Dr Mohd Sagagi - Abuja Dialogue-budget.pptx

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3/26/12 Budget Forum

2011 Budget Dialogue

Analysis of Kano State Government Budget

Budget Forum 11


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Part 1: over-view of Budget 2011

2011 Budget of Continuity and partofKano State Road Map forDevelopment (KSRD)

Budget Forum 22


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Over-View (Contd.)

2010 2011

110. 69Billion

109.47Billion

Approx 1% less

Budget Forum 33


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Over-view contd.

Composition:

Recurrent expenditure N50.955billion (46.5%)

[personnel cost: 27.4b(53.7%). Overheads 20.35b (39.9%) andCRC 3.2b (6.

Capital expenditure N58.52billion (53.5%)

Budget Forum 44


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Over-view contd.

sector Capital allocation

Land and Physical planning 19.3%

Works and Housing 17.9%

Budget and Planning 11.7%

Education 11.3%Agriculture and Natural Resources 10.9%

Rural and Community Development 7.7%

Health 6.1%

Environment and Sanitation 3.5%

Water Resources 3.0%

Higher Education 2.0%

Budget Forum 55


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Over view contd.

Education responsible for:

18% of overhead costs

44.5% of state-wide personnel costs Health Sector accounts for:

3.6% of overheads

25.6% of personnel costs

Water resources: 5% of overheads

Budget Forum 66


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Over-view contd.

Budget Finance

Recurrent revenue : N84.59b of

which IGR is N17b or 20.5%. Is thisfeasible?

Capital receipts : N24.9b of

which: grants N9.3b

loans N1.4b (domestic or

foreign ?) Budget Forum 77


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Over view contd.

is 2011 budget different? Is ittraditional

Budget Forum 88


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General features of State Budgets

1. Sources of Finance: IGR Vs

Federation Accounts. 2. Composition of Budgets:

Recurrent Vs Capital Costs

3. Budget Performance 4. Budget Impact

Budget Forum 99


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The issue: closing thebudget gaps

Internal Resource Generation

External Resource Generation

Resource Utilization

Budget Forum 1010


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Total Revenue..

I. Federation Account

Stat Allocation VAT

Excess crude- now Sovereign Wealth

FundII. IGR

III. OtherBudget Forum 1111


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IGR: today

Revenue N billion Remarks

Consolidated 57.55 51.99% of revised estimates

a. Federation accountb. IGR

49.847.71

IGR is 13.4% of consolidatedrevenue.

Budget Forum 1212


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Government Revenues: recent past

Year 2003 2004 2005 2006 2007 2008 2009*

InternallyGenerated Revenue (NBillion)

3.079 4.418 4.727 7.778 6.091 8.300 5.730

Total Revenue (NBillion)

22.782 31.817 37.910 47.865 39.615 70.720 43.696

IGR rate of

change %

- 43.5% 6.99% 64.54% -17.23% 36.27% -31.00%

IGR as % TotalRevenue

13.5% 13.9% 12.6% 16.25% 15.38% 11.70% 13.00%

Budget Forum 1313


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Recent past:

Total Revenues: (2003-2009) N294.4billion of which:

IGR = N40.123 billion (14%) and FA = N254.277 billion (86%)

(Compare: Lagos-63%, Sokoto-47%,

Ogun-28% and Ondo 16%. Nationalaverage in 2008 approx 15%)

Budget Forum 1414


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IGR: 1990s

Year 1994 1995 1996 1997 1998

Total revenues

(Naira Billion)

1.6 2.2 2.8 3.2 4.7

IGR 0.205 0.457 0.352 0.599 0.603

IGR as % of TR 13% 17% 13% 19% 13%

Budget Forum 1515


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Government Revenues Contd.

Budget Forum 1616


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Whats common?

IGR small and erratic

13% of RR today 11-16% 2003-2009

13-19% 1994-1998

Meaning: Nothing has changed?

Budget Forum 1717


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Government Revenues contd.

Budget Forum 1818


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personnel and overheadcosts:2003-2009

Year 2003 2004 2005 2006 2007 2008 2009*

IGR 3.079 4.418 4.727 7.778 6.091 8.300 5.730

Personnel

Cost

6.164 6.534 9.191 9.550 11.593 - 13.113

Overhead

Costs

7.088 7.305 12.084 17.654 13.079 - 13.523

RecurrentCosts 13.252 13.839 21.275 27.203 24.672 34.76 26.636

IGR/Personn

el

49.9% 67.6% 51.4% 81.4% 52.5% - 46.7%

IGR/Overhea

ds

43.4% 60.5% 39.1% 44.1% 46.6% - 42.4%

IGR/Recurre

nt

23.2% 31.9% 22.2% 28.6% 24.7% 23.88% 21.5%

Budget Forum 1919


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IGR, Personnel andOverhead costs

Budget Forum 2020


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IGR and Costs

2009: IGR =N5.7b, Personnel CostN13b and Overheads (fuellingvehicles, meals and refreshments

etc) N13.5B 2003-2007:

58.25% of personnel costs OR

46% of overhead costs OR

25% of Recurrent expenditure of the

State. Budget Forum 2121


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Four issues on IGR

I. The KSBIR: collects 51% of IGR,employs 542 people, pays approxN300 m and now made idle by

II. The Revenue Contractors:agreement not transparent,collection costly, operation has no

lasting impact on service deliveryand does not alter revenue profile.

III. The KN public and tax-payment:

rate of voluntary compliance: 6%Budget Forum 2222


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What to do:

I. BIR: build capacity, professionalize& mechanize, build integrity

II. Revenue Law 2010: implement tomake BIR autonomous

III. Public: inform, dialogue-to improvevoluntary compliance

I. Govt. : rebuild social/fiscal contract,

enforce tax laws and imposeBudget Forum 2323


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Challenge 2: reducingwasteful spending

.

Budget Forum 2424


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Composition of budgets

Item/year 2003 2004 2005 2006 2007 2008 2009* Total

Total Budget (Billion)

18.795 19.404 36.528 44.632 41.126 86.7 44.437 291.62

Recurrent 13.252 13.839 21.275 27.204 24.672 34.8 26.637 161.68

%of Total 71% 71% 58% 61% 60% 40% 60% 55.44%

Capital 5.543 5.565 15.253 17.428 16.454 51.9 17.801 129.94

%Total 29% 29% 42% 39% 40% 60% 40% 44.56%

Budget Forum 2525


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Composition contd.

Budget Forum 2626


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Composition of budgets contd.

Budget Forum 2727


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Composition contd.

except for 2008, RecurrentExpenditure constitutes 58%-71% ofState Budgets.

therefore 29-42% of the budget isavailable for capital investment tobuild schools, hospitals, roads, dams

etc. This means for EVERY Naira 71K is

operational cost and 29k capital

investment.Budget Forum 2828


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Composition contd.

to illustrate: 2003-2007 totalspending was N160 billion of which:-

N58 billion (36%) overheads

N10 billion (6%) administration

N41 billion (26%)-personnel

N109 billion or 69% of budgets

N50 billion (31%) capital investment

Budget Forum 2929


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Composition contd.

A worrisome development:

five government units CabinetOffice, Office of Governor, Office ofHOS, SHoA are responsible forbetween 25% and 38% of state-widerecurrent costs.

The 5 units recurrent costs of N9.8billion (2009) exceed the capitalinvestment spending of 7 MDAs,

namely: Budget Forum 3030


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Composition contd.

water resources (N1.89 billion),

education (N471 million), higher education (N86million)

agriculture (N1.82 billion),

health (N1.29 billion),

rural and community development (N557 million)

and works and housing (N1.99 billion).

Similarly, the capital spending of education (N471million) and higher education (N86 million) was farbelow the recurrent costs for running the Governorsoffice (N1.221 billion) or the State House of

Assembly (N1.256 billion) in 2009Budget Forum 3131


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Broadening the resourcebase

The capital market (for capitalintensive, revenue yielding projects:Kano line, KASCO, Meat andAssociated Products, Kano Ginnery,Daula Hotel, Markets)

Development finance institutions

PPP

Budget Forum 3232


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.

Kano Line: N50m Credit Facility in1992 to boosts fleet of vehicles

Metro LGs: N50m to rebuild SabonGari, Rimi Markets.

Kaduna 2009: $21 m to build scienceschools

Many other States.

Budget Forum 3333


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Composition contd.

Will the 2011 budget be different?

IT MUST BE!

Budget Forum 3434


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Budget Performance

Are Budgets Implemented asIntended?

Budget Forum 3535


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Performance

Estimates: N457.611 billion

Actual : N286.365 billion

Variance : (N171.25 billion) Budget Performance Index

(overall) 62.6%

Score: Very Good!

Budget Forum 3636


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Performance contd.

However consider 2010 budget

Budget Forum 3737


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Performance contd.

actual revised Index

Capitalexpenditure

13.69 b 56.2 25%

Recurrentexpenditure

33.32 b 52.70 63%

All budget 47.01b 108.88 43%

PerformanceIndex

Budget Forum 3838


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Challenges..education

Primary + pre-primary JSS SSS

No of schools 5,024 847 347

No. of class rooms 22,924 4,746 3,203

Number usable 21,640 (94.4%) 4,499 (94.8%) 3,068 (95.8%)

-in need of major repair 18.3% (range:4.8-35%) 13.3% (0-27%) 19.7% (0-89%)

-with sufficient seating 35.5% (14-95%) 45.3% (23.5-100%) 52.5% (0-100%)

-with good blackboard 61.5% (37-95%) 73.9% (45.2-100%) 73.6% (25-100%)

Schools with no water 47.4% 25.9% 14.2%

Schools with no toilet 61.8% 32.1% 13.5%

Pupil-toilet ratio 200.6 85.6 68.5

Pupil-class room ratio 87 59 55

-range 49-246 (BGW-KNC) 27-126 KNC-KBT 22-132 (DGW-DALA)

Budget Forum 4040


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Challenges..contd.

Primary JSS SSS PRE-PRIMARY

All teachers 44,648 7,903 5,380 584

qualified 16,531 (37%) 6,239 (78.9%) 4,396 (82%) 207 (35.5%)

Pupil-teacher ratio

-all teachers 42 (21-102) 33 (13-67) 31 (14-53) 251 (40-3,594)

-qualified 114 (58-570) 42 (16-74) 39 (18-73) 710 (75-6,148)

Pupils 1,054,994 264,143 169,725 975,375

Budget Forum 4141


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Budget Estimates (2003-2010)

Year 2003 2004 2005 2006 2007 2008 2009 2010

Total Budget

(Billion N)

34.76 35.81 47.54 55.60 57.77 105.21 120.92 110.69

Education

(Billion N)*

4.28 4.06 3.25 8.18 10.22 14.04 23.73 24.37

Share in total

budget

12.3% 11.3% 6.8% 14.7% 17.7% 13.3% 19.6% 22.0%

Budget Forum 4242

u ge es ma es an


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u ge es ma es aneducation expenditure

2003-2010

Budget Forum 4343

uca on expen ure as


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uca on expen ure asof total estimates 2003-

2010

Budget Forum 4444


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Education: share in actual spending(2003-2009)

Year 2003 2004 2005 2006 2007 2008 2009 total

Total Budget

(Billion N)

14.48 18.55 36.53 44.63 41.12 86.62 44.44 286.4

Education

(Billion N)*

1.96 1.80 2.55 6.20 7.38 11.86 8.05 39.8

Share in total

budget

13.5% 9.69% 7.0% 13.9% 17.9% 13.7% 18.1% 14%

Budget Forum 4545


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Education: share in actual expenditure(2003-2009)

Budget Forum 4646


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Share in actual budget

Budget Forum 4747


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What is the budget spent on?

Budget Forum 4848


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Has the budget been faithfullyimplemented?

Budget Forum 4949


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Budget implementation

Budget Forum 5050


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Where are implementation gaps?

2003 2004 2005 2006 2007 2008 2009

estimates

(Billion N)

4.28 4.06 3.25 8.28 10.22 14.04 23.73

Actual (Billion

N)*

1.96 1.80 2.55 6.20 7.38 11.86 8.05

Variance

(Billion N)

2.32 2.26 0.70 2.08 2.84 2.18 15.68

Index % 45.79% 44.33% 78.46% 74.88% 72.21% 84.47% 33.9%

Budget Forum 5151


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Performance Index

Budget Forum 5252

0 2 4 6 8 10 12

0

2

4

6

8

10

12

Education Index %


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Performance of capital budget

Year 2003 2004 2005 2006 2007 2008 2009

Estimates 2.427 1.375 2.323 2.583 2.795 4.02 10.88

Actual 0.404 0.507 1.614 1.232 1.310 3.1 0.557

Performance 16.6% 36.9% 69.5% 47.7% 46.9% 77.1% 5.1%

Budget Forum 5353


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Growth rates: (2003-2004)

2003 2004 2005 2006 2007 2008 2009

Actual budget(State)

14.48 18.55 36.53 44.63 41.12 86.62 44.44

Growth 28.10% 96.9% 22.20% -7.9% 110.7% -48.7%

Budget: education 1.96 1.80 2.55 6.20 7.38 11.86 8.05

Growth 8.16% 41.67% 143.14% 19.03% 60.70% -32.6%

Capitalexpenditure:education

0.404 0.507 1.614 1.23 1.310 3.1 0.557

Growth 25.5% 218.3% -23.8% 6.5% 136.6% -82.3%

Budget Forum 5454


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3/26/12 Budget ForumBudget Forum 5555


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G l f t f hi h d ti


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General features of higher educationbudgets

2006 2007 2008 2009

State Budget 55.6 57.77 105.20 120.90

Higher Ed Budget 1.84 3.04 3.73 5.89

% of State Budget 3.3% 5.3% 3.5% 4.9%

Rate of change - 65.7% 22.7% 57.9%

Composition

Recurrent 1.21 (65.76) 2.23 (73.36%) 3.06 (82.04%) 4.63 (78.6%)

Capital 0.620 (34.1%) 0.806(26.5%) 0.670(18%) 1.26 (21.4%)

Performance

Budget estimates 1.84 3.04 3.73 5.89

Budget actual 1.59 2.19 4.08 3.40

Index 86% 72% 109.4% 57.7%

Capital estimates 0.628 0.806 0.67 1.26

Capital actual 0.610 0.212 0.690 0.860

Budget Forum 5858


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Performance.. contd

KUT 2003 2004 2005 2006 2007 2008 2009estimates N684m N80m N192.5 N450m N540m N249 N576m

actual N193m N76m N3.1m N510m N186.9m N350.7m N0.00

Index 28% 95% 1.6% 113% 35% 71% 0%

Kano Poly

Estimates N95m N175m N200m N315m

N75m N7.9m N142m N80m

78.9% 4.6% 71% 25.4%

Budget Forum 6060


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Health care challenges-Kano

Poverty Index >60

Ratio of Doctors to General Population 4/100,000 Pop

Population Density 509 persons/Sq Km

Fertility Rate 6.7

Deliveries in Health Facility 12.7%

Delivery by Health Professional 49.8%

*MMR 1,025/100,000 live birth

*IMR 114 per 1000 birth

*Measles Coverage 17.8%

*HIV prevalence 2.3%

*TB prevalence 6/10,000 pop /year

Budget Forum 6161

H lth t b d t ti t 2003


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Health sector budget estimates 2003-2010

Year 2003 2004 2005 2006 2007 2008 2009 2010

Total Budget(Billion N)

34.76 35.81 47.54 55.60 57.77 105.21 120.92 110.69

Health (BillionN)*

0.632 0.782 1.301 3.350 3.43 5.77 9.11 8.873

Share in totalbudget

16.8% 2.2% 2.7% 6.0% 5.9% 5.50% 7.5% 8.0%

Budget Forum 6262


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Budget estimates: health sector

Budget Forum 6363


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Capital /budget ratio

Budget Forum 6464


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Health sector, actual spending

Year 2003 2004 2005 2006 2007 2008 2009 2010

Total Budget

(Billion N)

14.48 18.55 36.53 44.63 41.12 86.62 44.44 47.01

Health (Billion

N)*

0.320 0.649 0.844 2.46 4.35 5.37 4.432 7.02

Share in total

budget

2.2% 3.5% 2.3% 5.5% 10.6% 6.2% 9.7% 14.9%

Budget Forum 6565


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How is budget spent?

Year 2003 2004 2005 2006 2007 2008 2009 2010

Total Budget

(Billion N)

0.320 0.649 0.844 2.46 4.35 5.37 4.432 7.01

Recurrent

(BN)

0.145 0.108 0.219 2.199 3.448 4.081 3.139 5.577

Capital (BN) 0.175 0.541 0.625 0.261 0.902 1.289 1.293 1.439

Share of

Capital %

54.7% 83.4% 74.1% 10.6% 20.7% 24.0% 29.2% 20.5%

Budget Forum 6666


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Capital-recurrent expenditure

Budget Forum 6767


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Budget performance

Year 2003 2004 2005 2006 2007 2008 2009

estimates

(Billion N)

0.632 0.782 1.301 3.350 3.43 5.77 9.11

Actual (Billion

N)*

0.320 0.649 0.844 2.46 4.35 5.37 4.43

Variance

(Billion N)

0.312 0.133 0.457 0.890 -0.92 0.40 4.68

Index % 50.6% 83.00% 64.87% 73.4% 126.8% 93.07% 48.6%

Budget Forum 6868


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Performance: education Vs health

Budget Forum 7171


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Year 2003 2004 2005 2006 2007 2008 2009

Education Index%

16.6% 36.9% 69.5% 47.7% 46.9% 77.1% 5.1%

Health Index % 50.6% 83.00% 64.87% 73.4% 126.8% 93.07% 48.6%

Budget Forum 7272


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Budget per capita: key sectors

2006 2007 2008 2009 %change

education 625.6 753.1 1,186 774 23.7%

Health 258.9 443.9 537 426.2 64.62%

agriculture 648.4 284.7 453.0 359.6 -44.5%

Water resources 95.7 318.4 401.0 278.8 191%

W&H 97.9 383.7 637 472 382%

LPP 203.2 116.3 828.0 733.7 261%

Budget Forum 7373

d i


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Budget per capita

Budget Forum 7474


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Budget per capita: key sectors

Documents

Dr Mohd Sagagi - Abuja Dialogue-budget.pptx