2021 BUDGET ADDRESS BY HIS EXCELLENCY, SENATOR, DR. IFEANYI OKOWA, GOVERNOR OF DELTA STATE, AT THE PRESENTATION OF THE 2021 BUDGET PROPOSALS TO THE DELTA STATE HOUSE OF ASSEMBLY ON TUESDAY, OCTOBER 27, 2020
2. The coronavirus pandemic turned the global economy upside down. Initially a health issue limited to Wuhan, China, the coronavirus disease quickly spread to other countries forcing the World Health Organisation (WHO) to declare a pandemic on March 11, 2020.
3. The pandemic not only disrupted our living conditions and altered our social relationships, but it also sent the world economy crashing to levels never experienced for at least a hundred years. The global price of oil plummeted. From a budget benchmark of $57 per barrel of oil, the price plunged to as low as $10 at the height of the pandemic.
4. The consequences for the Nigerian economy were dramatic and dire. Government spending was severely hampered, financial institutions quaked, businesses ran aground, and thousands of people lost their jobs. The severe liquidity crisis compelled budget reviews by both national and sub-national governments.
5. Delta State was no exception. The 2020 approved budget of N395bn size was, with the approval of this House, downsized to N282bn. The economic implications of the lockdown, imposed to contain the spread of the virus, were quite devastating for such industries as travel, entertainment, education, hospitality, and social services.
6. Thankfully, there are signs of a rebound as the COVID-19 curve appears to be flattening and the lifting of the social restrictions has enabled the economy to reboot. This does not mean that the pandemic is over. Far from it. It just means that we must get on with our lives, nonetheless.
7. The economic crisis created by the pandemic is not going away soon. How quickly we recover from it depends on how effective governments, health authorities and communities are in containing the pandemic and adapting to the new global reality.
EXECUTIVE SUMMARY OF THE 2021 BUDGET
8. Amid a period of global economic uncertainty, President Muhammadu Buhari presented the 2021 Federal Budget proposals using the benchmark of $40 per barrel of oil and the production of 1.86 million barrels per day. Based on the projected negative growth outlook for the second quarter in a row, the President also hinted that “our economy may lapse into the second recession in four years, with significant adverse consequences.” Hence, although there are encouraging signs of things returning to normal, it is exigent that we proceed with cautious optimism.
9. The proposed 2021 Budget for Delta State is primarily focused on protecting – and supporting – our people in a COVID-19 environment, accelerating infrastructural renewal, incentivizing growth, enhancing job creation, engendering social inclusion, and developing sustainably.
10. Building on the foundations that have been laid over the last five years, the budget seeks to erect a modern, competitive, strong, and diversified economy that can easily withstand external shocks. With Stronger Delta as the goal, significant investments in entrepreneurship development, technical/vocational education, agriculture, tourism, infrastructure, water resources, and sports further this objective.
11. Overall, the proposed 2021 Budget, tagged the Budget of Recovery, is predicated on inclusive economic growth that is sustainable and people-centred with the following programme priorities:
– strengthen fiscal sustainability through increased efficiency in spending, improved revenue mobilization and debt sustainability;
– Improve processes and systems in Public Financial Management, and Monitoring and Evaluation, to bolster better public sector service delivery;
– Establish a multi-pronged revenue generation process with focus on efficient collection, prudent service management, and active resource management, as a platform for global funding support and private sector collaborations;
– Increase opportunities for youths, women and unemployed graduates under various job and wealth creation programmes;
– Enhance our Social Investment Programmes (SIP) such as livelihood support programmes, Widows Welfare Scheme, the girl-child empowerment, and programmes for the People Living with Disabilities (PwDs);
– Promote ICT-based education to conform with the current realities thrown up by the COVID-19 pandemic;
– Maintain our lead in the provision of Universal Health Coverage and cutting-edge technology for broad-based and excellent service delivery essential for a healthy and productive populace;
– Include complementary actions from other closely related sectors (housing, nutrition, water, sanitation, hygiene, education, community support, etc.) through inter-sectoral collaboration.
– Establish well equipped, functional, and responsive healthcare centres in the twenty-five Local Government Areas;
– Consolidate private-public sector partnership in the agricultural sector, and motivate youths to embrace farming as a viable source of livelihood, and develop agro-business enterprises;
– Sustain and strengthen the institutions and structures that enable peaceful co-existence among the diverse ethnic groups and communities; and
– Build cities, towns, and communities where people feel safe and secure in both private and public spaces.
KEY ACHIEVEMENTS IN THE 2020 FISCAL YEAR
Combating the COVID-19 Pandemic
12. The COVID-19 pandemic dominated the 2020 fiscal year. The global surge in infections and fatalities meant that most resources, time, personnel and energy were devoted to containing the virus, establishing new medical facilities to house the infected, treating the infected persons, and providing palliatives for our citizens who were reeling from the effects of the pandemic.
13. Even before there was a confirmed case in Delta, we established treatment centres at the Federal medical Centre, Asaba, Specialist Hospital, Asaba, and Delta State University Teaching Hospital, Oghara. An additional treatment centre was established by the Government at the Central Hospital, Warri, while with the aid of some corporate donors, two more treatment centres were set up at the NYSC Camp at Issele-Uku and the Stephen Keshi Stadium, Asaba. Each centre was furnished with the necessary Critical Care Equipment – ventilators, ultra-sound machines, dialysis machines, x-ray machines – and we were never in short supply of Personal Protective Equipment (PPE) for the healthcare personnel.
14. To mitigate the harsh economic effects of the lockdown, the State Government distributed food items to all 270 wards in the State, coordinated by a cross section of leaders at the Local Government Area/Ward levels. In collaboration with the Federal Government and CA-COVID, the State Government did another round of supplies to the poor and vulnerable in all the twenty-five local government areas. It gladdens my heart to report that Delta State was adjudged by CA-COVID to be the most organized and transparent among the States in the distribution of the palliatives.
15. The economy seems to be on the rebound as the curve flattens out and businesses reopen. However, we still need to stay vigilant and continue to observe all the necessary guidelines and safety protocols for us to completely defeat the virus.
Job and Wealth Creation
16. Job creation is the cornerstone of our policies and programmes. The strategic thrust has been entrepreneurship development programmes anchored on skills training, engaging youths in productive enterprises, nurturing entrepreneurs, leaders, and promoting communal peace and security.
17. In the last five years, the Special Purpose Vehicle for driving this policy initiative has been the Office of the Chief Job Creation Officer. A significant development in the 2020 fiscal year was the passing of the bill by the State House of Assembly transforming the office from an administrative creation to a body corporate as enshrined in the enabling law, for continuity and sustainability. The office is now known as Delta State Job and Wealth Creation Bureau to be headed by the Chief Job and Wealth Creation Officer.
18. The momentum generated by our entrepreneurship development programmes such as the flagship Skills Training and Entrepreneurship Programme (STEP) and Youth Agricultural Entrepreneurs Programme (YAGEP), is being accelerated with the addition of the Rural Youth Skills Acquisition (RYSA) and the Girls Entrepreneurship Skills Training (GEST) programmes. With the activation of these programmes, targeted at distinct people groups, this administration is delivering on its promise of prosperity for all Deltans by improving access and utilization of basic social services by the poor and vulnerable, thereby reducing disparities and engendering socio-economic inclusion.
19. After four years of rigorous planning, hard work, and negotiations, the Agro-Industrial Park at Aboh Ogwashi-Uku is finally ready to take off. It is currently at construction stage under an Engineering, Procurement and Construction (EPC) contract with a completion period of eighteen months. The ground-breaking ceremony will be performed before the end of this year.
20. The park is being developed as a multipurpose and multiproduct epicentre of agro-processing, agro-industrial and agribusiness activities to catalyze and transform agricultural value chains in the State. It is a joint venture between Delta State Government, Mirai Technologies Ltd and Norsworthy Investments Ltd. In this regard, the three parties have jointly registered a Special Purpose Vehicle (SPV) known as Delta State Agro-Industrial Park Limited.
21. By design, it will have clustered set of infrastructure, facilities and utilities including power, water, security, research and training, quality assurance, sewage, and waste management. Others are marketing and commerce, packaging, warehousing, storage, equipment maintenance, administration, conferences, residential and hospitality.
22. The value proposition of the Agro-Industrial Park includes the elimination of persisting infrastructure constraints to agro-industries, diminution of the cost of operations, and enhancement of the overall ease of doing agribusiness. The common infrastructure, facilities and amenities will enable firms and businesses to operate smoothly, attain maximal efficiency, maintain profitability, and grow investments over time. These will foster improved competitiveness of agro-industrial and agro-processing businesses, increased flow of private investments to the state’s agricultural sector, job and wealth creation, sustainable growth, and diversification of the state’s economy.
23. At full capacity, the park will host from 20-30 agro-processing factories and agribusiness enterprises. Altogether, the number of direct jobs that will be created by the Agro-Industrial Park could be up to 4,000, while the indirect economic impacts will cover tens of thousands of farmers and agricultural value chain operators.
24. Despite the disruptions caused by the COVID-19 pandemic, I am happy to report that work on our various road projects progressed steadily. We are grateful to the contractors who braved the odds to remain onsite to meet the delivery schedules. Notably, the sectors A and C2 of the Ughelli-Asaba highway have reached advanced stage and should be completed in no distant time. Similarly, the ultra-modern Central Secretariat Complex is nearing completion and should be ready for commissioning in the first quarter of 2021.
25. As all of us here must have noticed, Asaba is evidently looking more like the state capital that it is. Several internal roads in the city have been rehabilitated/reconstructed while the perennial problem of flood has now been substantially mitigated with the construction of major portions of the Asaba Storm Water Drainage. We expect similar results in Warri and environs with the take-off of the Warri/Effurun and Environs Development Agency.
REVIEW OF YEAR 2020 BUDGET
26. You will recall that Delta State 2020 budget was based on some assumptions, notably the price of $57 per barrel of oil. The reality, however, is that oil price plummeted by about 60% during the global pandemic. The sharp drop in oil price impacted negatively on the FAAC revenues to the State, hence assumptions underlying the 2020 budget were no longer sustainable.
27. To deal with the huge shortfall in income, the approved 2020 Budget was in the month of July 2020 downsized from N395bn to N282bn.
28. The revised budget was made up a recurrent budget of N152,450,230,043 and a capital budget of N129,881,666,342. The details are as follows:
29. These expenditures were expected to be funded from the following revenue sources:
PERFORMANCE OF 2020 BUDGET
(JANUARY – SEPTEMBER 2020)
REVENUE BUDGET PERFORMANCE
30. The State Government during the nine months of January to September 2020 recorded a total revenue of N190,308,961,283, out of the proportionate revenue of N211,748,922,289 which translates to 89.87%. The breakdown is as shown hereunder:
31. The significant performance in revenue within the period under review is attributable to the realistic amendment of the 2020 budget. We had relatively low receipts from other capital receipt because the pandemic affected many sources of capital inflow to the economy.
EXPENDITURE BUDGET PERFORMANCE
32. Government spent a total sum of N152,778,877,698.33 out of the proportionate budget of N211,748,922,289 for the period under review. This represents overall budget performance of 72.15%.
33. Out of this, the sum of N107,876,719,295.77 was spent on recurrent budget as against the sum of N114,337,672,532 budgeted for the period. This represents 94.35% performance. For capital expenditure, the sum of N44,902,158,402.56 was the actual expenditure as against the sum of N97,411,249,757, being the proportionate approved budget for the period.
34. A total sum of N64.85bn was spent on personnel cost as against the sum of N62.17bn which is 104.31 % performance. This was because we had to pay more allowances to frontline workers in the fight against the coronavirus pandemic. We have so far spent the sum of N43.03bn for overhead expenditures and consolidated revenue funds in the period under review, which represents 82.48% performance. The details are shown hereunder:
YEAR 2021 BUDGET
35. Mr. Speaker Sir, Honourable members, I now present to you our proposed 2021 Budget of N378,484,397,889. This is N96,152,501,504 or 34.05% increase over the revised budget of 2020. The increase was necessitated by the realities of the times with respect to gradual improvement in revenue inflow from the federal allocation as the impact of COVID-19 is easing.
36. The N378bn budget is made of a recurrent budget of N171,230,826,568, representing 45.24% of the entire budget size and capital budget of N207,253,571,321, which translates to 54.76% of the budget as shown below:
2021 MACROECONOMIC FRAMEWORK
37. Mr. Speaker, the Delta State 2021-2023 FSP/MTEF from which the draft 2021 Budget is drawn is anchored on the following indices:
(i) Crude oil production benchmark of 1.86 mbpd;
(ii) Oil price of USD 40 per barrel;
(iii) Exchange rate of N379/USD1);
(iv) National Real GDP Growth of 3%, and
(v) National inflation of 11.95%
38. These assumptions and parameters vary significantly with those of 2020 as shown hereunder:
SOURCES OF FUND FOR 2021 BUDGET
39. The revenue to fund the 2021 budget expenditure will be sourced from the following revenue lines:
Internally Generated Revenue (IGR)
40. Despite the punch of COVID-19 pandemic and the attendant lockdown, the State Government generated the sum of N30.5b in the first half of the year. This demonstrates that with the improvement in the international price of oil and the gradual return of economic life, IGR collection will improve further.
41. There have been formidable adjustments made in the administrative machinery of the Internal Revenue Service. We remain confident that these measures will continue to yield positive results. It is based on this assurance that we have projected the sum of N65.64bn in the 2021 budget.
42. Statutory Allocation from the Federation Account is the principal source of government revenue. It is anticipated that the global price of oil will not drop below the $40 per barrel benchmark used for the budget. Hence, the sum of N219,930,393,658 is projected as revenue from this source in 2021.
Other Capital Receipts
43. The sum of N75.30 billion is proposed for other capital receipts. This will be financed from receipts from State investment portfolios, grants, and net financing of critical projects.
44. The recurrent budget estimate for 2021 is N171,330,826,567. This comprises personnel cost of N85,303,761,431, overhead cost of N59,958,137,946, and consolidated Revenue Fund Charges of N25, 968,927,191. The personnel cost is higher than the 2020 revised budget figure of N82,891,689,326 by N2,412,072,105 or a variance of 2.90% while the overhead cost is N15,868,524,420 higher than the previous year’s estimate of N59,958,137,946, which is a variance of 35.68%.
45. The marginal increase of the personnel budget over the figure in the revised 2020 budget is to accommodate the reinstatement of the workers new minimum wage which was shelved for a short period in the heat of the sharp revenue drop during the pandemic.
46. The total proposed recurrent expenditure budget is higher than the N152,450,230,043 figure of the revised 2020 by N18,880,596,524, which is approximately 12.31% increase. The overhead cost moved up slightly compared to that of the revised budget to enable Government to fund the increased tempo that will trail the post-COVID-19 activities of government.
47. Also, the increase over the revised 2020 budget is as result of the return to economic and social activities, which is expected to culminate in increased funding for Social Investment Programmes (SIP) of government which have huge recurrent components.
48. The recurrent expenditure budget is summarized hereunder:
49. The proposed capital estimate for 2021 fiscal year is N207,253,571,322, accounting for 54.76% of the total budget sum of N378 billion. This estimate is higher than the N129,881,666,342 budgeted in the revised 2020 budget by N77,371,904,980 or 59.97% increase.
50. The increase stemmed from the gradual improvement in some revenue streams, especially the improvement in receipts from FAAC. There is a corresponding increase in funding of critical capital projects that can create wealth and improve the quality of lives of our people.
51. The sectoral breakdown is as shown hereunder:
SN DETAIL OF ITEM Revised Budget 2020 Proposed Provision 2021 %
1 Administration Sector 9,348,779,312 10,932,855,863 17.00
2 Economic Sector 62,955,671,643 113,912,890,969 89.94
3 Law & Justice Sector 865,000,000 1,394,447,007 61.21
4 Regional Sector 27,455,060,007 41,994,000,000 53.00
5 Social Sector 26,757,155,380 35,019,377,483 30.88
6 Contingency Fund 2,500,000,000 4,000,000,000 60.00
CAPITAL EXPENDITURE 129,881,666,342 207,253,571,322 59.97
Job and Wealth Creation
52. Mr. Speaker, as you are no doubt aware, one of the core mandates of this administration is to build a knowledge economy anchored on skills acquisition. To this end, Government shall sustain the provision of training opportunities, internship schemes, and subsidies for young people to be job and wealth creators.
53. One of the areas Government has shown strong resolve in human capital development is in the development of the capacities of women and the girl-child. Girl-child empowerment is the process of uplifting the economic and social status of traditionally under-privileged girls in a male-dominated social construct. This administration would sustain the empowerment programmes for women and the girl-child to engender the uplifting of families’ economies. We have commenced the Girls Entrepreneurship and Skills Training (GEST) programme for 450 girls. This number will be up scaled up in 2021.
54. The sum of N1b is earmarked for the Job and Wealth Creation Bureau in the proposed 2021 Budget.
55. This administration shall continue to revitalize the hospitals and health institutions to enable them deliver effective and affordable health care to the people of the State. This has become compelling in the face of the COVID-19 challenge which exposed the gaps in our healthcare facilities nationwide.
56. As a State we shall enhance the capability of our healthcare system in preventing and treating infectious diseases, such as building additional medical and quarantine facilities, increasing our stock of medical supplies, as well as strengthening scientific research on infectious disease prevention and control, pathology, and medication. At the same time, we shall also pay serious attention to environmental hygiene to reduce the risk of infectious diseases.
57. The sum of N6,795,181,078 is provided for the Ministry of Health and its parastatals in the 2021 fiscal year.
58. This administration understands the invaluable role education plays in the life of any society. Investment in education is vital for human and economic development. Changes in technology, labour market patterns, and general global environment, all require appropriate policy responses.
59. Since we came to office, the budget for education has been growing annually, demonstrating our commitment to developing the sector to meet today’s needs. Our vision is to give all children of school age equal access to qualitative and functional primary and secondary education. Currently, we are in the process of establishing nine new public schools to increase access to education. The establishment of the Professional Teachers Development Centre will give a boost to teacher development and training.
60. In 2019, we created the Ministry of Technical Education to give priority to technical education in the State and commenced the establishment of nine (9) new technical colleges. The new colleges will be kicking off in the 2021/2022 academic session.
61. It is pertinent that I inform this Honourable House that since 2015, the State has been meeting its obligation to the UBEC counterpart funding. Funding for this activity increased from N852.95m in 2011 to N1.5bn in 2020.
62. The sum of N23,553,836,163 is provided for the Education sub-sector in the 2021 fiscal year.
63. Farming as an activity contributes nearly one-sixth to our national GDP and a major portion of our population is dependent on it for livelihood. Government recognizes the need to restore agriculture to its pride of place in the State. This is underscored by the global challenge of hunger and malnutrition threatening millions of people. We have proposed projects in the 2021 Budget that will employ improved farm input, farming systems, and post-harvest processing technologies to increase food production, create jobs and ensure food security.
64. The sum of N2,049,462,663 is proposed to be spent in the Ministry of Agriculture in the 2021 fiscal year.
65. The gazette of the water law has given semi-autonomous status to Delta State Urban Water Corporation, in line with international best practice. This puts Delta State at a vantage position to attract international interventions in the water sector.
66. Following the declaration of the state of emergency on water, the State is enjoying collaboration with the Federal Government on PEWASH (Partnership for Expanded Water Supply, Sanitation and Hygiene), a programme for the improvement of access to water supply and sanitation.
67. The Government also entered into agreement with Chevron Nig. Ltd in the DTSG/Chevron Joint Venture Agreement for the reticulation of potable water from chevron Olero Area. This project is to provide water from the already treated deep borehole to some Itsekiri communities. This administration is currently executing the construction of new water schemes in Ijaw communities of Ogbudugbudu, Ogbinbiri, Tsekelewu, Ogbahgoro, Ebrohimi an Opuama.
68. The Water Sector has a budget of N1,832,971,962 in the proposed 2021 budget.
69. Road interconnectivity is a pre-requisite for commerce and economic development. Since inception of this administration in 2015, we have commenced 439 road projects, aside from those done by Ministry of Urban Renewal, the Delta State Capital Development Territory Agency, Warri/Uvwie and Environs Development Agency, and Delta State Oil Producing Areas Development Commission, DESOPADEC.
70. In the 2021 fiscal year, we hope to complete the remaining portions of the Asaba Storm Water Drainage. We are equally giving attention to the Storm Water Drainage project in Warri and environs.
71. Government has moved to complete inherited projects in the riverine areas. One of such projects is the Ode Itsekiri-Trans Warri road with 19 bridges. The project was awarded in 2006, with the contractor, Setraco, mobilizing to the site in November 2007, and before the end of the last administration in 2015, the contractor had done five kilometers of the road and completed five of the bridges.
72. We are also working on the Ayakoromo bridges that we inherited from the previous government. The project, connecting Egbedi and Ayakoroma communities in Ughelli South and Burutu Local Government Areas respectively, is about 70 per cent completed, and should be finished by the second quarter of 2021.
73. The Ovwor-Effurun-Otor Bridge, started by this administration, has been completed. Meanwhile work is at advanced stage at the Kwale-Beneku Bridge, and the Orere, Agbarho – Otokutu road.
74. In the Ministry of Works alone, we have provided the sum of N66,659,711,358 for roads infrastructure in the 2021 budget proposals.
75. We are committed to continuously resource our youths through advanced ICT programmes and reactivation of the ICT Hub, Asaba. The Rural Youth Skill Acquisition programme is designed to create earning opportunities, stem restiveness, discourage rural-urban drift and grow the local economy.
76. The sum of N1,249,196,846 is proposed for the Ministry of Youth Development in the 2021 fiscal year.
INVESTMENT AND INDUSTRIALIZATION
77. This administration will continue to create the enabling environment for companies and industries to thrive and provide gainful employment for our youths in a safe and secure environment. We are currently partnering with DELFRASCO Limited for the establishment of a Tower Manufacturing, Testing, Research, Training and Hot Dip Galvanising Facility at Issele-Uku. The Project is conceived to meet the present and future demand for tower manufacturing in Nigeria as well as the whole of Africa and is expected to contribute positively to the socio-economic development of Delta State and Nigeria.
78. When fully operational, it will be Nigeria’s and indeed Africa’s first and largest multi-industry local content industrial complex, providing products and services to power, oil and gas, telecom, infrastructure, agriculture, and other Industries. Major customers are expected to include Transmission Company of Nigeria (TCN), Nigeria LNG Train 7 Projects, EPC Contractors in Energy and Infrastructure Projects, and telecom infrastructure providers.
79. Activities at the Kwale Industrial Park were slowed down by COVID-19. However, we have remained in touch with the Chinese investors as we eagerly look forward to the take-off of the Park.
80. We are committing the sum of N2b to the Kwale Industrial Park project in the 2021 fiscal year.
81. We have also signed some MOUs with other investors. One of such is the $20 million Umutu Gas Plant at Ukwunai LGA. Propective foreign investors have signed a Gas Sale and Purchasing Agreement (GSPA) with Platform Petroleum to erect a gas plant for the purpose of transporting compressed gas to industries in Delta State.
82. Other ongoing strategic investments attracted to the state include the Mechanic Village along the Asaba-Benin Expressway and the Warri Tanker Park.
83. Mr. Speaker, Honourable Members, I wish to conclude this address by reiterating that the effects of the deep economic downturn experienced this year may linger with us for a while. Granted that the economy is coming back to life, but I dare say that the storm is not yet over. Nevertheless, we must brace up and take proactive steps to shore up productivity and propel the economy on the path of growth and recovery.
84. The ultimate test of leadership is not how we are doing in good times, but how we are able to confront adversity and overcome it. So, Mr Speaker, we must not allow ourselves to be overwhelmed by the current vicissitudes; we must think strategically, and we must take a long-term approach to governance.
85. In the final analysis, the cataclysmic effects of the COVID-19 pandemic are a wakeup call to policy makers, political leaders, and technocrats that development policies must always be flexible and aligned with emerging realities. The call is to innovate and proffer financing options for government business such that we are strategically positioned should another sharp downturn occur. I am confident that with the raw chutzpah that Deltans are known for, we shall triumph over the current challenges and leave a legacy of a Stronger Delta for the current and future generations.
86. It is on this note, Mr. Speaker, Honourable Members, that I now present the 2021 Budget Proposals for consideration and passage by this Honourable House.
87. Thank you for your time and attention.
88. God bless Delta State.
89. God bless us all.
Office of the Governor