- How feasible?
Budget watchers would have to keep an especial tab on Cross River State in the 2018 fiscal year. The reason is that the south-south Nigerian state famous for its Obudu Cattle Ranch reserve and Christmas Carnivals may be on the verge of performing a fiscal wonder.
The state governor, Professor Ben Ayade, had financial experts bemused last week when he presented a staggering N1.3 trillion 2018 budget proposals to the state House of Assembly. This is clearly the highest in the annals of state budgets in Nigeria.
Other important features of the budget include the fact that it is over N1 trillion higher than the 2017 budget which is about N301 billion. It is proposed to be 70 per cent capital expenditure and 30 per cent recurrent. Huge recurrent there; as 30 percent of N1.3 trillion is more than the entire budget of most states of the country!
However, most remarkable are two giant projects the state has embarked upon – a superhighway and a deep sea port. According to Governor Ayade, priority would be to actualise these projects. He said: “the size of the budget is expected to create room for potential investors since the actual construction of the deep sea port and the superhighway has commenced.”
In other words, the band of the budget has been expanded to accommodate investors’ interests in these projects.
This is a most ambitious budget for an ambitious governor taking on two of the biggest projects to be found anywhere in the country today. As has been noted above, this is the biggest figure of any state’s budget in the history of Nigeria. Indeed, it is the first time any state’s budget would cross the trillion naira mark.
Lagos State, which boasts of being among the largest economies in Africa has a current budget of about N812 billion and plans to spend N1.1 trillion in 2018. Cross River’s sister state, Akwa Ibom, a big spending oil rich state, has proposed only N652 billion for 2018. Rivers, another oil state is appropriating N385 billion.
States which are ordinarily in the league of Cross River State are Edo (N147b); Kwara (N181b); Kaduna (N201b), to mention a few. Most of the 36 states of the federation are still within this bracket.
While we commend the big heart of Governor Ayade, we are at once skeptical and indeed afraid for a few reasons.
First, this is no doubt a hugely deficit budget which will leave the state with a tome of debt. What has happened is akin to spending the state’s five years budget/revenues in one fiscal year. This is dangerous, to put it starkly unless these big projects are designed to yield quantum revenues and in record time too.
Otherwise, we think that the state may be biting far more than it can chew.
To put it plainly, Cross River State is still basically a rural economy with government and civil service as its mainstay. Tourism which was beginning to take root under a previous government has been stymied by succeeding administrations. Thus, unless these huge projects are realised quickly and profitably, the state would become over-leveraged.
We also worry and hope that these projects have been put through adequate due diligence in the first instance. We hope they are not political projects or mere ego trips by the governor in which case they end up as one of those white elephant projects.
It is cogent to ask what becomes of these projects in the event that the initiator governor does not get a second term or fails to complete them. And we ask: what lessons did Governor Ayade learn from what we may term the Tinapa debacle, another humongous white elephant project right there in his state?
Short of being seen as pessimists, we aver that fiscal rectitude would require that a poor state like Cross River should never carry at any one time, projects about five times her annual earnings. Fiscal discipline, it is said, is the greatest economic wisdom.
