Budget of Sacrifice, Restoration and Change

Address by Malam Nasir El-Rufai, Governor of Kaduna State, at the presentation of the Draft 2016 Revenue and Expenditure Estimates to the Kaduna State House of Assembly at the Lugard Hall, Kaduna on Tuesday, 1 December 2015

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

Thank you for permitting me to address you today. The first time you accorded me this privilege, I stressed that change requires partnership; that the three arms of government must cooperate to deliver progressive service to our people.

At the time of that visit, we were still learning the dimensions of the problems we were elected to solve. We had campaigned against the poor conditions of our schools, hospitals and roads, the lack of jobs for our people and the division and insecurity that fester in the state. With our election, this big stack of challenges we had railed against became ours to try to overcome. We accept this daunting task with courage and determination.

We are here today to present to you in concrete terms and greater details on how we intend to execute our solemn duty to make life better for our people, which is the only meaningful way to make Kaduna State great again. Our budget proposal is based on the Restoration Programme, the Kaduna State specific version of the APC manifesto on which we campaigned. Permit me to narrate how we have plotted the journey by describing where we are starting from.

Where Kaduna State has been
The Kaduna State Government we inherited was one that had grown accustomed to presenting big budgets that it lacked both the revenues and the discipline to implement. Whatever the capital to recurrent expenditure ratio was on paper, previous governments were only fastidious about the recurrent side of the budget which recorded almost perfect performance. Thus the cost of taking care of those working for or leading the government or close enough to it took a minimum of 80% of available resources. Yet this bazaar of the incumbent powerful had little room for the retired and retiring public servants as arrears of gratuity and unremitted and unfunded pensions piled up, and now stand at about N14.3 billion.

The net effect of this excessive focus on the wellbeing of the political elite and the public servants meant that very little was left for the welfare of the majority of our people. The result was severe under-investment in schools, hospitals, investment-stimulation, jobs and security. In our first week in office, we learnt that at least half of our school pupils sit on bare floors, while many schools had no roof, windows, doors, water or decent toilets; compounded by the shortage of teachers and inadequate qualifications among many of the teachers currently in service. In some instances, school is just an open space or an overcrowded cluster of ramshackle buildings. In Rigasa, I visited a school designed for about a thousand pupils with 29,000 pupils! While 67% of Kaduna pupils manage to complete primary education under these sorry circumstances, less than one in four of them move on to secondary school.

We have also inherited the third highest infant mortality rate in Nigeria, with parents losing 95 babies out of every 1000 births. The mortality rate for under-fives worsens to 155 out of every 1000 births. We have learnt that every year, we lose over 103,000 mothers during childbirth due to a dearth of ante-natal care, midwives and equipped facilities. This means we lose about 300 women per day, and about 12 every hour all year. The public health service was dependent on the exertions of less than 200 doctors, with a quite a few of them youth corpers.

Even this emphasis on consumption that recurrent expenditure represents was being funded by resources that were dependent on federal allocations. A well thought-out plan, executed in a determined manner, may be thwarted or impeded by sudden catastrophes. But to fail to plan how to fund one’s appetence for consumption is surely to invite certain calamity.

Mr. Speaker, honorable members, Kaduna State has a young population, with 87.5% of its residents being under 35. People below 18 constitute 44% of the population. We have a duty to ensure that this abundance of youth is transformed into potential that propels growth, rather than peril. To ensure that they have a future, we – the older generation above 35 years of age - must all make sacrifices, free up resources for development and commit to upholding law and order while promoting harmony across our communities.

Cutting costs is a clear testament of sacrifice. That is what we began to do since May 29th 2015 when my deputy and I announced that we shall return 50% of our salaries and allowances to the treasury. We reduced ministries to 13 and appointed only 13 commissioners against the 24 of the last government. We followed up by slashing overheads spending by 60%, and taking steps to establish actual numbers of serving public servants and pensioners. Then we implemented the Treasury Single Account (TSA) as a pragmatic way of managing liquidity and controlling public finances. This laid the basis for us to commence preparations for the 2016 budget on the Zero-based Budgeting (ZBB) framework. ZBB enabled Ministries, Departments and Agencies to cut respective budgets to a realistic size and to ensure that its line items are realistic, implementable and funded.

Performance Review of Previous Budgets
Actual capital implementation in 2013 stood at 26% and 38% in 2014. In 2013, health capital sector implementation was just 14%. We inherited a 2015 budget that was plagued by the perennial mismatch of statement and action. A lot of its items had been aligned towards winning the election. Between January and May 2015, releases of about N26 billion had been authorized by our predecessor, but only about N2bn was cash-backed, compelling us to request this Honorable House to approve two virements totaling N16.8bn for priority capital and recurrent expenditures. So far we have cash-backed N5bn, and the balance will be expended for critical interventions before year-end by God’s Grace.

The Draft 2016 Budget
Mr. Speaker, honorable members, I present to you the Budget of Sacrifice, Restoration and Change. This, in a nutshell, is the thrust of the 2016 budget: sacrifice by the political and public service elite, to restore the fundamental purpose of government in empowering people to change their lives for the better. A better future grounded in hope and optimism.

Change in the way government works and in the orientation of the public service is a basic expectation of the masses who elected us to serve them. Some of our citizens have been so battered by hardship amidst the wastefulness of the elite that they believe change means the doling out of cash to them as the politics of yesteryears prescribed. As a party of change, the APC does not regard poverty as a condition to be celebrated or exploited, but as something to be tackled in a way that empowers and dignifies people. This philosophy is being pursued with single-minded determination in this state starting with this budget.

Thus pro-poor programmes are at the heart of the 2016 Budget proposals, which reflect a move away from solely funding the running of government of a few to providing infrastructure and services to millions of citizens. The budget proposals restore the minimum of 60:40 ratio in favour of capital expenditure. This is in keeping with our agenda to expand access to Education, Healthcare, Jobs and Security. Our investments in infrastructure and interventions in school feeding, planting of economic trees, and waste collection, are expected to create 200,000 direct and indirect jobs amongst youths, women and other vulnerable groups.

Following the town hall meeting and other public consultations, we have revised upwards the capital estimates to accommodate projects like the reconstruction of the collapsed dam in Birnin-Gwari, clearance of inherited arrears on Zaria Water project and construction of access roads that will bring the Kagoro Hills tourism project closer to realization.

Mr. Speaker, honorable members, the 2016 revenue and expenditure estimates add up to N171.7 billion, comprising N109.3bn (64%) capital and N62.4 (36%) recurrent components. Our fiscal assumptions are based on a conservative benchmark crude oil price, at about US $39.50 per barrel.

Any excess revenues arising from oil price appreciation will be saved and accounted fully to this Honourable House for supplementary appropriation if needed, as required by the Constitution before spending.

With your accelerated passage of our fiscal responsibility, land administration and tax reform bills into law this year, we intend in 2016 to grow internally generated revenue such that it attains parity with federal statutory allocations. Our intention is to be paying all public service salaries from IGR by the end of 2016.

Permit me to spell out the details of the 2016 estimates as follows:

2016 BUDGET SIZE
Recurrent Budget 62,378,578,647
Capital Budget 109,353,099,067
Total Expenditure 171,731,677,714

Recurrent Revenue
Opening Balance 38,851,356,689
Internal Generated Revenue 45,773,866,438
Statutory Allocation 33,795,300,000

Capital Revenue
Value Added Tax 12,626,460,737

Internal Soft Loans and Credits 18,250,000,000
Internal Grants 12,447,480,841
External Soft Loans and Credits 6,807,924,241
External Grants 2,079,288,767
Sales of Public Assets and Companies -
Survey and demarcation of layouts Fees 100,000,000
Land Recertification and Regularization Fees 1,000,000,000

Recurrent Expenditure
Personnel Cost 30,699,417,332
Overhead Cost 31,679,161,315

Capital Expenditure

Economic Sector
Agriculture & Forestry 5,577,475,527.60
Commerce, Industry And Tourism 1,336,000,000.00
Works, Housing And Transport 31,352,898,071.95
Total: 38,266,373,599.55

Social Sector
Education 27,548,679,874.23
Health 6,661,683,063.73
Social Development 461,551,200.00
Total: 34,671,914,137.96

Regional Sector
Environment & Natural Resources 2,115,820,161.00
Water Resources 11,403,208,639.35
Total: 13,519,028,800.35


General Administration
Executive 19,812,695,408.71
Governance 2,155,942,120.00
Law And Justice 512,945,000.00
Legislature 414,200,000.01
Total: 22,895,782,528.71

Grand Total CAPITAL
109,353,099,066.57

Continue........
We have found increased resources for capital expenditure only by severe cost-cutting. In the 2016 estimates, we have decreased recurrent expenditure by 50% of the 2014 actuals. Government House expenses for 2016 are projected at N563.7 million, a 70% cut from the N2.1 billion that the previous government spent in 2014, the same year that they appropriated only N300m to Ministry of Health for capital projects.

The draft budget allocates resources in strict conformity with our prioritization of necessary interventions. We have therefore proposed the following spread of capital investments:
• Education with N27.5 bn for the renovation and reconstruction of schools; primary school feeding; uniforms and tablets for secondary school students; and provision of school furniture. The public has responded with enthusiasm to our free education policy by raising school enrolment rate by 50%. We have a duty of continuous investment in this sector to reduce current congestion and improve quality.

• Health with N6.6bn for 255 primary health care centres (one in each ward), modernized, equipped with items like ultrasound scans and other tools that can assist safe deliveries; upgrade of 23 rural hospitals and refitting of our general hospitals;

• Works, Transport and Housing to take N31bn for:

o Transport: A rapid rail transit system for Kaduna metropolis;

o Roads: Township Roads reconstruction within our major urban centres, and continuation of selected roads that link our many population and farming centres,

o Public Housing through PPP with interested developers packaged with mortgages to enable our civil servants and citizens purchase homes and pay over 15-20 years,

o Street lighting, in our major urban centres to improve security, encourage our economic activities at night, and enhance quality of life;

o The establishment of a Facilities Management Agency to professionalize and centralize the maintenance of government assets for efficiency and effectiveness;

o Rural feeder roads to connect our major agricultural and commercial settlements that build on the successes of the World Bank-financed RAMP 1 in the state;

• Water with N11.4bn for Zaria Water project arrears and current payments, waterworks rehabilitation projects in Ikara, Kafanchan, Kagoro, Kaduna, Kwoi, Manchok, Saminaka, the old Zaria plant and the ABU Samaru waterworks. Investments towards the completion of the Zaria Water Project will continue on a focused manner. RUWASSA will continue investments in rural water supply and rehabilitate all borehole projects that have gone into disrepair or needing maintenance. During 2016, we hope to restructure the water sector based on the Water Supply Bill that will be before this Honourable House to ensure the financial sustainability of the State Water Board.

• Agriculture with N5.5bn for:
o A price support system to guarantee minimum prices for our farmers at the beginning of the farming season for grains and other produce;

o Availability of low-interest loans for our farmers generally, and for MSMEs, rice production, commercial agriculture and the introduction of a private-sector driven statewide tractor hiring scheme;

• Other flagship capital investments:
o KADGIS: The Kaduna Geographic Information Services will develop and manage a centralized, electronic land registry to provide marketable titles for all land owners, including our farmers; while raising significant revenues from ground rents, land use charges and titling fees for the benefit of the State and Local Governments.

o Pampaida Scale-up: to replicate the success of the Pampaida Millennium Village in selected rural communities across the state in a phased manner, with the support of domestic and international donors;

o Kaduna Ring Road is a 90km toll road that will link the Eastern and Western sectors of Kaduna from behind Rigasa and across River Kaduna beyond Millennium City. The project is intended to be a PPP and discussions have advanced with domestic and international firms to begin construction in 2016. The amount in the budget is for feasibility studies and engineering designs plus equity contribution for the project’s take-off.

o Kaduna Sports Academy: In order to provide avenues to engage our youths and develop talent in sports, we plan to establish a Sports Academy in the State. Already, the site for the Academy has been identified along Kaduna-Abuja Road in Kagarko Local Government. A provision of N30,000,000 has been made in the 2016 budget for planning and preliminary design of the Academy with the expectation that construction will begin in the 2017 financial year.

o Comprehensive Security Interventions in partnership with neighbouring states to confront cattle rustling, kidnapping and the remnants of terrorism and violence afflicting our region;

o Textile Revival is a key ambition of the APC administration. It is a multi-state and intergovernmental effort aimed at debottlenecking the Cotton-Textile-Garment value chain. We are investing to support revival of cotton production and organizing our tailors with the schools’ uniform program as pilot. In cooperation with the federal government, intend to work round the clock to get the Gurara and Kudenda electric power projects completed and put into use in 2016,

o Climate Change Interventions, Shelter Belt and Tree Planting programme entails the planting of hundreds of kilometers of desert-resistant economic trees along our borders with Bauchi, Kano, Katsina, Zamfara and Niger States, while flagging off a statewide plan to plant 10 million trees before May 2019 by God’s Grace. This tree planting program will target 50 urban and rural women from each ward in the same manner we engaged 6,500 women and youths to clean up Kaduna, Zaria and Kafanchan metropolitan areas in October 2015.

o Accelerated Computerization of our Courts: The Kaduna State Judiciary is among the most respected for its transparency and efficiency, particularly in the settlement of commercial disputes. We intend to support the efforts of the Chief Judge with a program to computerize and digitize case management, record of proceedings and access to case law and precedents in Kaduna State courts.

• Cost-Cutting: In the 2016 estimates, we have decreased recurrent expenditure by 50% of the 2014 actuals. We have demanded sacrifice, and political appointees will follow the lead of the Deputy Governor and I by taking pay cuts. We shall be reducing Duty Tour Allowances and Estacode rates by 25% across the board. In the public service, there will be no automatic annual salary increments in 2016. There is no alternative to belt-tightening within government if government is to avoid becoming a parasite, and its functionaries being perceived as such by society.

• Productive and Effective Recurrent Spending: The budget proposals make room for the discharge of our recurrent obligations. We have made provisions for timely repayment of domestic and foreign debt; enhanced funding of our Contributory Pension Scheme and the Retirement Benefits Redemption Fund, and the clearance of vetted and accrued gratuities. We will undertake a review of pension payments on the Pay-As-You-Go system and recommend legislation to streamline and rebalance outlays to achieve fairness and equity such that all pensioners, not a few, have a pension they can live on for their past services to the State and country.

• Internally-Generated Revenues: In basing our revenue estimates on sub-$40 oil, we are mindful that this moment of potential fiscal peril is precisely the time for a state like ours to get serious about generating and collecting more internal revenue. Mr. Speaker, honorable members, with your support we shall be forwarding legislation to create the Kaduna State Internal Revenue Service to collect all tax revenues in the state. It is a matter of survival that we succeed in ensuring that we pay our bills with what we raise, and have a government whose size and cost we can afford.

Our Moral Compass
In promoting the public good, we shall not create clusters of entitlement but will encourage a society of empowered initiative. Our programme is structured to ensure that poverty does not stifle a child’s ability to gain decent basic education or kill a pregnant mother during childbirth, and that young people have the skills and access to finance to actualize their agency in creating jobs or in doing well where they are employed. We seek to reduce the possibility that pregnancy becomes a multiple, sometimes fatal ordeal for father, mother and infant. We seek to stand by the hardworking and the honest, to promote initiative and to reward merit without religious or ethnic preference.

This is our first budget. We look forward to early passage so that we can implement it to make change real in the lives of our people.

Mr. Speaker, honorable members, I wish to acknowledge and appreciate the kind cooperation of the leadership and membership of the Kaduna State House of Assembly. We salute the efforts of the Chief Judge in the remaking and development of our judiciary. We should continue to strengthen the partnership in the service of our people.

On behalf of my colleagues in the Executive Branch of Kaduna State government, we thank our people most profoundly. We thank the citizens of Kaduna State for believing enough in us to vote for us in March and April this year. We are grateful for the opportunity to serve, while appreciating them for their patience and perseverance. We promise to do our best or die trying. Our people deserve nothing less.

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

Nasir Ahmad El-Rufai, OFR
Governor of Kaduna State

Soundly impressive budget and one those who know him will expect El Rufai to implement to a very high efficiency percentage. I praise the 'change' agitation that has now made it possible for Nigerians to see the likes of El Rufai leading Nigerians States. My only regret is that Ribadu, another pro-people public servant, effed himself up when this would have being the perfect government, even a match made in heaven, under which he can showcase his talent to the benefit of Nigeria.

We have found increased resources for capital expenditure only by severe cost-cutting. In the 2016 estimates, we have decreased recurrent expenditure by 50% of the 2014 actuals. Government House expenses for 2016 are projected at N563.7 million, a 70% cut from the N2.1 billion that the previous government spent in 2014, the same year that they appropriated only N300m to Ministry of Health for capital projects.

El-rufai should be rated one of the best governor in nigeria. He incredibly slashed down recurrent expenditure to just 40% while capital has a whooping 60%. Many governors can't do that, his priority on education is reflected in the budget too. Ride on sir, you will be remembered for your good works.

Hmmmmmmm

See budget!
Budget of hope from time-tested school of the progressives.
A simplified budget meant for easy appraisal.
A cost cutting budget to provide more for the long neglected masses under the PDP wasteful years.

Whenever I see Rufai I remember the adage that bad association spoils good habit.
It means one can never attain his destined goal under the roof of a 'killer' party.

Rufai, it's high time you held thanksgiving for being rescued by Allah.
Allah is a God of miracle, indeed!

Sai godiya walhi Allah ya taimaki Mallam

Elrufai seriously means business. I wish him and his team success.

I'm impressed by the breakdown of this budget, and there's just something about this man's determination that makes me feel strongly that he will be able to achieve much of this. I wish Kaduna state the best.