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Willie Obiano

Willie Obiano, the Governor of Anambra State on Thursday, 14 October 2021, presented the draft budget estimates for the 2022 fiscal year, being the last of his eight years as governor of the state.

The proposed 2022 budget-themed ‘‘Continuity, Sustainability and Development of a New Anambra’’ has a budget size of N141.9 billion. The budget will be geared towards sustaining the administration’s performances over the past seven years in ensuring that it maintains its status as a hub for business and a destination for new investments.

The recurrent expenditure is projected to gulp 43 percent of the total budget size, translating to N60.9 billion the remaining 57 percent which translates to N81.0 billion is for capital expenditure. The proposed aggregate revenue and expenditure budgets for 2022 are N129.1 billion and N142.5 billion, respectively, resulting in a N13.4 billion fiscal deficit which will be financed domestically.

Key Assumptions

The proposed 2022 Budget estimates an average daily production of 2.23 million barrels, an estimated benchmark crude oil price of $50/bbl, translating to a projected annual FAAC of N41.9 billion as against the 2021 figure of N45.3 billion.

Value Added Tax (VAT) revenue projection is pegged at N19.8 billion annually, which is an 18.8 percent increase from the 2021 figure of N15.5 billion.

Internally Generated Revenue is projected at N3.35 billion monthly and N40.36 billion annually for 2022, compared to N3.04 billion monthly and N36.6 billion annually for last year.

Capital Receipts (including grants, other FAAC transfers, counterpart funds, aid and concessionary funding) are estimated at N23.38 billion compared to N18 billion of 2021.

Personnel costs are estimated at N1.8 billion monthly which is about N21.67 billion for the year compared to N1.56 billion monthly and N18.8 billion for 2021.

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Total Overheads are estimated at N1.98 billion monthly and N23.78 billion for 2022 as against N1.36 billion monthly and N16.4 billion for the 2021 figure; while Social Benefits and Contributions including Pensions, Gratuities, group life insurance, and loan repayments are projected at N18.3 billion for the fiscal year 2022 compared to N16.4 billion for year 2021.

Performance of 2021 Budget

Nigeria is recovering from weakening macroeconomic conditions occasioned by the COVID-19 pandemic which compelled economic lockdown and hitherto a sharp decline in oil prices.

Accordingly, with the budget theme “Economic Recovery and Consolidation”, the budget size for the 2021 fiscal year was N143.65 billion. N86.9 billion was earmarked for capital expenditure, translating to 60.5 percent of the budget, while N56.8 billion went to recurrent expenditure, translating to 39.5 percent of the budget.

However, the state is mindful that due to the security challenges occasioned by the gubernatorial election tussle witnessed in the current fiscal year, it is likely that its domestic economy may contract, thereby leading to the general reduction of economic activities and a significant loss on most sectors of the state’s economy.

Key Takeaways

Anambra Vision 2070

The proposed budget is in sync with the aspirations of the Anambra Vision 2070, a 50-year development plan that will guide development in the state to the year 2070. It is hoped that successive governments can rely upon it for strategic directions of policy, programmes, and regulations, and may also serve as a veritable tool to evaluate future governments.

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Revenue Mobilization and Fiscal Sustainability

The state pushed its Internally Generated Revenue (IGR) from a monthly figure of N2.1 billion in 2019 to approximately N2.5 billion in 2020, on the back of efforts at plugging revenue leakages and growing the taxpayers’ database by enforcing mandatory registration of Anambra Social Service Identification (ANSSID) as a prerequisite for any services provided by the state.

Little wonder, then, that Anambra was listed as one of the top 3 states in the BudgIT 2021 Fiscal Performance Ranking behind Rivers and Ebonyi States, indicating that its fiscal fundamentals, compared to others in the country, were more prudently managed. The report also listed Anambra, Rivers, and Lagos, as the only three states in the country that could meet their operating expenses obligations with a combination of its Internally Generated Revenue (IGR) and Value Added Tax (VAT).

In a similar vein, Anambra has instituted a wide range of reforms in Public Finance Management which helped the state benefit a lot under the FG-World Bank-supported State Transparency, Accountability and Sustainability (SFTAS) Program for Results (PforR). And a work plan has been set out to ensure the sustainability of these reforms at the end of the SFTAS program.

Legacy Projects

The state is now at the verge of getting approval from the Nigeria Civil Aviation Authority (NCAA) to kick-start commercial operations of the Anambra International Cargo and Passenger Airport Umueri from October 21, 2021. At 3.7 kilometers long and 60 meters wide with 1 km racers on each side, the Anambra International Cargo and Passenger Airport has the second-longest runway in Nigeria, next to only Murtala Muhammad International Airport Lagos.

Work is also in top gear at the International Conference Center which can sit 10,000 persons and at the same time, the Awka City Stadium project is at about 90 percent completion at the moment.

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Youth Empowerment & Creative Economy

The state has great regard for its youths, with over 70 percent of the appointees being youths. Significant funds have been earmarked as aggregate funding to Youth Entrepreneurship & Empowerment Programmes across all Ministries, Departments and Agencies in the State.

Small & Medium Enterprises Development

Part of the N2 billion Commercial Agriculture Credit Scheme facility will be spent to fund micro-entrepreneurs through cooperatives in the three senatorial districts, with the balance disbursed at a single-digit interest rate to Small and Medium Enterprises. Moreso, the World Bank Nigeria’s COVID-19 Action Recovery and Economic Stimulus (CARES) response program which will provide an additional $5 million financing to support MSMEs across all sectors in the State, develop community projects and support households with conditional cash transfers, is expected to kick off by the end of 2021.

Consecutively, the Governor has presented the 2022 budget proposal to the State Assembly early enough for prompt passage into law. It is expected that the legislative process of the passage of the 2022 Appropriation Bill will be expedited to enable implementation from 1 January 2022. The early passage of the Bill, once again, would sustain Anambra’s fiscal and economic landscapes.

Obiora Obiabunmo is the Senior Special Assistant to the Anambra State Governor on Economic Planning, Budget and Development Partners, and Nonso Ndumanya, Executive Assistant to the Governor on Research and Policy Formulation.

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