Economic Confidential, February, 2009

FOCUS

BUDGET 2009 OF KWARA STATE

2009 BUDGET PROPOSAL DELIVERED TO

THE KWARA STATE HOUSE OF ASSEMBLY

ON TUESDAY, 23^RD DECEMBER 2008

BY HIS EXCELLENCY, DR. ABUBAKAR BUKOLA SARAKI,

EXECUTIVE GOVERNOR OF KWARA STATE.

Mr. Speaker Sir, Honourable members of the Kwara State House of Assembly; we give glory to Almighty Allah that has brought us to the chamber of this great House yet again.

Exactly one year ago, in December 2007 I was here to present a review of what we did in the outgoing year and a proposal of what we intended to do in the year 2008. Today, I present to the people of Kwara State, as represented by you, honourable members, an account of my stewardship for 2008, and what my government intends to do in 2009.

Before I proceed, Mr. Speaker, permit me to provide a short background to what I shall be proposing to you today. As we gradually, but steadily approach the terminal point of this administration, my administration is focused more than ever before on the great challenge of consolidating on the major achievements we have recorded in the last 6 years. Six years ago, our State was not what it is today. So much efforts, so much sacrifices, so much investment, and so much courage have brought us this far. In less than half a decade, we have made that great leap from that sleepy State that was racked by violence, to a State that is fast becoming a preferred investment destination in this part of our country; where opportunities for growth and glory continue to emerge by the day.

Therefore, as we look forward with a growing sense of accomplishment, we remain focused on creating the policies and strengthening the systems that will ensure that the house that we have labored so much to build does not crumble after us. This, Mr. Speaker, is the major objective of the 2009 budget: to continue to consolidate on the gains of the past years, and to begin to lay the foundation for sustainability in the years ahead.

2008 BUDGET REVIEW

At this juncture, Mr. Speaker, kindly permit me to do a cursory review of the 2008 Budget.

Agriculture: One of the most ambitious agriculture projects anywhere in this country is the commercial agriculture initiative that we pioneered in Shonga. I am delighted to report that the Farm achieved major progress in 2008. It recorded the largest single movement of cattle in the world when it successfully imported all the cattle required for diary production into the country without a single fatality. Consequently, it was able to kick-off its diary plant with installed capacity for 80, 000 litres of milk per day, being the largest of such plant in Nigeria. No doubt, the best story that came out of Shonga in 2008 is that the first set of milk and yoghurt rolled out of the diary farm, and can now be found in the open markets of our State and other parts of the country, thereby establishing that important linkage between commerce and agriculture, which we envisioned when the project started.

As we continue to support the commercial agriculture initiative, we have also kept up with our promise of guaranteed support for our small farm holders across the State. One area that has been of concern to our farmers over the years is access to fertilizer. I am pleased to report that in 2008, we recorded since inception of this state, we procured 15, 000 metric tones of assorted brand of fertilizers, which is the largest distribution of fertilizers since inception of the State; and distributed to farmers at up to 50% subsidy. We are confident that this heavy investment will have a direct impact on the level of food production that we shall witness in the coming year.

Education: In 2008, we launched the Kwara State Education Reform Agenda, Every Child Counts, which seeks to put children at the heart of education delivery in our State and to achieve a major step-change in improving the quality of education of our children at all levels, but especially at the primary school level. The Quality Improvement as well as other key aspects of the reform, has brought Kwara State into both national and international reckoning and has made our State, not only a role model but also, the single most preferred State by international development agencies like the World Bank and British DFID for education support interventions. Perhaps, the single most important achievement we recorded for education in 2008 was the Teacher Needs Assessment, which made us the first State Nigeria to ever conduct that kind of assessment, and thereby underlying our commitment to improve the quality of education in our State.

Power: The Step-Down Station at Ganmo remains the only National Independent Power Project (NIPP) that has not been abandoned in Nigeria. Even though this is a Federal Government project, we realise that our various efforts at achieving economic growth for our State can only achieve desired results if we are able to provide the necessary infrastructural support, especially electricity. Therefore, it is in the primary interest of our people that we must ensure that this project does not fail. And we are glad to note that our intervention and the investments we made on this project have seen it to 99% completion. We are confident that very early next year, when the project is completed, our power supply situation in this State will be among the best in the country. The economic and social benefits of this can hardly be quantified.

Road: A direct consequence of increased economic activities in our State is increased vehicular traffic which has put existing road network, especially in the metropolis of our State capital under severe pressure. Our government’s deliberate response to this development in 2008 is heavy investment in road construction and rehabilitation. We have opened up new roads, and we have expanded and upgraded several existing ones with keen focus on strategic roads that will cater to increased vehicular traffic, thereby making movement around the metropolis quicker and faster. One of the most ambitious of these road projects in 2008 is the fly-over around the post-office area, which is the centre of our city in order to deal with the peculiar traffic congestion in that axis. Apart from the road projects in the capital city, we also executed several road projects in other parts of our State. On this note, we are proud to note that there is no Local Government in any part of our State that has not received attention in road construction or rehabilitation.

Health: In 2008, we continued to focus our attention on preventive and curative health at the primary healthcare level. Most significantly, is our commitment to achieving the Millennium Development Goals in the area of maternal and child mortality and especially, malaria. Our major achievement in the outgoing year is the launching of the Malaria-Free kwara at both the State and the Local Government levels. This programme is anchored on massive free distribution of Insecticide Treated Nets and free malaria drugs to pregnant mothers and under-5 children.

In terms of health infrastructural development, we embarked on the rehabilitation of the General Hospitals in Patigi, Lafiagi, and Kaiama. We also rehabilitated several primary health centres in Osi, Alapa, Rogun, Afon, Oju-Ekun, Omoda, Yashikira, Banni, Araromi Opin among others. Rehabilitation of the Sobi Specialist Hospital will continue into the coming year.

Sports: In 2008, we continued our commitment to preserving the major infrastructure in our State by investing in the rehabilitation of the kwara State stadium complex. However, our flagship achievement in sports in the outgoing year is the Kwara Football Academy, which has continued to break new grounds as the academy stabilizes and launches itself into national and international reckoning. A major achievement of the KFA is its training tour of Europe, which was meant to showcase the students and give them the right kind of exposure necessary to make that critical transition in their career. I am delighted to note that about 7 of the students are now currently on trial in Europe.

Water: Our major objective, especially in urban water supply is to ensure efficient delivery of pipe borne water. We have pursued this through the expansion of Asa Dam Water works has capacity to treat 25.5 million gallons of water per day. We shall be able to pump this quantity of water from the dam when we complete the installation of the high lift and the low lift pumps in the coming year May 2009.  This is a huge progress from the 4.3 million gallons that we inherited at the inception of this administration. As we conclude the expansion programme, it is our commitment to turn our attention to strengthening the distribution system to ensure that the water really get to people’s home.

Housing: In 2008, we continued our aggressive housing development projects under a Public-Private Partnership with the completion of Mandate III and the commencement of 260 Housing Units at Akerebiata. These projects of Low Cost Housing are meant to provide affordable housing to our people as well as bring about organized development around the capital city.

Rural Development:  In 2008, about 118 communities were connected to the national grid. 116 transformers were supplied to various communities; and 438 hand-pumps and motorized boreholes across the 3 Senatorial districts. To further improve our capacity to deliver rural water in the State, additional 3 rigs were procured in the year.

Fitch Rating: Mr. Speaker Sir, distinguished Members of the House; since 2003, we have labored to project our State as a place where the business of government is conducted in a responsible and transparent manner; where government is not only accountable but also operates in accordance with the rule of law and due process, which we believe are necessary pre-condition for building the right kind of profile that will attract national and international partnership and investments that are crucial in achieving economic growth for our State.

It is pursuant to this that we invited the world’s foremost credit rating agency, Fitch to our State in 2008 to do an assessment of our credit rating, which involves a critical analysis of those indices that show how well the business of government is conducted in our State. We are proud to note that we are the only State in Nigeria to have submitted itself to this level of scrutiny. And we are proud to note that at the end of the exercise we were awarded a Foreign and Local currency rating of B+ and a National Long-term rating of AA-. More than anything else, this rating confirms the steady progress we have recorded in the last 5 years and a measure of our commitment to making kwara State one of the leading States in Nigeria.

Apart from the overall positive image that the Fitch rating has brought to our State, one other important benefit is that it projects us as a responsible credit worthy entity. The direct fallout of this achievement is our ability to raise an N18 Billion Bond to embark on key capital projects in the face of the acute financial challenge that we face in the coming year. The key projects that we intend to execute with this bond are as follows:

1.       The Kwara Truck Plaza

2.       The International Aviation College

3.       Site Acquisition and Services:

i.        The Cement Factory

ii.       Rice Processing Factory

iii.       Cassava Processing

iv.      Chicken Processing

4.       The New Secretariat

5.       Irrigation Project

6.       Commercial Agriculture Phase II

7.       Water Projects

8.       The Kwara State University

Distinguished Ladies and Gentlemen, these are important social and economic projects that we believe will further jumpstart our desire to bring rapid economic development to our state. They represent the core projects that we shall embark upon in the coming year. And it is on this note that I now proceed to present a brief overview of the 2009 Budget Proposal to you honourable members of this House.

BUDGET 2009

Mr. Speaker, distinguished members of the House. The prospect of a new year usually holds great excitement about the possibilities that lie ahead for progress and new achievements. However, the 2009 has been greatly foreshadowed by the world economic recession that has affected economies everywhere in a manner that had hardly ever been witnessed before.

One of the key consequences of this global financial crisis is the tumbling price of crude oil, to which our economy is closely tied. In the outgoing year, the price of crude rose to a high of $147 per barrel and from that point; it has tumbled steadily to a frightening low of $44 per barrel. And even as we speak, there is no guarantee that it would not fall even further. If this happens, revenues accruing to both the Federal and State Governments would be severely affected. And there would be no excess crude revenue to fall back on. This indeed holds a grim prospect for everyone. Our ability to implement capital projects is directly tied to the price of crude oil. Therefore, if oil prices fall even further, it will be very difficult, if not impossible to fully implement the budget in the coming year.

However, in the face of this potentially crippling challenge, the only saving grace for kwara State would be the =N=18 billion Bond fund which is targeted at the following key projects:

1.       The Kwara Truck plaza: One of the key potential advantages of our State is our strategic location as a gateway between the North and the South of our country. Hundreds of trucks pass through our State everyday going to the north or the south. It is our desire to capture the enormous revenue potential around this by providing a transit base for these trucks. We believe this project will bring enormous revenue to our State as we continue to seek creative ways to diversify our economy.

2.       The International Aviation College: As Mr. Speaker would recall, earlier in the month we signed an MOU with an international aviation consulting Firm to partner with us in setting up an international aviation training institute in Ilorin. In setting up this College, we would be responding to a huge national and international gap in aviation expert training. This College is intended to train both commercial and helicopter pilots. Again, the social and economic potential of this project is indeed enormous.

3.       Cement Factory (Site Acquisition & Services): This project fit into our industrialization drive and our effort as a government to continue to midwife and provide enabling environments that will attract the right kind of investment to areas of critical needs to our people. 

i.        Cement Factory: As one of the fastest developing State in the country, the requirement for cement as a key component for building and construction will continue to rise. This provides an important window of opportunity to attract investment into this sector. This is why we are committed to investing a significant amount of funds coming through this fund to acquiring the site and providing the necessary services to make it suitable for a cement factory.

ii.       Rice Processing Factory:  In our pursuit of value-added agriculture, we intend to capitalize on our capacity for large-scale production of rice to set up a major rice processing factory in Oke-Oyi. Upon completion, this will be one of the largest rice processing factories in the State, thereby saving our country huge amount of foreign exchange currently expended on importation of rice.

iii.       Cassava Processing Factory: Our land is suitable for the production of high quality cassava. In the last couple of years, we have experimented with cassava processing through small scale pilot projects. However, with the experiences gathered on these pilot projects, we intend to facilitate large scale cassava processing to produce such by-products like starch and ethanol.

iv.      To complement the large scale poultry farm in Shonga, a chicken processing factory would be built that will deliver processed chicken to both State and national markets. This factory is expected to be commissioned in April next year, and it would have an installed capacity to process up to 50, 000 chickens per day.  

4.       New Secretariat: As my administration proceeds in its efforts to make the civil service an engine room of government as promised over the years, one core incentives that we intend to provide is a conducive environment for work. You would observe that the existing secretariats are almost as old as the State itself. Apart from its age; it is no longer sufficient in coping with increased number of people in the civil service, as well as meeting the needs of a civil service that is envisioned to be result-oriented and efficient. This is why a considerable amount of investment will go into building a new secretariat complex.

5.       Commercial Agriculture Phase II: Having recorded significant success in the first phase of our commercial agriculture, we are encouraged to embark on a further development of this approach to agriculture in our State. We have all witnessed the enormous economic and employment benefits that the commercial agriculture project has brought to Shonga and its environs. In our bid to promote equitable development in all parts of our State, we intend to replicate the commercial agriculture initiative in another part of our State as the Phase II of the commercial agriculture project. We are confident that with the funds coming from this bond, we would be able to provide the right support necessary for the take off of the project at a faster and less painful way as in the Shonga project.

6.       Irrigation project: As we continue to demonstrate our commitment to lead Nigeria’s drive for agricultural development, it has become quite imperative that we depart from the traditional dependency on rains. Even for small-scale farming, rain-fed agriculture is not only very limiting, but also commercially unviable. The development of irrigation system will therefore be the most important investment that we would be making in changing the face of agriculture in our State. With an efficient irrigation system it would be possible for our farmers to harvest twice in a year and therefore make more money. In this regard, small scale irrigation projects would be constructed in various parts of our State, including Osu-Aba in Patigi Local Government; Okemi in Moro Local Government; Mushe in Baruten Local Governments and Eruomola in Oke-Ero Local Governments. These are meant to serve our small scale farmers, while the large scale irrigation project in shonga will cater to the needs of the commercial agriculture project in that area.

7.       Water projects: The success we have recorded in the expansion of the Asa Dam to increase its gallon per day capacity, the next most important challenge that we face is the distribution of the water into homes. To achieve this, we shall invest trough this bond in the rehabilitation and expansion of water supply pipe network in a manner that will ensure that the significant gains we have made in expanding the capacity of the Asa Dam is not lost. 

Consequently, we shall focus on the replacement of the rising mains in both the Eastern and Western reservoir as well as extension new rising mains to proposed Oloje-Ganmo-Oke-Ose tanks. This will be completed by the construction of 10,000 cubic metre tanks at Oloje and Ganmo. This will improve distribution of water to Oloje, Abayawo, Offa Garrage, Gaa Akanbi, Kulende, the permanent site of the university and the polytechnic.

We shall also reconstruct three main distribution pipe networks along Eastern Reservoir to Oja-Oba, through Offa Road, Amilegbe, Ipata and Oja-gboro. Similarly, we shall also carry out reconstruction of the GRA ground tanks to Oja-Oba, through Kwara Hotel, and Emir’s Road, as well as Western Reservoir networks to Sobi Road, Adeta, Kiama Road, Pakata, and Abayawo. Another network from GRA tanks will also connect to Kulende, through Ministry of Agriculture roundabout; Ajase-Ipo road, through Gaa-Akanbi and Oke-Ose tanks through Kulende. The implication of this, Mr. Speaker, is that when we complete these networks, every part of Ilorin will have access to pipe borne water. 

8.       Kwara University Project: Demand for higher education in our State would increase as we improve the quality of secondary education and more children are able to achieve the right qualification to proceed to the University. We must begin today to provide the space for them as available opportunities across the country are very limited and are not capable of meeting the demand. Our greatest asset will continue to be our young people. Setting up this University is therefore a major effort at investing in the future of Kwara State.

OUTLOOK FOR THE 2009 FINANCIAL YEAR

Mr. Speaker sir; as I stated earlier, the 2009 budget is intended to consolidate on the gains of 2008 and lay the foundation for sustainability in the years ahead. The following is the breakdown of the 2009 Budget as proposed to the Honourable House.

                                                          =N=

1.       Total Recurrent Revenue               29, 696, 372, 892

2.       Total Recurrent Expenditure           27, 078, 300, 907    

3.       Total Recurrent Surplus                 2, 618, 071, 985

(Transfer to Capital Dev. Fund)

4.       Total Capital Receipts          45, 136, 392, 947

5.       Total Capital Expenditure                45, 136, 392, 947

The total budget portfolio for 2009 being proposed is therefore N72, 214, 693, 854, as against a total of N66, 540, 157, 168 for 2008. This reflects an increase of 8.52%.

The breakdown of the Recurrent Expenditure Estimates of N27, 078, 300, 907 (excluding transfer to Capital Development Fund) is presented as follows:

                                                          =N=

1.       Personnel Cost                            5, 187, 475, 138

2.       Other Charge

(Overhead Cost)                          9, 995, 236, 000

3.       Consolidated Fund Charges             11, 895, 589,769

Total Recurrent Expenditure           27, 078, 300, 907

4.       Transfer to Capital

Development Fund                       2, 618, 071, 985

Total Recurrent

Estimated Budget                         29, 696, 372, 892

Accordingly, the proposed Capital Expenditure for 2009 is N45, 136, 392, 947, as against the sum of N39, 088, 174, 168 estimated in the 2008 Revised Budget. The sectoral breakdown is as given below:

                                                          =N=

1.       Road Development                       10.976 billion

2.       Education                                     5.906 billion

3.       Agricultural Development                 4.979 billion

4.       Water Supply                                4.085 billion

5.       Industry                                       2.015 billion

6.       Rural Development                         1.931 billion

7.       Health                                          1.888 billion

8.       Housing                                        1.373 billion

9.       Commerce                                    1.064 billion

10.     Environment & Tourism                     1.350 billion

          TOTAL                                        34.553 billion 

    Others                                              10.583 billion

    GRAND TOTAL                                     45.136 billion

Mr. Speaker, distinguished members of the House; as I have stated earlier, the primary focus of the 2009 capital budget is to focus squarely on completing on-going projects in various sectors. However, this is without prejudice to those key projects outlined earlier to be executed with the Bond. Having stated this; permit me to briefly outline some of the key strategic areas that we intend to focus on in the coming year.

AGRICULTURE: Agriculture remains the flagship of our economy development drive. As earlier stated, we intend to focus on irrigation projects across the State, in addition to the Shonga Irrigation Project, which will service the commercial farm project as well as neigbouring small scale farmers. Some of these irrigation projects will be located in Gwanara in Baruten, Pampo in Asa, Idofin- Odo Ase, in Oke-Ero, Erin-Ile in Oyun and Eruku in Ekiti.

As stated earlier, one of the highlights of our agriculture support in the out-going year is the massive procurement of fertilizers to farmers. We intend to sustain this level of fertilizer supply in 2009 as well.

Power Supply: Our priority on this aspect is to complete the Power Supply station at Ganmo and complete the distribution network projects to ensure that the full benefits get to the people. This will enable us to evacuate power from the 2 x 150 MVA; 330/132KV transformers; and 2 x 60 MVA, 132/33KVA transformers from Ganmo new sub-station. In this wise, we shall require 6 x 15 MVA, 33 x 11 KVA transformers to improve electricity in Ilorin metropolis. 2 of these, will be located at Budo Efo; 1 in Asa; 1 in Agba; and 2 at Gaa Imam. This distribution will ensure adequate electricity supply to the entire Ilorin metropolis. 

Commerce: In 2009, we shall ensure the take off of the Ilorin Modern Market as part of our drive to properly organize the informal sector of our economy. Similarly, the Kwara Micro-finance Bank will also take off in the coming year to complement the activities of existing micro- finance banks to provide credit to small businesses as well as co-operative groups. A sum of N300 million has been made available to co-operatives to access.

Health: One major break through that we have recorded in the healthcare delivery sector is the introduction of the community health insurance programme in Shonga with the enormous benefits it has brought to our people. In the coming year, we intend to extend this initiative to other parts of our State, specifically to Lafiagi in Edu Local Government and Afon in Asa Local Government.

One of the major challenges faced by our health sector is lack qualified doctors. To tackle this problem we intend in the coming year, to complete the process of accreditation for the Sobi Specialist Hospital to enable us train House Officers to work in our hospitals.

Perhaps, the most important investment that we shall be making in the health sector in 2009 is the establishment of a World Class Diagnostic Centre, which serve both public and private hospitals not only in Kwara but in the entire country. The revenue potential of this initiative, apart from the health benefits, is indeed enormous.

Roads and Transport: Our focus for 2009 is the completion of on-going road projects across the State. Most notably in this respect is the Chikanda-Kosubosu road and all other major roads that we have started. In addition to the Truck Plaza mentioned earlier, we also intend to see the completion and take off of the Cargo Terminal at the Ilorin International Airport. In order to begin to address the growing vehicular traffic in Ilorin metropolis, the year 2009 will also witness the full take-off of the Kwara Traffic Management Authority that will ensure the smooth flow of traffic in our capital city, especially along certain roads that have been identified as highly prone to congestion.

Education: In 2009, we intend to embark on physical construction of the State University. It is our commitment to ensure that the first set of students is admitted into the kwara State University in 2009.

Judiciary: As part of our commitment to continue to support the judiciary, we shall embark in the coming year on the construction of a new High Court Building in the State. Similarly, we shall construct residential buildings for high court judges under an arrangement that will enable them to own the building eventually.

CONCLUSION

Mr. Speaker, distinguished Honourable Members of the House; what I have presented to you is the review of the 2008 budget as well as the budget estimate proposal for 2009. In the out-going year, we have tried to consolidate on the gains of the previous years while breaking new grounds in various sectors. In 2009, our priority would be to complete all on-going projects while laying foundation for the system that will ensure sustainability in the years ahead.

However, it is important to note that the financial atmosphere under which the 2009 will operate gives so much room for concern. The dwindling price of crude oil presents unprecedented fiscal challenge that if not arrested may compromise our ability to implement the budget. In this context, our primary challenge would be to keep personnel cost and overhead at the current level so as to be able to meet our commitments in this regard.

This is also time for us to embark on aggressive drive for Internally Generated Revenue through existing and new regulatory and administrative policy. One cardinal focus in the coming year is the revenue accruable from a more efficient management of our land.

However, we are confident that this too is a passing phase in our history and in the history of the world. It is a time that challenges our ability for prudent management of resources as well as locating hidden opportunities. While we hope for the best in the coming year, we need to focus what we know and tighten our belt for the challenges ahead.

May God bless Nigeria, May God bless kwara State. May God bless us all.

Governor Bukola Saraka

Executive Governor

Kwara State