irresponsible,” said Dr. Bongo Adi, senior lecturer, Lagos Business School.
“Even a housewife knows that she should plan based on immediate past income trends and not on what is likely to come; nobody (or at least no sensible person) makes financial arrangements on the basis of a recently purchased lottery ticket.
“Ayade appears to be a great gambler and has decided to bet the house that Cross Rivers State will win the 2018 revenue lottery!”
On Friday, the governor took to his twitter handle, @senatorbenayade to further justify his whooping budget sum, insisting that it is driven by vision.
“We must come to the understanding that indeed any state whose budget is driven by the envelope size is limited in vision. The prosperity agenda set for CRS does not allow me the opportunity of an envelope budgeting,” he said.
“There are two ways in business and public sector management that you derive your budget. It is either that your budget comes as an expression of your envelope size or as an expression of your ambition.
“Our budget prescribes the actual cost element while the intellectual financing shuns the cost because the ambition so expressed allows us the latitude to drive with to ensure that we guarantee that all aspects of the budget so provided are driven.”
But few people, if any, share his optimism. Seun Alatise, an economist and head corporate finance at Century Finance and Securities noted that, indigenes of the state would soon be, seeing pigs fly.
According to him, the assumptions of the budget are, heady, unattainable and queer.