Honourable Members.
As is customary, it is important to express my appreciation to this honourable House for the opportunity to make this presentation today. As an elected Governor, I consider myself and, indeed, the State blessed by the candour and civility with which this House conducts its business. It is one that makes for unabridged development and I continue to count on this strong partnership as we strive to build a Stronger Delta standing on the tripod of Prosperity, Peace and Progress.
2. I will begin by saying that I am presenting this budget from a position of cautious optimism. Several reasons account for this.
• Beginning with recent trends in the oil sector, the mainstay of the national economy, there are major policy issues which face the country, not only in this new budget year, but over the medium term, which will impact significantly on politics and governance at all levels of Government.
• Although the global price of oil remains relatively stable at about $57 per barrel, it is still low and under the federal budget benchmark of $60. Matched against the fluctuating oil production levels, which, in recent months, dropped to as low as 1.78mbpd as against the projected 2.18mbpd, there is serious cause for concern.
• Coupled with the commencement of the deduction at source of the Bail Out Funds to the States by the Federal Government, we are faced with the prospects of continual fiscal adjustments that will doubtless be challenging and problematic.
• Although all available indices project a positive national economic outlook in 2020, the cost of governance at all levels of government is at the same time expected to rise sharply with the implementation of the new minimum wage.
• The new VAT regime of 7.5%, designed to shore up the national revenue, more than likely, will not induce any dramatic changes in terms of the net gain to the fiscal revenue as the anticipated increase will largely be offset by the attendant rise in the cost of goods and services as well as the new minimum wage.
• While the various reforms and fiscal adjustments of the last four years of this administration have placed Delta State on a much more secure and sustained growth trajectory, our GDP is still dominated by the oil and gas sector notwithstanding significant incremental outputs from the social services and agriculture sectors.
• The pension liability of the State remains onerous and continues to exert a huge toll on our finances.
• Private investment is still hampered by environmental factors, notably high interest rates, macro-economic instability and security concerns.
3. Given the above scenario, the 2020 budget proposals, the first in the second tenure of this administration, is a critical budget and even if we focus on one objective, that of achieving stability in governance, it is one requiring deep introspection and public understanding. The broad strategy of the budget, therefore, is to:
i. Achieve fiscal stability and promote accountability as imperatives for sustained economic growth;
ii. Prioritise efficiency in expenditure through stringent control on non-productive expenditure, judicious allocation of resources and cost effectiveness of project delivery;
iii. Accelerate rural-urban integration and urban renewal through roads and flood control infrastructure, markets development, housing and sanitation;
iv. Grow the non-oil sectors to produce an economy that is truly diversified, self-reliant, resilient and that can withstand external shocks;
v. Continue to pursue Health for all Deltans (HeFAD) in line with the Universal Health Coverage mandate of the United Nations Sustainable Development Goals;
vi. Increase investment in youth entrepreneurship development programmes as well as technical/vocational education designed to foster a new generation of wealth creators, business leaders and managers;
vii. Deepen and strengthen our social investment programmes for improved protection of the poor and vulnerable segments of the society;
viii. Escalate our peace building initiatives to secure our oil and gas installations, ensure public safety and engender an investor-friendly climate;
ix. Boost revenue through widening of the tax base and administration of a functional tax regime that is fair, just and equitable; and
x. A more responsive and efficient public sector.
KEEPING THE MOMENTUM GOING
4. As usual, I will precede my presentation this morning by acquainting you with some important developments in our State since I was sworn into office for a second term.
The Future of Asaba Airport
5. We achieved another breakthrough with Asaba Airport in August this year with the approval by the State Executive Council for the concessioning of the Airport to a consortium of investors led by Menzes Aviation, a world-renowned aviation company. It is the first full brownfield airport concession in Africa and a hybrid arrangement covering further development and management of the airport.
6. Key highlights of the transaction are as follows:
- Menzies Aviation to manage the Airport and provide airline support services;
- First Investment Development. Company to build Radisson Blu Hotel and Convention Centre at the Airport;
- Air Peace to operate as Anchor Airline and to build and operate a commercial Maintenance, Repair and Overhaul Facility;
- Rainoil to operate the Tank Farm and provide Jet A1 Fuel for Aircraft;
- Cybernatics to develop the Cargo Terminal and Logistics Centre;
- Quorum Aviation to build private jets terminal and operate helicopter services for the oil and gas industry; and
- Arbico Construction company to develop and manage the business park.
7. The concession is, in the first instance, for a period of 30 years with annual concession fee of N100m payable to the Delta State Government, escalating by 10% every five years. There is also annual royalty of 2.5% of Gross Annual Revenue payable to the State. With over N28b expected to be pumped into the airport development by the concessionaire over the next three years, the benefits to the State in terms of employment opportunities, urban renewal and tourism potentials are enormous.
Kwale Industrial Park
8. As you are aware, I just returned from China where we held a Road Show for the proposed Kwale Industrial Park. It afforded the State Government delegation the opportunity to market the Park and our State to the Chinese business and investment community. So far, we have received expression of interest from companies willing to establish a glass factory, ceramics factory and an agro-allied industry for soya beans.
9. In a meeting with another group of investors in Nanjing, Jiangsu Province, a company with a 400-metric tonne capacity methanol plant indicated its readiness to immediately set up a plant at the Park. It was agreed that a team from the State would visit their factory within the next month while officials of the company are to come for a site visit immediately thereafter. The company is hopeful of moving their operations to Kwale Industrial Park within the first half of 2020.
10. To refresh our memories, the Kwale Industrial Park is designed to profit from the competitive advantage of the State in the gas and energy sector. Located along the Ughelli-Asaba road, the Park is envisaged to be one of Nigeria’s biggest location for gas and energy intensive manufacturing, encompassing ceramics, rubber, methanol, pulp and paper. It is a mix-use industrial/business location featuring industrial, commercial, administrative and residential sections in the Park. Heavy and light manufacturing activities will be in the industrial sector while schools, shopping centres, banking halls and recreation facilities will be concentrated in the commercial sector.
11. Once fully operational, the Kwale Industrial Park is expected to be a major driver of this administration’s industrialisation agenda and provide immense employment opportunities for our people.
Agro-Industrial Park, Aboh-Ogwashi-Uku
12. In line with the agricultural transformation and wealth creation objectives of this administration, the State Government is implementing a public-private partnership for the establishment and operation of an Agro-Industrial Park at Aboh Ogwashi-Uku in partnership with Mirai Technologies Ltd as technical partner and anchor investor, and Norsworthy Investments Ltd. as participating investor.
13. Following rigorous project appraisal and the completion of all design-phase activities, the project development is currently at financial closure, preparatory to the construction phase. When fully established, the Agro-Industrial Park will be the principal catalyst of the agricultural commodity value chains, create thousands of new jobs and multiply wealth for the teeming youth and agricultural population of the State.
14. In the 2020 fiscal year, the construction and development of the Agro-Industrial Park will be prioritized among the crucial public investments of the State Government.
Opening the Riverine Communities through Road Infrastructure
15. On July 12, this year, this administration recorded a major feat with the commissioning by Vice-President Yemi Osinbajo of roads in the hitherto neglected riverine communities, notably the 20.29 km Obotobo 1- Obotobo 11 – Sokebolou – Yokri, Township roads (Phase 2) and the Main Axial Road at Okerenkoko in Warri South West Local Government Area. In the case of the Obotobo 1 -Obotobo 11 – Sokebolou – Yokri road, it is not just the length of the road that makes this project unique; it is that the road is located right beside the Atlantic Ocean with all the human, material, ecological and financial implications that this difficult terrain presents.
16. Also, this major access road in Ogulagha Kingdom cuts across four communities that contribute a large chunk of crude oil to the national economy as well as right through the various oil production companies and the oil pipelines manifolds along the road. It goes without saying, therefore, that this road would ease the movement of people, goods and services within the communities as well as improve their socio-economic life.
17. Similar road projects undertaken by this administration in riverine communities include the paving of Burutu Township roads, on-going construction of Rigid Concrete Pavement Road at Ogidigben, construction of Access Road to Nigeria Maritime University Okerenkoko (Kurutie Campus), construction of Oporoza Palace Road in Gbaramatu Kingdom, all in Warri South West Local Government Area, as well as the Construction of Ogulagha/Youbebe/Biniebiama Road, in Burutu Local Government Area.
18. These projects demonstrate our commitment to bring development to every part of the State, no matter how remote. Furthermore, they have greatly helped to ensure peace in the State, which bodes well for uninterrupted oil production and the health of the national economy. As I remarked during the June 12 commissioning ceremony, “it is a triumph of will over danger, hard work over resignation and determination over adversity.”
Warri, Uvwie and Environs Storm Water Drainage Project
19. The State Government has commenced the process of constructing a massive storm water drainage project in Warri, Uvwie and Environs to tackle the recurring problem of flooding and environmental degradation in the area. Before now we appointed a consultant, who, working with a Government-appointed Committee studied the problem of perennial flooding/erosion in Warri, Uvwie and Environs, and drew up a Master Plan to tackle the problem.
20. Given the massive nature of the project and the huge costs involved, the State Government has decided to execute it in phases. The first and second phases, expected to commence this dry season, will cover the high-risk areas within the Warri metropolis. It will involve desilting of natural drainage channels (some of them will be dredged), demolition and reconstruction of undersized drains and construction of new water channels. We are currently processing the award of contracts for the first two phases worth N9.5b Hopefully, we should be able to complete the project in good time so that our people can have some relief when the rains come.
School Census, Audit and Mapping
21. Through the Ministry of Basic and Secondary Education, we have commissioned a comprehensive study of all public primary and secondary schools in Delta State. This study is being carried out by a renowned international research company to assess the current state of our primary and secondary schools, especially in terms of physical infrastructure, manpower distribution and curriculum development. The outcome of this study will guide future government intervention and the construction of infrastructural facilities in our primary and secondary schools.
REVIEW OF THE YEAR 2019 BUDGET
22. I will now begin my presentation by reviewing the performance of the 2019 Budget.
COMPONENTS OF THE 2019 BUDGET
23. During the 2019 fiscal year, Government budgeted the sum of three hundred and ninety billion, three hundred and seventy-eight million, six hundred and seventy-one thousand, one hundred and seventy-eight naira (N390,378,671,178). This comprised One Hundred and Fifty Seven Billion, Ninety Six Million, Twenty Nine Thousand, Two Hundred and Fifty Three Naira (N157,096,029,253) for recurrent expenditure, and Two Hundred and Thirty Three Billion, Two Hundred and Eighty Two Million, Six Hundred and Forty One Thousand, Nine Hundred and Twenty Five Naira (N233,282,641,925) for capital expenditure.
24. The main sources of funds for the 2019 budget:
Revenue Sources Approved Budget 2019 % Approved
Internally Generated Revenue 73,410,363,076 18.80
Statutory Allocation Including Mineral Revenue Derivation 217,894,748,193 55.82
Value Added Tax 13,051,179,721 3.34
Other Capital Receipts/Miscellaneous 86,022,380,188 22.04
Total Revenue N 390,378,671,178 100
2019 REVENUE PERFORMANCE
DETAIL OF ITEM APPROVED BUDGET 2019 PROPORTIONATE BUDGET JAN - AUGUST, 2019 ACTUAL JAN - AUGUST, 2019 % PERF
Internally Generated Revenue 73,410,363,076 48,940,242,051 36,168,411,689 73.90
Statutory Allocation Including Mineral Rev. Derivation 217,894,748,193 145,263,165,462 151,224,187,289 104.10
Value Added Tax 13,051,179,721 8,700,786,481 10,025,753,736 115.23
Other Capital Receipts/Miscellaneous 86,022,380,188 57,348,253,459 41,138,071,875 71.73
TOTAL REVENUE 390,378,671,178 260,252,447,452 238,556,424,588 91.66
25. Despite some economic hiccups at the national and sub-national levels, the State was able to record improved performance in statutory allocation and Value Added Tax. The Statutory Allocation in the first eight months of the year brought in the sum of one hundred and fifty-one billion, two hundred and twenty-four million, one hundred and eighty seven thousand, two hundred and eighty nine naira only (N151,224,187,289) as against the proportionate sum of one hundred and forty-five billion, two hundred and sixty-three million, one hundred and sixty-five thousand, two hundred and eighty-nine naira (N145,263,165,462) amounting to 104% performance.
26. From Value Added Tax, we received ten billion, twenty-five million, seven hundred and fifty-three thousand, seven hundred and thirty-six naira (N10,025,753,736) against the proportionate budget of eight billion, seven hundred million, seven hundred and eighty-six thousand, four hundred and eighty-one naira (N8,700,786,481) or 115%.
27. As at August, Internally Generated Revenue has raked in the sum of thirty-six billion, one hundred and sixty-eight million, four hundred and eleven thousand, six hundred and eighty-nine naira (N36,168,411,689), amounting to 74% budget performance. This relatively good performance in all revenue streams could be attributed to increased oil sales and improved performance of our revenue collection efforts.
28. Our overall revenue performance for the first eight months of the year (January to August), 2019 amounted to two hundred and thirty-eight billion, five hundred and fifty-six million, four hundred and twenty-four thousand, five hundred and eighty-eight naira (N238,556,424,588) as against the proportionate approved budget of two hundred and sixty billion, two hundred and fifty-two million, four hundred and forty-seven thousand, four hundred and fifty-two naira (N260,252,447,452), which is approximately 91.66% performance.
2019 RECURRENT EXPENDITURE PERFORMANCE
Recurrent Expenditure Approved Budget 2019 Proportionate Budget Jan - August, 2019 Actual Jan - August, 2019 % Performance
Personnel Costs 66,165,356,710 44,110,237,807 52,672,774,467 119.41
Overhead Costs / Consolidated Revenue Fund Charges 90,930,672,543 60,620,448,362 65,863,716,264 108.65
TOTAL RECURRENT EXPENDITURE 157,096,029,253 104,730,686,169 118,536,490,731 113.18
29. The recurrent budget for year 2019 is one hundred and fifty-seven billion, ninety-six million, twenty nine thousand, two hundred and fifty three naira (N157,096,029,253) with eight months proportionate budget figure of one hundred and four billion, seven hundred and thirty million, six hundred and eighty six thousand, one hundred and sixty-nine naira (N104,730,686,169). The actual expenditure within the period under review is one hundred and eighteen billion, five hundred and thirty-six million, four hundred and ninety thousand, seven hundred and thirty-one naira (N118,536,490,731) or 113.18% budget performance.
30. One of the transactions that accounted for the robust performance is our resolve to clear all backlog of workers promotion arrears, some dating back to 2013. This accounts for the high personnel cost performance for the period under review.
31. Against an approved budget of sixty six billion, one hundred and sixty five million, three hundred and fifty six thousand, seven hundred and ten naira (N66,165,356,710), the sum of fifty two billion, six hundred and seventy two million, seven hundred and seventy four thousand, four hundred and sixty seven naira (N52,672,774,467) was spent on payment of salaries for the period January to August 2019.
32. Matched with the proportionate budget of forty-four billion, one hundred and ten million, two hundred and thirty-seven thousand, eight hundred and seven naira (N44,110,237,807), this accounts for a performance of approximately 120%.
33. In keeping with our desire to continue to motivate our workforce in order to elicit the highest level of productivity possible, Government has thus far cleared all historical arrears that have to do with workers’ salaries.
CAPITAL EXPENDITURE PERFORMANCE
Capital Expenditure Approved Budget 2019 Proportionate Budget Jan - August, 2019 Actual Jan - August, 2019 % Performance
Administration Sector 19,983,414,038 13,322,276,025 2,312,367,150 17.36
Economic Sector 131,064,846,283 87,376,564,189 107,731,419,561 123.30
Law & Justice Sector 3,445,848,935 2,297,232,623 455,449,145 19.83
Regional Sector 31,000,000,000 20,666,666,667 22,230,385,251 107.57
Social Sector 44,788,532,669 29,859,021,779 6,721,066,511 22.51
Contingency Fund 3,000,000,000 2,000,000,000 - -
CAPITAL EXPENDITURE 233,282,641,925 155,521,761,283 139,450,687,617 89.67
NOTE: Actual expenditure for Contingency Fund is already reported across the sectors, as the Contingency Fund is not a Vote of Charge.
34. Our capital budget in 2019 was two hundred and thirty-three billion, two hundred and eighty-two million, six hundred and forty-one thousand, nine hundred and twenty-five naira (N233,282,641,925). This gives a proportionate figure of one hundred and fifty-five billion, five hundred and twenty-one million, seven hundred and sixty one thousand, two hundred and eighty-three naira (N155,521,761,283) for the period, January to August 2019.
35. Actual payment for the period stood at one hundred and thirty-nine billion, four hundred and fifty million, six hundred and eighty-seven thousand, six hundred and seventeen naira (N139,450,687,617) which represents a performance of 89.67 %. Considerable increase is expected in the level of expenditure in the fourth quarter of the year due to the volume of civil work that will pick up from the month of October as we take full advantage of the dry season.
YEAR 2020 BUDGET
36. Mr. Speaker, Honourable members, it is my pleasure to present to this honourable House the 2020 Budget Proposals, christened “Budget of Sustained Development.”
37. The 2020 revenue and expenditure estimates are based on a Medium-Term Expenditure Framework (MTEF), which projected a $57 benchmark price for crude oil at production levels of 2.18 million barrels per day, 10.36% annual inflation, 3.60% projected real GDP growth and an exchange rate of N305 to the US Dollar.
38. The proposed size of the year 2020 Budget is three hundred and eighty-nine billion, one hundred and ninety million, seven hundred and ninety-nine thousand, three hundred and sixty-two naira (N389,190,799,362). The Recurrent Expenditure is one hundred and seventy-one billion, five hundred and forty-nine million, three hundred and forty-eight thousand, three hundred and fifteen naira (N171,549,384,315) while the provision for Capital Expenditure is two hundred and seventeen billion, six hundred and forty-one million, four hundred and fifteen thousand and forty-seven naira (N217,641,415,047). This represents 44.08% Recurrent Expenditure and 55.92% Capital Expenditure, consistent with our agenda to spend more on projects and programmes that will impact directly on the socio-economic well-being of our people.
39. The total proposed budget size for 2020 dropped by N1.18bn from the budget figure of 2019.
SUMMARY OF THE 2020 DRAFT REVENUE AND EXPENDITURE ESTIMATES
RECURRENT REVENUE PROJECTION 2020
Revenue Detail Proposed Provision 2020 % Proposed
Internally Generated Revenue 71,012,876,590 18.25
Statutory Allocation Including Mineral Revenue Derivation 248,405,143,118 63.82
Value Added Tax 22,958,761,951 5.90
Other Capital Receipts/Miscellaneous 46,814,017,703 12.03
TOTAL REVENUE 389,190,799,362 100
RECURRENT EXPENDITURE ESTIMATES 2020
Recurrent Expenditure Details Proposed Provision 2020 % Proposed
Personnel Costs 83,959,405,755 48.94
Overhead Costs 60,221,051,369 35.11
Consolidated Revenue Fund Charges:
Statutory Emolument 467,230,932 0.27
Social Contribution 7,800,000,000 4.55
Social Benefit 5,008,000,000 2.92
Internal Debt Service - 0.00
Domestic Loan Repayment (Principal ) 6,667,696,259 3.89
External Loan Repayment 300,000,000 0.17
Grants and Contribution 7,126,000,000 4.15
Total Recurrent Expenditure 171,549,384,315 100
CAPITAL EXPENDITURE ESTIMATES 2020
40. The sum of N217,641,415,047 has been allocated for capital expenditure across sectors as follows:
Capital Expenditure Proposed Provision 2020 % Proposed
Administration Sector 12,374,527,400 5.69
Economic Sector 110,339,000,295 50.70
Law & Justice Sector 1,533,908,821 0.70
Regional Sector 43,714,320,016 20.09
Social Sector 46,679,658,515 21.45
Contingency Fund 3,000,000,000 1.38
TOTAL CAPITAL EXPENDITURE 217,641,415,047 100
SECTORAL HIGHLIGHTS
ROADS AND PHYSICAL INFRASTRUCTURE
41. I don’t think I need to say much about improving roads and physical infrastructure. We must continue with significant investments in this sector to connect our communities, renew our urban centres, boost commerce and provide a more civilised living environment for our people.
42. The sum of N84.54 billion is provided for the Ministry of Works in the 2020 fiscal year.
BUILDING A KNOWLEDGE ECONOMY
43. We intend to continue to reposition our educational system to equip our youth population with the skill set needed for this new world of rapid change and digital revolution. As you are aware, technical and vocational education has been our main policy thrust in this sector. During our first tenure, we completed the rehabilitation and equipping of the six technical colleges in the State. Accreditation of all trade subjects by the National Board for Technical Education (NBTE) was achieved in 2018 and plans are underway for the establishment of additional Technical Colleges in the remaining 19 Local Government Areas of the State.
44. The Ministry of Technical Education was recently created to consolidate the gains we have made and institutionalise technical/vocational education in our schools’ curricula. Part of the functions of the new Ministry include formulation of policies for technical education and management of technical colleges in the state. The new Ministry will also coordinate the accreditation of technical colleges and vocational centres, process the registration and licensing of vocational enterprise institutions, coordinate partnership and investment of technical colleges and vocational Centres in the State, as well as liaise with appropriate Ministries, Departments and Agencies in the implementation of technical and vocational education and training programmes in the State.
45. The sum of N31.6 billion is proposed for the education sector in the 2020 fiscal year.
DELIVERING QUALITY HEALTHCARE
46. Health is a right and quality healthcare delivery is a cardinal objective for government at all levels. This administration has remained passionate, deliberate and focused in its quest to formulate tangible and lasting policies and programmes for improving the health of all residents in the State. The overarching goal of my administration is to achieve Universal Health Coverage (UHC), by providing quality healthcare services that is readily accessible to all residents in the State irrespective of their status in the society and their residential location.
47. We are making steady progress in our implementation of the Universal Health Coverage being implemented and managed by the Delta State Contributory Health Commission. As at September 2019, the total number of the enrolees registered under the scheme was 657,436.
-- equity plan: 499,158;
- formal plan enrolees: 150,170,
- informal Plan: 8,108.
48. To boost informal sector registration, the Commission has deployed Community Based Liaison Officers (CBLOs) and supervisors across the State. Their main function is to implement a “compound to compound” advocacy about the benefits of participation in a health insurance scheme, adoption of better health seeking behaviours, uptake of better living standards and upfront prioritization of expenditure for health through payment of premium for health insurance.
49. There will be family discounts for group premium payment, and payments can be done in convenient instalments. Wealthy individuals and philanthropists in the area will be encouraged and supported to make premium contribution(s) on behalf of the poor and vulnerable in the various communities. Efforts are also being made to leverage on the implementation of the Basic Healthcare Provision Fund (BHCPF) to enhance the Informal Sector registration through the integration of the Basic Healthcare Provision Fund and the Delta State Contributory Health Scheme.
50. Our administration has also made significant progress in the upgrading of public healthcare facilities spread across the State. Through the efforts of the State Primary Healthcare Development Agency, the Ministry of Health and other State Government agencies, 107 Primary Healthcare Facilities and 63 General Hospitals have been fully functionalised to meet up the basic requirements of the Federal Ministry of Health for the implementation of the Basic Healthcare Provision Fund.
51. Through the “Access to Finance” programme, a PPP initiative between the Delta State Government, Bank of Industry and the Pharmaccess Foundation, to revitalize and operationalize defunct healthcare facilities in rural communities, healthcare services and the benefits of the State health insurance scheme have been extended to remote communities in Delta State with significant benefits already being recorded.
52. What this means is that a total of 395 public primary and secondary healthcare facilities including private healthcare facilities were inspected and accredited to provide healthcare services under the Delta State Contributory Health Scheme. The Commission (DSCHC) is also implementing a governance framework, an organizational structure and an elaborate ICT enabled operations tool for the scheme.
53. With the several initiatives through Public Private Partnerships, this administration is addressing the problem of “Brain Drain” in Nigeria by turning it around to a “Brain Gain” towards Delta State. Private sector participation in the Delta State healthcare space is being supported and encouraged with favourable incentives and a ready pool of patients under the Delta State Contributory Health Scheme.
54. We intend to have doctors and other healthcare service professionals, consulting at the various primary healthcare centres in Delta state on full time or scheduled visiting status to boost quality healthcare services across the State. The Delta State University Teaching Hospital Oghara, and the Asaba Specialist Hospital are currently being renovated and upgraded for specialized healthcare services that will boost medical tourism in Delta State. Meanwhile, special intervention programmes for HIV care, TB management, birth control activities and mental healthcare services are being planned for incorporation into the State Health Insurance programme for sustainability.
55. Let me also acknowledge the invaluable contributions of the 05 Initiative to healthcare delivery in the State. Headed by the Wife of the Governor, the Non-Government Organisation has constructed and equipped 12 Sickle Cell Clinics in the State, including a world class referral centre in Asaba. These clinics will boost healthcare services and other necessary social support for people living with the Sickle Cell Disorder not just in Delta State but from all over the country.
56. The sum of N9.7 billion is proposed for the health sector in the 2020 fiscal year.
ENERGY
57. Mr. Speaker, the availability of reliable power supply is a critical input to production of goods and services in the economy. Availability of power supply can also contribute to the improved living conditions of all households, especially in the rural areas. In this regard, this Government has continued to invest in power generation and distribution in order to support economic growth, promote employment creation and improve the living standards of the citizens.
58. In our first tenure, we provided electricity to more towns and villages than the number we met on ground. We shall continue to improve the tempo in order to enhance power supply to reach more towns and villages in the State. The target of this administration is to keep intervening in the provision of electricity infrastructure in both the urban and rural communities of the State to ensure the well-being of our people and promote socio-economic activities. In the medium and long term, the Government will seek alternative means of providing steady and sustainable electricity power supply to all Deltans.
59. The sum of N3.6 billion is proposed for the energy sector in the 2020 fiscal year.
WATER RESOURCES
60. To boost service delivery in the provision of potable water in the State, Government has proposed to spend N2.5b in the 2020 fiscal year.
61. We have domesticated state of emergency in the water sector (WASH) as declared by the Federal Government. We have also set up an inter-ministerial steering committee on water sanitation and hygiene to ensure effective implementation of the goals. The focal point of the state of emergency is to work towards ending open defecation in the State in no distant time.
AGRICULTURE
62. Our commitment to our farmers runs deep. One of the key elements of the agriculture-based job and wealth creation strategy of this administration is the market-oriented development of the commodity value chains. Within this context, the Delta State Foods Export Initiative was set up to link farmers and processors to domestic and export markets in order to ensure better prices and sustained higher incomes. The initiative started, on a pilot scale, with the production, packaging, branding, international certification and successful export of high quality garri to the United Kingdom.
63. Through this pilot initiative, this administration has demonstrated that it is achievable to reach high standards of food quality and export same to Nigeria diaspora markets across the world. Specifically, the initiative has attained four fundamental enablers of foods export namely;
- the creation of food quality assurance and verification mechanisms along the cassava-garri value chain;
- the establishment of food quality testing laboratory;
- the establishment of state-of-the-art garri packaging factory at Issele-Uku; and
- the existence of diaspora off takers of the high quality garri.
64. The immense impacts of the foods export project on job and wealth creation along the commodity value chain is evidenced by the initial direct and indirect economic benefits and incentives to cassava farmers, processors and logistics operators.
65. In the 2020 fiscal year, we will aim at consolidating the success of the pilot initiative to strengthen already established systems and upscale foods export. Efforts will be directed to cover more cassava processors, improve training of value chain operators, streamline the cassava supply chain, expand market off-take and enhance capacity utilization at the Issele-Uku packaging factory.
66. The sum of N2.0 billion is proposed for the agricultural sector in the 2020 fiscal year.
JOB CREATION
67. The faithful implementation of our job creation programmes in the last four years is ensuring a stronger and more resilient economy and better living conditions for Deltans. The impacts of these programmes, particularly the Skills Training and entrepreneurship Programme (STEP) and Youth Agricultural Entrepreneurs Programme (YAGEP), have been felt by various segments of Delta society – unemployed youths, workers, micro, small and medium enterprises, Persons with Disabilities (PwDs), farmers, traders and so on.
68. One remarkable social impact of the job creation programme is the mind-set shift, among youths, from government (salaried) employment to entrepreneurship and self-employment. Through the training and reorientation modules of STEP and YAGEP, the youths are imbibing the principles of skills acquisition and entrepreneurship as a viable employment option. They are now looking beyond and outside their academic certificates for employment and livelihoods, as owners and managers of skills-based enterprises.
69. The job creation programme is also impacting positively on the growth and development of Micro, Small and Medium Enterprises (MSMEs) sector in the state. By providing services as training centres, facilitators and mentors to the job creation programme, hundreds of small and medium enterprises have been stimulated and supported to upgrade their technical, entrepreneurial and managerial capacities, increase visibility/patronage and improve the quality of their services and achieve enterprise development.
70. In line with the goal of strengthening job and wealth creation, efforts will be devoted in the year 2020 towards consolidating on the impacts already achieved, upscaling the coverage and institutionalization. The sum of N1.5 Billion is proposed for the Job Creation Office in the 2020 fiscal year.
CONCLUSION
71. As I stated at the beginning of this presentation, there are challenges ahead, some domestic, some international. The best we can do is to prepare ourselves against any future “shocks” and their probable impact on the performance of the economy. The reduced size of the 2020 budget compared to last year’s budget is evidence of our continued commitment to fiscal prudence.
72. Towards this end, at least 70% of the provision from the budget envelopes (capital limits) are to fund the relevant budget lines for:
(i) certified jobs already listed, awaiting payment;
(ii) certified jobs yet to be listed for payment;
(iii) jobs executed awaiting certification at the MDAs;
(iv) contracts awarded which are currently being executed by the contractors.
73. The balance 30% is to be applied to very critical, essential and key capital projects with measurable socio-economic value. To support these efforts at fiscal prudence, we have intensified the implementation of the Integrated Payroll System across MDAs to automate personnel records and salaries’ payment process, with the goal of eliminating ghost workers.
74. I am happy to report that the credibility of our Government has continued to attract local and foreign investors, and Delta ranks very high on the Ease of Doing Business index today. Going forward, it is very important that we strengthen the partnership with the Federal Government and continue to support and promote micro and small businesses to expand the economy.
75. Let me now take few minutes to appreciate all the officials who, and institutions which worked tirelessly to put this budget together. Specifically, I thank the Ministries of Economic Planning and Finance, the Office of the Accountant-General, the Directorate of Government House and Protocol, and Chairman and members of the Internal Revenue Board.
76. I also express my gratitude to the Deputy Governor, Deacon Kingsley Burutu Otuaro, and the other members of the State Executive Council for their zeal and dedication. As is often the case, no Ministry, Department or Agency got all that they wanted. It is the very nature of budgeting where needs always exceed available resources.
77. That notwithstanding, I solicit the understanding and support of all MDAs to continue to cooperate with one another for the development of a Stronger Delta where prosperity, peace and progress reign. It is in that spirit of unity, cooperation and collective responsibility that we will be able to successfully tackle and overcome the challenges that confront us now and in the medium term.
78. It is on this note, Mr Speaker, that I present the 2020 Budget Proposals for debate and passage by this honourable House.
79. Thank you for your time and attention.
80. God bless Delta State.
81. God bless us all.
Office of the Governor
Government House
Asaba
October 2019.ADDRESS BY HIS EXCELLENCY, SENATOR, DR. IFEANYI OKOWA, GOVERNOR OF DELTA STATE, ON THE OCASSION OF THE PRESENTATION OF THE 2020 BUDGET PROPOSALS TO THE DELTA STATE HOUSE OF ASSEMBLY ON WEDNESDAY, NOVEMBER 06, 2019
Mr. Speaker,
Honourable Members.
As is customary, it is important to express my appreciation to this honourable House for the opportunity to make this presentation today. As an elected Governor, I consider myself and, indeed, the State blessed by the candour and civility with which this House conducts its business. It is one that makes for unabridged development and I continue to count on this strong partnership as we strive to build a Stronger Delta standing on the tripod of Prosperity, Peace and Progress.
2. I will begin by saying that I am presenting this budget from a position of cautious optimism. Several reasons account for this.
• Beginning with recent trends in the oil sector, the mainstay of the national economy, there are major policy issues which face the country, not only in this new budget year, but over the medium term, which will impact significantly on politics and governance at all levels of Government.
• Although the global price of oil remains relatively stable at about $57 per barrel, it is still low and under the federal budget benchmark of $60. Matched against the fluctuating oil production levels, which, in recent months, dropped to as low as 1.78mbpd as against the projected 2.18mbpd, there is serious cause for concern.
• Coupled with the commencement of the deduction at source of the Bail Out Funds to the States by the Federal Government, we are faced with the prospects of continual fiscal adjustments that will doubtless be challenging and problematic.
• Although all available indices project a positive national economic outlook in 2020, the cost of governance at all levels of government is at the same time expected to rise sharply with the implementation of the new minimum wage.
• The new VAT regime of 7.5%, designed to shore up the national revenue, more than likely, will not induce any dramatic changes in terms of the net gain to the fiscal revenue as the anticipated increase will largely be offset by the attendant rise in the cost of goods and services as well as the new minimum wage.
• While the various reforms and fiscal adjustments of the last four years of this administration have placed Delta State on a much more secure and sustained growth trajectory, our GDP is still dominated by the oil and gas sector notwithstanding significant incremental outputs from the social services and agriculture sectors.
• The pension liability of the State remains onerous and continues to exert a huge toll on our finances.
• Private investment is still hampered by environmental factors, notably high interest rates, macro-economic instability and security concerns.
3. Given the above scenario, the 2020 budget proposals, the first in the second tenure of this administration, is a critical budget and even if we focus on one objective, that of achieving stability in governance, it is one requiring deep introspection and public understanding. The broad strategy of the budget, therefore, is to:
i. Achieve fiscal stability and promote accountability as imperatives for sustained economic growth;
ii. Prioritise efficiency in expenditure through stringent control on non-productive expenditure, judicious allocation of resources and cost effectiveness of project delivery;
iii. Accelerate rural-urban integration and urban renewal through roads and flood control infrastructure, markets development, housing and sanitation;
iv. Grow the non-oil sectors to produce an economy that is truly diversified, self-reliant, resilient and that can withstand external shocks;
v. Continue to pursue Health for all Deltans (HeFAD) in line with the Universal Health Coverage mandate of the United Nations Sustainable Development Goals;
vi. Increase investment in youth entrepreneurship development programmes as well as technical/vocational education designed to foster a new generation of wealth creators, business leaders and managers;
vii. Deepen and strengthen our social investment programmes for improved protection of the poor and vulnerable segments of the society;
viii. Escalate our peace building initiatives to secure our oil and gas installations, ensure public safety and engender an investor-friendly climate;
ix. Boost revenue through widening of the tax base and administration of a functional tax regime that is fair, just and equitable; and
x. A more responsive and efficient public sector.
KEEPING THE MOMENTUM GOING
4. As usual, I will precede my presentation this morning by acquainting you with some important developments in our State since I was sworn into office for a second term.
The Future of Asaba Airport
5. We achieved another breakthrough with Asaba Airport in August this year with the approval by the State Executive Council for the concessioning of the Airport to a consortium of investors led by Menzes Aviation, a world-renowned aviation company. It is the first full brownfield airport concession in Africa and a hybrid arrangement covering further development and management of the airport.
6. Key highlights of the transaction are as follows:
- Menzies Aviation to manage the Airport and provide airline support services;
- First Investment Development. Company to build Radisson Blu Hotel and Convention Centre at the Airport;
- Air Peace to operate as Anchor Airline and to build and operate a commercial Maintenance, Repair and Overhaul Facility;
- Rainoil to operate the Tank Farm and provide Jet A1 Fuel for Aircraft;
- Cybernatics to develop the Cargo Terminal and Logistics Centre;
- Quorum Aviation to build private jets terminal and operate helicopter services for the oil and gas industry; and
- Arbico Construction company to develop and manage the business park.
7. The concession is, in the first instance, for a period of 30 years with annual concession fee of N100m payable to the Delta State Government, escalating by 10% every five years. There is also annual royalty of 2.5% of Gross Annual Revenue payable to the State. With over N28b expected to be pumped into the airport development by the concessionaire over the next three years, the benefits to the State in terms of employment opportunities, urban renewal and tourism potentials are enormous.
Kwale Industrial Park
8. As you are aware, I just returned from China where we held a Road Show for the proposed Kwale Industrial Park. It afforded the State Government delegation the opportunity to market the Park and our State to the Chinese business and investment community. So far, we have received expression of interest from companies willing to establish a glass factory, ceramics factory and an agro-allied industry for soya beans.
9. In a meeting with another group of investors in Nanjing, Jiangsu Province, a company with a 400-metric tonne capacity methanol plant indicated its readiness to immediately set up a plant at the Park. It was agreed that a team from the State would visit their factory within the next month while officials of the company are to come for a site visit immediately thereafter. The company is hopeful of moving their operations to Kwale Industrial Park within the first half of 2020.
10. To refresh our memories, the Kwale Industrial Park is designed to profit from the competitive advantage of the State in the gas and energy sector. Located along the Ughelli-Asaba road, the Park is envisaged to be one of Nigeria’s biggest location for gas and energy intensive manufacturing, encompassing ceramics, rubber, methanol, pulp and paper. It is a mix-use industrial/business location featuring industrial, commercial, administrative and residential sections in the Park. Heavy and light manufacturing activities will be in the industrial sector while schools, shopping centres, banking halls and recreation facilities will be concentrated in the commercial sector.
11. Once fully operational, the Kwale Industrial Park is expected to be a major driver of this administration’s industrialisation agenda and provide immense employment opportunities for our people.
Agro-Industrial Park, Aboh-Ogwashi-Uku
12. In line with the agricultural transformation and wealth creation objectives of this administration, the State Government is implementing a public-private partnership for the establishment and operation of an Agro-Industrial Park at Aboh Ogwashi-Uku in partnership with Mirai Technologies Ltd as technical partner and anchor investor, and Norsworthy Investments Ltd. as participating investor.
13. Following rigorous project appraisal and the completion of all design-phase activities, the project development is currently at financial closure, preparatory to the construction phase. When fully established, the Agro-Industrial Park will be the principal catalyst of the agricultural commodity value chains, create thousands of new jobs and multiply wealth for the teeming youth and agricultural population of the State.
14. In the 2020 fiscal year, the construction and development of the Agro-Industrial Park will be prioritized among the crucial public investments of the State Government.
Opening the Riverine Communities through Road Infrastructure
15. On July 12, this year, this administration recorded a major feat with the commissioning by Vice-President Yemi Osinbajo of roads in the hitherto neglected riverine communities, notably the 20.29 km Obotobo 1- Obotobo 11 – Sokebolou – Yokri, Township roads (Phase 2) and the Main Axial Road at Okerenkoko in Warri South West Local Government Area. In the case of the Obotobo 1 -Obotobo 11 – Sokebolou – Yokri road, it is not just the length of the road that makes this project unique; it is that the road is located right beside the Atlantic Ocean with all the human, material, ecological and financial implications that this difficult terrain presents.
16. Also, this major access road in Ogulagha Kingdom cuts across four communities that contribute a large chunk of crude oil to the national economy as well as right through the various oil production companies and the oil pipelines manifolds along the road. It goes without saying, therefore, that this road would ease the movement of people, goods and services within the communities as well as improve their socio-economic life.
17. Similar road projects undertaken by this administration in riverine communities include the paving of Burutu Township roads, on-going construction of Rigid Concrete Pavement Road at Ogidigben, construction of Access Road to Nigeria Maritime University Okerenkoko (Kurutie Campus), construction of Oporoza Palace Road in Gbaramatu Kingdom, all in Warri South West Local Government Area, as well as the Construction of Ogulagha/Youbebe/Biniebiama Road, in Burutu Local Government Area.
18. These projects demonstrate our commitment to bring development to every part of the State, no matter how remote. Furthermo
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