Bauchi’s Hopeless Budget



As we explore the issue of Nigeria’s missing federalism, we turn today to Bauchi as we focus on and analyze sub-national budgets, fiscal prudence and good governance.
The state is one of the older states with the good fortune of being decently governed in the past – by people like General Sani Sami as military governor and, more recently, my former classmate Ahmed Adamu Muazu. It is also one of the states that claimed to have enacted, in 2009, versions of the Fiscal Responsibility and Public Procurement Acts 2007. These served in sending the right signals, at least in theory about fiscal balance, financial prudence and accountability. The state governor can also lay claim to some political and experiential pedigree. Governor Isa Yuguda was educated at Ahmadu Bello University, had a long and successful career as a banker, and was federal minister twice under the Obasanjo administration. Persuading the Buhari Organization and the ANPP into supporting his gubernatorial aspiration, then decamping to the PDP after the election, should add up to something of a character sketch for governance; depending on one’s interpretation.
Bauchi State was created in 1976 by the Murtala-Obasanjo-Danjuma administration upon acceptance of the Irikefe Panel on States’ Creation. The panel recommended that the old North-Eastern State be split into Borno, Bauchi and Gongola States. In 1996, the old Bauchi State was split into the current Bauchi and Gombe States. With an estimated 5.7 million citizens, it is the seventh most populous state in Nigeria. If Bauchi was a country, it would be ranked 33rd out of 54 African countries, and about the population of Togo. Within the ECOWAS sub-region, Bauchi is bigger than Gambia, Sierra Leone, and Liberia in population. The state is more naturally endowed than the four West African nations mentioned. It has ample arable land, spanning the two ecological zones of Sudan and Sahel Savannah and serviced by two major rivers – Rivers Jama’are and Gongola, thus enabling all year round irrigated agriculture. Its vast fertile soil and hardworking farmers produce maize, rice, millet, groundnut, and guinea corn. Cattle and livestock are also reared in the state.
The state has several proven reserves of solid minerals like Barites, Gypsum, Granites, Potash, Bauxite, Sapphire and Mica amongst others. There is likelihood of oil and gas deposits existing in Bauchi, Gombe and Benue Basins as well. Bauchi’s Yankari Game Reserve is the largest in West Africa and is a leading tourism asset. Other similar but less publicized tourist attractions include Premier Game Reserve, rock paintings at Goji and Shira and the Tafawa Balewa Mausoleum.
The North-East zone of Nigeria is the poorest part of the country. According to NBS Poverty Profile 2012 which studied poverty incidence nationwide using 2009 and 2010 data, 75% of the population of the region was relatively poor, 71.5% was absolutely poor, 51.5% could hardly feed itself (that is, food poor) in an agriculturally-endowed region and a whopping 68.2% live on less than a dollar per day. The states of Yobe (58%), Borno (56%), Katsina (50%) and Bauchi (49%) have the highest poverty indices in Nigeria. All except Katsina are in the north-east zone. Aggravating the absolute, relative and food poverty measures are very high levels of income inequality. Yobe and Taraba in the north-east recorded the highest increases in income inequality between 2003 and 2010 as measured by changes in Gini coefficients. Happily, Bauchi State recorded a decrease during the period due largely to the period of decent governance under former Governor Ahmed Muazu.
The north-east also has the highest levels of unemployment in Nigeria, with Yobe leading the pack with 39%, Bauchi (30%), Gombe (29%), and Borno (27%) following closely. These numbers should be compared with the 8% unemployment rate of Lagos State and the national average of 21%. Bauchi was doing better in educational attainment, though things may have deteriorated since 2008. In that academic year 13,520 Bauchi students attempted WAEC and only 1,764 (about 13%) got five credits including English and Mathematics. Only about 850 Bauchi youths were admitted to universities that same year compared with over 4,000 for Enugu. In healthcare, along with Kano and Sokoto States, Bauchi has the highest rates of infant and maternal mortality in the country. It is clear that Bauchi, like most northern states have huge challenges in virtually every governance area.

Whichever way one looks at and compares these statistics, they confirm the continued economic and social under-performance of the north-east zone of which Bauchi State is a leading component. It is therefore not surprising that while the Nigerian political Sharia movement of the early part of this century started in Zamfara State of north-west, it was the north-east zone that gave birth to the anarchist movement generally referred to as ‘Boko Haram’. Indeed, it was in Bauchi that the first state engagement with Boko Haram occurred, but was initially carefully handled by the state government. Things deteriorated after Shehu Gabam, Yuguda’s chief of staff that managed the first crisis left the administration.
Are all these ingredients of the birth and growth of insurgency there for all to see? Or was it aggravated by poor governance, misplaced spending priorities and incompetent security management? What should the Bauchi State government be doing to secure the future of its citizens? Has state governance in the last few years delivered on social services and opened up economic opportunities for citizens? Let us look at the 2012 budget for answers to some of these questions.
In 2011, the State House of Assembly approved about N118 billion as the budget, to be financed with N53 billion from federation allocation (FAAC), N6.3 billion from internally-generated revenues (IGR) and a whopping N59 billion as loans from money and capital markets. The Bauchi State government budgeted N138.7 billion for 2012, an increase of about N21 billion over the amount in 2011. Yuguda intends to finance the 2012 budget with N69 billion from FAAC, a paltry N7.3 billion as IGR and another N58 billion as loans. In what should be a violation of any sound fiscal responsibility law, nearly 40% of the budget will be financed through borrowing for two years in a row. In 2011, Bauchi State’s domestic debt was about N91 billion, so by the end of the year, Bauchi would be in debt to the tune of some N150 billion. Public debt charges this year is some N6.3 billion and rising. It looks like Yuguda is determined to leave behind a debt-ridden, if not financially insolvent state!
Let us now look at the budget proper. The entire budget document is about 30 pages long, short on details and defective in organization. About N77.3 billion (53%) of the 2012 budget is earmarked for capital expenditure, while N61.4 billion (47%) is for recurrent spending. The recurrent budget is made up of N27.5 billion (20% of budget) for personnel cost and N33.8 billion (24%) for overheads. Yuguda’s budget is therefore better than the federal 28% allocation for capital spending, but still falls short of the minimum of 70% needed to achieve real development. Only three states met this minimum in 2012 – Akwa Ibom (84%), Rivers (74%) and Imo (73%), and the first two may perhaps be easily explicable on the basis of excess oil revenue windfalls. And how can a state that could raise only N7 billion internally budget four times that amount for staff costs?
The sectoral breakdown of the budget showed the following structure; N36.2 billion (26%) for general administration, N25.8 billion (19%) for economic sector, N23.1 billion (17%) for regional development, N41.5 billion (30%) for what I will classify as social services, and N12.2 billion (9%) as Consolidated Revenue Fund charges. The largest total departmental allocations went to Education (N19.4 billion), Security under the SSG’s office (N17.6 billion), Health (N13.7 billion), Works & Transport (N7.7 billion), Rural Development (N7.1 billion), Agriculture (N7.6 billion), Power & Solid Minerals (N5.0 billion) and Water Resources (N3.2 billion). The bulk of the allocation for security is usually spent at the discretion of the governor, without any transparency, accountability or records for necessary audit.
The Judiciary including the Sharia Court of Appeal will cost N3.2 billion to maintain, while the Legislature was earmarked a total slightly above N2 billion. The political office holders in the executive branch along with ‘severance gratuity’ will cost over N3.1 billion in 2012. Adding up the cost of political office holders in the executive, legislative and judicial branches of the Bauchi State government comes up to N8.3 billion – a billion naira more than the state’s entire IGR! Thus, Bauchi State exists only because it collects monthly hand-outs from FAAC. Since the advent of this republic in 1999 to 2011, the state has collected some N347 billion from Abuja, about 2.7% of federation revenues. At least N180 billion of this total was spent under Yuguda’s first four year watch. And what are the results? The people of Bauchi State are in the best position to answer that question. We will just draw attention to a few items of expenditure and leave the conclusions to the reader.
Bauchi State has budgeted nearly N5 billion for a ministry of power and solid minerals. These are essentially federally-regulated functions best undertaken by the private sector. These monies will simply be frittered away. In 2012, about N19 billion will be spent to produce about 1900 students qualified to be admitted into University, while nearly N14 billion will be spent to improve maternal health and reduce infant mortality. Over N50 billion will be spent to open up economic opportunities and address the needs of vulnerable groups in Bauchi State, without a clear strategy to address value-chain issues and binding constraints in agriculture, livestock production, tourism and mining – sectors in which the state possesses relative competitive advantage. Similar amounts have been spent in previous years with nothing to show for them.
Bauchi was ranked as the tenth state in Nigeria in the overall lowest cost of doing business by the World Bank in 2010, but 21st in ease of starting a new business. Nearly three in ten working age persons in the state are unemployed, with over 43% of all employable females jobless. Unfortunately, instead of addressing these issues with a slim government that directs its resources to building physical infrastructure and human capital, encouraging agriculture and mining, and delivering on basic social services, the government announced the appointment of 924 political appointees as ‘aides’ in September 2011. These consisted of 20 special advisers presumably approved by the State House of Assembly, 94 senior special assistants, and 810 special assistants. Yuguda also appointed 24 directors-general of agencies, 20 local government deputy chairmen and 82 councilors. This is quite apart from some 20 commissioners and several heads of executive bodies. Yuguda, like many northern governors is spending the state’s resources on a very small circle of political jobbers while the general populace gets poorer, more hopeless, thereby constituting greater threats to the society.
Is the Bauchi State government securing the future of its citizens? No. Is its budget structure and spending priorities better than that of the federal government? Yes, at least slightly. But Bauchi State is not fiscally independent or viable unless it improves its IGR and slashes the size and running costs of its bloated government. Unless the government does that, it does not deserve the support of its citizens.

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