Makinde’s 2024 Budget as Elixir for Oyo State

Early this month, the Oyo state governor, Seyi Makinde presented N434.22 billion 2024 budget to Oyo state House of Assembly. Kayode Tokede writes on what Oyo state economy and the people stand to benefit

Recently, the Oyo State Governor, Seyi Makinde presented the state’s 2024 budget to its house assembly. The proposal tagged, “Budget of Economic Recovery,” highlighted four critical sectors as roadmap for sustainable development 2023-2027 with definite action plans.

The key sectors are: Education, Infrastructure, Health and Agriculture. The focus on four critical sectors by the Makinde’s administration is to cushion the effect of federal government removal of fuel subsidy and the removal of the dollar to Naira currency peg as the Oyo state government understands the implications come 2024 and beyond.

The 2024 budget estimated at N432.22billion, according to Makinde, “Will cover specific projects, policies and actions, which, when implemented, will cushion the impact of the economic hardship our people face.”

The total capital expenditure stands at N222.34 billion, while total recurrent expenditure is estimated at N211.88 billion.

“One thing you would immediately notice as you debate this budget is that we have been able to, once again, achieve a budget where Capital Expenditure is about 2.4 per cent higher than recurrent expenditure. We believe that the growth of our economy is dependent on the fiscal decisions we take regarding our capital expenditure.  Therefore, we are focusing on projects that will yield positive results for our economy in our areas of comparative advantage,” he expressed.

The state’s Commissioner of Budget and Economic Planning, Professor Musibau Babatunde in a presentation said, the 2024 budget estimates of MDAs were prepared taking due cognizance of the Roadmap for Sustainable Development, 2023 to 2027 and the Sustainable Action for Economic Recovery (SAfER) program in the wake of the subsidy removal and exchange rate unification.

State Government’s Vision

Babatunde added that the vision of State Government is to make Oyo State the fastest growing economy that will evolve into one of the largest economies in Nigeria.

“The current administration operates an economic agenda hinged on four priority areas, which include:  Economic expansion: Infrastructure, solid minerals, tourism, agribusiness, Education Health and Security

“The Oyo State’s policy direction focuses mainly on diversifying the revenue bases of the state, through intensifying efforts to improve the independent revenue base of the state so as to reduce the state’s overdependence on FAAC Allocations, Donor Partner grants and assisted projects,” he explained. 

On Education, the government is proposing an estimated N90.65 billion, 20.88 per cent of the total budget and estimated N74.32billion for infrastructure, about 17.11 per cent of the total budget.

For Health, he announced estimated N40.998, which is 9.44 per cent of the total budget and Agriculture got estimated N15.85billion which is 3.65 per cent of the total budget.

Makinde noted that his administration has once again prioritised the education sector, expressing that when he assumed office in 2019, “the huge deficits in this sector showed that we would require N70 billion to offset it.”

“This called for innovative steps to save our schools and children’s futures. So, aside from consistently paying the Universal Basic Education Commission counterpart funding that allows us to access matching grants from the Federal Government; we piloted the project whereby old students and alumni of schools can work with the State Government to fund infrastructural development.

“Additionally, although the percentage allocation to education in the budget remains largely the same at about 20per cent, the total sum allocated to education has been increased from about N58 billion in the 2023 budget to over N90 billion. We believe this will further help to reduce the infrastructure and manpower deficits in this sector.” 

On Infrastructure, he said the 17.11per cent allocation is targeted at opening Ibadan up to boost economic activities. 

“You will recall that we started with constructing the 110 km Senator Rashidi Ladoja Circular Road under Omituntun 1.0, focusing on the bridges and interchanges and the 32 km East End Wing. We plan to continue the construction of this road and, thereby, further open Ibadan up to increased economic activities. Furthermore, we have allocated funds in this budget to rehabilitate sixteen additional roads and four bridges,” he explained.

Changing the Native in Healthcare

Speaking further he said, “Our Health sector is getting 9.44 per cent of the budget. Although this represents a drop in percentage from our last budget, it represents a marginal increase of about N4 billion in budgetary allocation. We plan to continue with upgrading and equipping our healthcare facilities with funds allocated in this budget.

“We immediately plan to complete the outstanding Primary Healthcare Centres (PHCs) upgrades while equipping already rehabilitated facilities. We will also work with international organisations and development agencies to ensure that our Secondary and Tertiary Healthcare facilities receive the necessary attention to bring them up to standard.”

He explained that the marginal increase of about N4 billion in the allocation to Agriculture is to further revamp the sector.

He added, “You will recall that we have initiated an inputs distribution package for our smallholder farmers under the SAfER initiative. We also worked with the World Bank to provide inputs to our smallholder farmers under the OYS-CARES programme. We plan to build on the various interventions we have introduced to help our smallholder farmers focus on productivity. At the same time, we will in the next few months, be completing work on the Fasola Agribusiness Industrial Hub.

“I am happy to report that the work done at this hub has further revealed the economic benefits of locating projects around our areas of comparative advantage.  Because of this project the Oyo Zone has been opened up for more business as that axis now hosts large and medium-scale agribusinesses. The Oyo-Iseyin Road reconstruction, which we commissioned in September 2023 is also driving business to this zone.”

key assumptions & macro-framework

Meanwhile, Babatunde stated that the government has adopted the key assumptions and the macroeconomic framework of the FGN Medium Term Expenditure Framework (MTEF) projections.

He said, “For example, the crude oil forecast assumes that all evacuation lines will be operational and oil theft will reduce significantly. Inflation is projected to average 21.4 per cent in 2024 before declining to 20.3 per cent and 18.6 per cent in 2025 and 2026, respectively. Exchange rate is expected to peak at N750 in 2024 before declining to N665.61 in 2025 and depreciating to N669.79 in 2026.”

Oyo State economy is second only to Lagos State in South-West of Nigeria and the gateway to the Northern part of the country.  The State has an estimated Gross Domestic Product (GDP) of N5.11 trillion in 2022 according to the analysts and predominantly an agrarian society, agriculture and related activities contribute over 75 per cent to the state’s GDP. 

Agriculture provides job for about 60 per cent of the State population and   Oyo State has the potential to become the nation’s food basket as the composition of the Agricultural Sector places the State as the 8th largest crop and 5th largest livestock producing State in Nigeria.

Key areas to generate revenue

Makinde has massively improved the state’s Internally Generated Revenue (IGR) since he assumed office as governor. For 2024, the state government is estimating an Internally IGR of N72 billion, which is an average of N6 billion per month.

He explained that,  “We have chosen a conservative amount which we hope to meet and surpass to ensure that we improve our budget performance from about 70 per cent which we recorded last year.  To achieve this, we will continue to use technology to block loopholes and expand our tax net to include more persons who are not already captured. As with the previous years, we have no plans of increasing taxes.

“For example, streamlining processes within the Ministry of Lands, Housing and Urban Development has led to increased revenue from that ministry such that in October this year, the ministry generated its highest monthly revenue of N604.55 million. And just this October, we recorded an all-time revenue high of N4.8 billion for our Internally Generated Revenue in Oyo State.”

Makinde added, “You are also aware that we have expanded the sectors through which we are growing our Economy pillar from two to four with the addition of Solid Minerals development and Tourism.

“To this end, we signed two executive orders this past October 2023. These are Executive Orders Numbers One and Two of 2023. For the solid minerals sector, we signed a first-of-its-kind executive order – I can report that no other State in Nigeria has been able to come up with something similar – that protects mining communities against insecurity and exploitation. We plan to work with these mining communities to ensure they and the State benefit from the exploitation of mineral deposits in our land.

“Executive Order Number Two separates the Ministry of Culture and Tourism from the Ministry of Information and Orientation. This better positions the Ministry of Culture and Tourism to focus on the activities and projects it needs to carry out to harness the state’s tourism potential.”

Budget’s Principles and Focus

Babatunde highlighted that the 2024 budget principles are to allocate adequate funds for prioritized on-going projects and programs, particularly those that would boost social and human capital;

Other principles, according to him are, “innovativeness for improved generation and administration of Internally Generated Revenue, all MDAs should review the existing laws and regulations to improve and make for innovative Internally Generated Revenue.

“Aggressive drive for infrastructure provision to improve productivity; Principle of Equity and Budget Realism in Projects and Program conceptualization ensuring gender equitability and social inclusion; Pursuance of Projects and Programmes that will attract Official Development Assistance (ODA); Effective and efficient utilization of resources through vigorous monitoring and impact evaluation of projects and programmes; unlocking the State’s economic potentials through Agriculture and Agribusiness value chain, Tourism and Solid minerals; Improved security of lives and properties and adequate provision for Government Counterpart Cash Contribution to donor-funded programmes in order to trigger the in-flow of expected revenue from this sub-sector.”

Points to consider 

Babatunde added that the Oyo State 2024 budget has been prepared against the backdrop of continuing global and national economic challenges.

“In summary, fiscal challenges have increased due to: Subsidy removal, Floating of the exchange rate, weak national economic performance and other structural issues in the national economy. Revenue generation remains the major fiscal issue.

“However, government is reviewing the current tax administration to ensure that the taxable entities will be brought into the tax net towards improving revenue generation.  Efforts will however focus on blocking the leakages through key public financial reforms and improving revenue collection efficiency through ICT. We expect an early passage of the Budget for implementation from January 1, 2024, ”he added.

QUOTE

“We have chosen a conservative amount, which we hope to meet and surpass to ensure that we improve our budget performance from about 70 per cent which we recorded last year.  To achieve this, we will continue to use technology to block loopholes and expand our tax net to include more persons who are not already captured. As with the previous years, we have no plans of increasing taxes.”