Governor El-Rufai presents 2021 budget

Address by Malam Nasir El-Rufai, Governor of Kaduna State, at the presentation of the State’s 2022 Draft Estimates of Revenues and Expenditure to the Kaduna State House of Assembly, held at the Lugard Hall, Kaduna, on Tuesday, 12th October 2021

PROTOCOLS
The Deputy Governor,
The Right Honourable Speaker,
Principal Officers of the Kaduna State House of Assembly
Honourable Members of the Kaduna State House of Assembly
The Chairman, APC Kaduna State Chapter
Members of the Kaduna State Executive Council
Permanent Secretaries, Clerk of the House and
Gentlemen of the Press
Ladies and Gentlemen,

1. I am delighted to present the 2022 Draft Estimates of Revenue and Expenditure of the Kaduna State Government. This is the seventh time that this honourable House has accorded us this privilege. It is a poignant moment, marking the penultimate time it will be my duty to present the state budget. As we firmly embark on the closing stages of our stewardship to the people of Kaduna State, I wish to acknowledge and appreciate once again the productive partnership the Kaduna State House of Assembly and the Executive Branch have built in the service of our people since 2015.
2. Mr. Speaker, Right Honourable members, it is with your kind support that we have the necessary legislation to anchor our governance innovations. Enacting the Kaduna State Independent Electoral Commission (KADSIECOM) law has enabled our state to introduce a revolution in Nigeria by adopting electronic voting for the local government elections of September 2021 and May 2018. This is among the over 100 new laws enacted since 2015 to institutionalise reforms in public finances, procurement, taxation, child welfare and protection, investment promotion, scholarships, youth capacity building and residency, among others. The new laws also created a geographic information service and an internal revenue service.
3. This governance agenda is not based on a whim or some fancy theorising. It is rooted in deeply held values and rigorous assessment of what is required to build a good society, to empower our people and overcome the legacy of decades of neglect governance norms and failures in delivering public goods. Expressed in the Putting People First slogan, our governance agenda is anchored on the Restoration Programme, the Kaduna State specific iteration of the APC manifesto.
4. In 2015, we committed ourselves to develop human capital by investing in education, healthcare and social welfare; institute a good governance system that is founded on a competent and responsive public service; foster security; maintain, rebuild and expand Infrastructure (including water supply, electricity and road networks) to accelerate economic growth that will create jobs, jobs and more jobs; promote agriculture and food security and reform land administration as a basis for wealth creation and capital formation, while preserving and enhancing environmental management.
5. From June 2015, we have deployed the annual budget as a fundamental policy tool for signalling change and in implementing change. We have enjoyed a strong partnership with this honourable House in this quest.
6. In the over six years that we have exercised responsibility for this state, we have kept faith with our manifesto and fashioned our governance agenda around it. Through various initiatives, we have expressed our commitment to promote equality of opportunity, accelerate human capital development, attain fiscal viability, and reduce inequality.
7. In June 2019, shortly after we commenced our second term, we launched the Urban Renewal Programme to modernise our three major cities. This is an unprecedented investment in urban infrastructure that is changing Kaduna, Kafanchan and Zaria. We have built, upgraded and expanded infrastructure in these cities as part of a coordinated effort to improve the economic competitiveness of our state and increase its appeal as a place to live, work and rest.
8. Without hiking tax rates, Kaduna State has become a top five state for internally generated revenue in Nigeria, collecting N50.7bn in taxes and levies in 2020. This is almost four times the N13bn that the state collected as IGR in 2015. We have increased school enrolment, made education free and compulsory for all children till they complete senior secondary school and launched a multicampus system for all our state-owned tertiary institutions. We have reformed the scholarship system to reward merit and support the needy. We are implementing a more sustainable funding arrangement for tertiary education based on a partnership between the government, parents and students.

How we are Putting People First

9. Mr. Speaker, Honourable Members, we have accomplished much in the service of our people across many sectors. I will highlight a few.
10. We have expanded access to Education, making the first 12 years of schooling free and compulsory. Apart from saving parents over N3bn yearly in fees by making basic education free till completion of SS3, we initiated a primary school feeding programme that was later taken over by the Federal Government. We continue to implement an extensive programme to renovate primary and secondary schools and supply them with furniture, water and sanitation facilities;
11. We recently recruited 7600 new teachers for secondary schools, in addition to the 2500 teachers of English, Mathematics and the sciences earlier recruited. We continue to monitor the performance of the 25,000 recruited in 2017 and 2018 to replace the 22,000 who failed the competency test.
12. We revamped the scholarship system, increased allowances to those entitled based on either merit or need. We also introduced a low-interest loan scheme to cater for those not qualified for scholarship, but wishing to finance their tertiary education.
13. In the Health sector, we continue to improve the primary health care system, with equipment and materials and the recruitment of healthcare personnel. Enrolment of citizens for universal health coverage through the State Contributory Health Insurance Scheme continues. Testing capacity for Covid-19 has been sustained using a mix of PCR and GeneXpert machines.
14. Our investment in Social Welfare continues with funding of initiatives to support various demographics. We are funding several skills acquisition and entrepreneurship programmes for youths and women, including the Kaduna State Women Economic Empowerment Programme (KADSWEP) with N200 million low-interest microcredits targeting women entrepreneurs and vulnerable groups.
15. 5000 young graduates have been trained in entrepreneurship through the Kaduna Startup and Entrepreneurship Programme, KADSTEP. With our partners in the Bank of Industry and the Kaduna Business School, we have unveiled KADSTEP 2.0 which will focus on training in ICT skills. This reinforces initiatives like Click-On Kaduna which has enabled thousands of young people to learning to code and acquire other digital skills at our Kaduna ICT hub.
16. As mentioned earlier, the Urban Renewal Programme is a historic investment in the infrastructure of our three major cities. It is the most visible part of our Infrastructure efforts, including developing the long-term infrastructure masterplan and a blueprint for the industrialisation of Kaduna State. The Urban Renewal Programme is improving infrastructure, transport connections and the liveability of our three main cities of Kaduna, Kafanchan and Zaria. The programme started with Kaduna, with new roads, expanded arterial roads, shopping malls and neighbourhood centres included. Some of our major roads have already benefitted from our solar street lighting programme, designed to light up Kaduna metropolis and help improve security.
17. Following the completion of the long-delayed phases 1 and 2 of the Zaria Water Expansion Project that now supplies potable water to Zaria and Sabon Gari Local Governments, the extension of the transmission and distribution pipelines Soba, Giwa and other neighbouring local government areas continues.
18. We are changing the face of markets through direct investments and in partnership with private companies. Vice President Yemi Osinbajo recently commissioned the new Kasuwan Magani market. The expansion and development of markets in continues Sabon Gari in Sabon Gari LG, Dan Magaji in Zaria LG, and Kasuwar Barci in Kaduna South Local Government. Most of the real traders in the Abubakar Gumi Central Market in Kaduna have bought their shops as part of our programme to expand wealth creation through property ownership.
19. For safety on the highways, we have completed and opened the trailer park in Marraraban Jos. This has reduced gridlock on the Kaduna-Zaria Road. We are working to ensure the completion of Trailer Parks at Tafa in Kagarko Local Government and near Olam in Chikun local government area.
20. Reforms in Governance have empowered our MDAs to strengthen their capacity for results delivery. Our tax agency has quadrupled the collection of internally generated revenue in five years. Through the effort of the Kaduna State Geographic Information Service (KADGIS), we have signed more than 50,000 certificates of occupancy in four years.
21. This government has recorded the highest levels of budget performance in the history of the state, injecting the largest ever capital investment in the history of the state. In 2019, Kaduna State achieved 97.5% budget performance for capital expenditure, spending N148.57bn of the N152.33bn budgeted. This is more than twice the erstwhile record of capital spending of over N62bn in 2016.
22. We have paid almost the entire N14bn arrears of gratuity and death benefit we inherited from 2010. We are faithfully implementing the contributory pension scheme and paying retirees on defined benefits even as we raised minimum monthly pension to N30,000.
23. While implementing governance reforms, we have also focused on maintaining our credentials as one of the foremost investment destinations in Nigeria, attracting $2.8bn in investments and pledges. We recently hosted the sixth edition of the Kaduna Economic and Investment Summit, KADInvest. This concluded with the commissioning of the tomato processing plant of Tomato Jos, one of the investors in the agriculture sector in our state. We are looking forward to the commissioning early in 2022 of the Gujeni iron and steel plant of the African Natural Resources and Mines in Kagarko LGA. We also expect the Dangote-Peugeot vehicle assembly project and the OCP fertiliser plant located along the Kaduna-Abuja Road to come on stream.
24. Work is progressing well on the roads, bridges and other infrastructure required for the Damau Milk Farm project, a collaboration between our state, the Central Bank of Nigeria and Arla, the European dairy giant. This is a ranching project, designed to help transform and modernise livestock production in Kaduna State, by sedentarising farmers and involving them in a commercially viable animal husbandry business.

The proposed 2022 Budget of Sustainable Growth

25. The uncertainties unleashed by the Covid-19 pandemic make it even more important to embrace fiscal realism. As a subnational, our economic parameters are aligned with the Federal Government of Nigeria’s which assumes an oil price benchmark of 57 US Dollars per barrel; daily oil production estimate of 1.88 million barrels , exchange rate of 410.15 per US Dollar; projected GDP growth rate of 4.2 percent and 13 percent inflation rate.
26. Taking into account these economic parameters, the draft 2022 estimates are based on the following considerations:
    i. Limiting the size of the budget strictly in conformity with realizable revenues in the light of a post COVID-19 economy.
    ii. Providing funds for projects from start to finish, while taking into cognizance ongoing projects and inherited capital liabilities.
    iii. Maintaining the minimum budgeting baseline model of 60:40 ratio of capital to recurrent.
    iv. Education and Health sectors holding a minimum of 26% and 15% of the total proposed budget respectively.
27. The government will strictly adhere to these targets, giving close attention to priority projects, strengthening expenditure control measures, and seeking ways to significantly expand internally generated revenue collection.

Summary of the 2022 Draft Revenue and Expenditure Estimates

28. The draft 2022 budget acknowledges the continuing uncertainty caused by Covid-19 and the varying degrees of economic recovery across the world, two factors with significant consequences for export earnings and business confidence. Therefore, we are proposing a budget size of N233bn in 2022, with the capital component at N146bn and recurrent expenses of N87.6bn. The 2022 budget, when approved, is projected to have capital to recurrent ratio of 63%:37%. The 2022 estimates are slightly smaller than the proposed 2021 budget estimates of N237.52bn, of which N157.56bn was capital and N79.96bn recurrent expenditure, a 66% to 34% capital to recurrent ratio.
29. Most of the capital spending will be in the Economic and Social Sectors, in keeping faith with our stated governance agenda. We propose to devote 76.8% of the capital budget to schools, hospitals, and infrastructure, including housing. Capital spending on Education is N68.4bn (29%) and for Health N35.1bn (15%).
30. Mr. Speaker, Honourable Members, permit me to present the detailed summary of the recurrent and capital allocations, and to outline the proposed allocation to each sector:
31. GENERAL SUMMARY
    The summary of the 2022 – 2024 Draft Revenue and Expenditure Estimates as follows:
32. Recurrent Revenue Projections 2022 of N146,408,640,343.67
33. Opening Balance ₦24,450,000,000.00
34. Internally Generated Revenue ₦67,267,465,873.67
35. Statutory Allocation from Federation Account ₦54,191,174,470.00
36. Contributions for COVID-19 Response ₦ 500,000,000.00
    ₦146,408,640,343.67
37. Recurrent Expenditure Estimates 2022
    Personnel Cost 44,653,466,906.47
    Overhead Cost 31,705,684,158.87
    Public Debt Charges 6,200,000,000.00
    10% to Local Government Joint Council 5,016,269,047.66
    TOTAL RECURRENT EXPENDITURE 87,575,420,113.00
    NET RECURRENT REVENUE 58,833,220,230.67
38. Transfer to Capital Budget

Recurrent Revenue 146,408,640,343.67
Less Recurrent Expenditure 87,575,420,113.00
Recurrent Budget Surplus 58,833,220,230.67

4. Capital Accounts Funds 2022 Total Capital Budget: N146,097,619,642.88

Opening Balance 8,020,225,751.78
Recurrent Budget Surplus 58,833,220,230.67
Value Added Tax (VAT) 24,955,552,583.00
Internal Loans and Credit 100,000,000.00
Internal Grants 21,776,980,746.97
External Loans 19,603,348,709.33
External Grants 12,308,291,621.13
Sales of Government Assets 500,000,000.00
TOTAL CAPITAL BUDGET 146,097,619,642.88

5. Capital Expenditure Estimates 2022
   The sum of ₦146,097,619,642.88 has been allocated as Draft Capital Estimates across sectors as follows: –
   Sub-Sector: Economic Proposed Estimates
   Agriculture 1,796,277,164.41
   Business, Innovation and Technology 3,725,230,354.53
   Housing and Urban Development 9,347,379,072.06
   Public Works and Infrastructure 36,973,505,543.12
   Total for Sub-Sector: Economic 51,842,392,134.12

Sub-Sector: Social
Education 44,686,238,773.12
Health 22,764,378,045.10
Social Development 690,522,000.00
Total for Sub-Sector: Social 68,141,138,818.22

Sub-Sector: Regional
Environment and Natural Resources 2,986,195,031.17
Water 4,994,433,881.76
Total for Sub-Sector: Regional 7,980,628,912.93

Sub-Sector: General Administration
Executive 11,554,247,474.89
Governance 2,964,500,840.01
Law and Justice 287,948,802.71
Legislature 3,326,762,660.00
Total for Sub-Sector: Gen. Admin 18,133,459,777.61
Grand Total 146,097,619,642.88

32. Mr. Speaker, Honourable Members, these figures show that the 2022 draft budget estimates express our political values and governance principles in the same consistent manner as our six previous budgets. Devoting N115bn to these critical sectors demonstrates continuity in our emphasis on Education and Health as the key drivers of human capital development, and on investments in Infrastructure as essentials to promoting economic competitiveness, support job creation and advance the well-being of our people.

Legislative Agenda for 2022

33. Mr. Speaker, Honourable Members, you have kindly enacted many of the bills in our 2020/2021 legislative agenda into law. This includes the Traditional Institutions Law and the laws creating Metropolitan and Municipal Authorities to manage Kaduna, Kafanchan and Zaria as single, integrated and organic cities.
34. Some of the bills on the agenda are still being drafted. Therefore, in the remaining months of 2021 and in 2022, we shall be approaching the House with more bills to further strengthen governance in the state. The pending bills that we hope to transmit to the Kaduna State House of Assembly include:
    a. The Kaduna State Executive Council recently approved the State Social Protection Policy. This places us in a better position to propose a Social Protection Bill to domesticate the various social intervention programmes of the Federal Government and propose a statewide social safety net that will address the basic needs of our poorest and most vulnerable citizens.

b. Employment Promotion Bill that will establish a State Council of Economic Advisers to guide the government on measures to promote job creation, economic development and investment promotion.

c. State Education Bill to re-enact our outdated education law, including updating the Universal Basic Education Law to repeal the 2005 law, and reflect lessons learnt in the implementation of the domestication of the UBE Act. This will enable the eventual elimination of the dysfunctional ‘Out-of-School children’ phenomenon in Kaduna State.

d. Family Court and Small Claims Court (Establishment) Bills, along with legislation to amend the District Court Law, and

e. Another very important bill for the enactment of a State Commercial Code to guide the conduct of commercial activities, encourage innovation and investment in our state.

35. Mr. Speaker, Honourable Members, it is my pleasure to now lay before this Honourable House the draft estimates of revenues and expenditure for the 2022 fiscal year, and the Appropriation Bill accompanying these, for your kind consideration.

Thank you for listening.
God Bless Kaduna State.
God Bless the Federal Republic of Nigeria.

Nasir Ahmad El-Rufai, OFR
Governor of Kaduna State
12th October 2021