With revenue from the Federation Account on the slide, Ogun State government has put machinery in motion to shore up its Internally Generated Revenue (IGR) to finance its 2023 budget.
The state governor, Prince Dapo Abiodun, signed the N472 billion Appropriations Bill, christened Budget of Continued Development and Prosperity, to law on December 29, 2022.
While presenting a breakdown of the budget on Wednesday in Abeokuta, the state Commissioner for Finance, Mr Dapo Okubadejo, said the rising price of crude oil in the global market had pushed up the amount hitherto expended by the federal government on subsidy, adding that this had depleted the allocation to states from the federation account.
His words, “The saving grace for us is that when we came into office in 2019, the government put in place unique policies aimed at making Ogun State the fastest growing economy in Nigeria. We started the process of putting some critical infrastructure in place to grow our economy. We also thought out of the box to put some measures in place. These are now paying off. So, we are looking at funding the bulk of the 2023 budget, not from allocation from the Federation Account but from our IGR.”
Okubadejo, who doubles as the Chief Economic Adviser to the Governor, explained that the state had adopted a Medium Term Strategy for both its revenue and expenditure.
He added “We adopted the Medium Term Revenue Strategy to drive the state budget from the revenue angle, rather than the traditional expenditure base approach. A realistic policy-driven model (bottom-up approach) guided by a proper and realistic revenue strategy. The IGR projection is as follows: N196b – 2023, N231b – 2024 & N279b – 2025.”
Continuing, he said, “In the medium term, it is projected that FGN allocation of N92b will help sustain the 2023 projected expenditure in view of previous performances between the years 2020 and 2022. The projection is predicated on the existing FGN additional distribution from the non-oil excess account that serves as buffer fund anytime total monthly distribution from FAAC is below N650 billion. It is projected that the FAAC revenue increase will be sustained in the outer years of 2024 to 2025.
“The Medium-Term Expenditure Framework (MTEF) year 2022 broad parameters of the financing mix baseline shall be sustained in the MTEF 2023 – 2025.”
According to Okubadejo, the N472billion budget is expected to be funded with revenue from Ogun State Internal Revenue Service – N90bn; revenue from other Ministries, Departments and Agencies – N120billion; opening balance – N41.6; capital receipts – N128.37billion; statutory allocation – N50.7billion; excess crude – N3.8billion; and VAT – N37.4billion.
On the expenditure side, the state plans to spend N137.79 billion on Infrastructure (ICT, power, transport and industrialization); a N105.5billion on Social welfare and well-being (health, housing, environment, physical planning and special needs); N72.2billion on Education (early childhood, vocational, technical and tertiary), N7billion on Youth empowerment, religion and culture, N16billion on Agriculture (forestry, crops, plantations and husbandry) and N133.3billion on Enablers (general public service, public order and safety).
Okubadejo, who noted that budget performance was critical to the overall development of the state, added that the government would further increase its revenue generation in the new year by completing new projects such as the cargo airport which he said the state government planned to optimize by creating an aerotropolis in the axis.
The event was attended by many commissioners and permanent secretaries, including Alhaji Waheed Odusile, Commissioner for Information and Mr Olaolu Olabimtan, Commissioner for Budget and Planning.
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