CALPED Fumes Over Negative Impact of Debt Servicing on Infrastructure and Service Delivery in Kaduna

CALPED Fumes Over Negative Impact of Debt Servicing on Infrastructure and Service Delivery in Kaduna

 

 

By: Femi Mustapha

 

 

 

 

The Coalition of Associations for Leadership, Peace Empowerment, and Development (CALPED) has expressed dismay over the negative impact of debt servicing on infrastructure and service delivery in Kaduna State. Money allocated for debt servicing annually is gradually competing with capital expenditure. This was stated in a communique issued on the 2024 draft Budget of the Kaduna State government, signed by the Program Officer, Governance and Advocacy Seth Luke, and Head of Leadership, Governance, and Advocacy Yusuf Ishaku Goje.

 

The group urged both the Executive and the Legislature to check this trend.

 

CALPED also called for adequate and timely release of Equity Funds, Basic Health Care Provision Funds (BHCPF), and Counterpart Funds to ensure more vulnerable groups are enrolled in the Health Insurance Scheme.

 

The communique highlighted that the State Government, through the Planning and Budget Commission, made public the 2024 draft budget and organized a town hall meeting to generate citizens’ feedback and inputs.

 

It added that expectations are high based on the social contract as captured in the SUSTAIN blueprint of the current administration of Governor Uba Sani. This being the administration’s first budget, it deserves a closer look to ensure policy-budget linkage, budget realism, and allocation to strategic priorities of the State.

 

The group also observed that the inflation rate in the fiscal assumptions is unrealistic and does not align with the current realities. The inflation rate is projected at 23.6% for 2024, as against the 27.33% published on the NBS website. Planning for development should be based on realistic data.

 

“It is important to note that the International Monetary Fund (IMF) recently downgraded Nigeria’s economic growth forecast for the year 2023 to 2.9%. This should be reconsidered and reviewed to ensure it is more realistic.

 

“The 2024 total draft budget is N35.3 billion (8.35%) higher than the MTEF recommended budget size. This means that the Government would have to borrow more to finance the deficit or shortfall.

 

“The 2024 draft budget increased by N81 billion (21.7%) from the 2023 budget. It is good for the government to spend more on its citizens. However, there is a need for clear and effective strategies to enhance revenue generation using the appropriate fiscal policy instrument that would enhance the revenue generation systems and processes. This should focus more on expanding the revenue sources, not increasing tax rates.

 

“The State government should accelerate the review and approval of the Sector Implementation Plan (SIP) to ensure adherence to policy-budget linkage and result-based monitoring & evaluation. Ideally, the sector’s budget should be drawn from their various SIPs.

 

“The approved MTEF (2024-2026) macroeconomic framework recommended exchange rate of N750 should be adhered to, as it appears to be more realistic considering the risk factors identified.

 

“Key overhead costs (some of which we have identified amounting to N7.7 billion) should be reviewed and considered for reallocation to strategic priorities.

 

“The viability of the proposed loan from Afri. Exim Bank should be reconsidered to ensure a guarantee for accessing the loan. If not, it should be dropped, and a supplementary budget initiated when the loan is 100% guaranteed.

 

“A percentage of the allocation for social investment programs should be allocated to the take-off of the Social Security Administration to ensure better coordination mechanism and value-for-money.

 

“The reality of deficits in the health systems prompted the African Heads of State and Governments to promise to allocate at least 15% of their annual budgets to the health sector in what is now known as the ‘Abuja Declaration’ in April 2001.

 

“The last administration adhered to this commitment; we, therefore, call on this administration to sustain the Abuja Declaration by ensuring at least 15% of annual spending is allocated to the health sector.

 

“This is because, according to the draft budget made public by the Planning and Budget Commission a day before, the sector got about 13%, even though the speech by the Honorable Commissioner mentioned 15%.

 

“The 2024 total draft budget they opined is N35.3 billion (8.35%) higher than the projected MTEF recommended budget size.

 

“The 2024 draft budget increased by N81 billion (21.7%) from the 2023 budget. It is observed that as of the third quarter of 2023, the budget performance is less than 50%.

 

“While the 2024 draft budget has increased in naira terms, when converted into dollars, it is lower than that of the 2023 budget. The 2023 budget is $867,476,128.93 ($1 to N435), while the draft budget is $609,188,328 ($1 to N750).

 

“The draft budget of N458.3 billion is 13.4% and 13.6% of the State’s GDP of N3.4 trillion (at current market price) and N3.3 trillion (at current basic price) respectively.

 

“The 2024 budget deficit is about 37.4, with the State opting for loans and grants of N171.0 billion to cover the deficit; it is also 59.9% of the total revenue.

 

“The recurrent budget increased by 2.9% in 2024 from the 2023 approved budget. The recurrent budget is lower at 30.43% compared to 35.99% in 2023 as a percentage of the total budget.

 

“There was also a 32.2% increase in capital expenditure allocation from 2023. The percentage of total capital expenditure versus total budget increased to 69.57% compared to 64.01% in 2023. However, the 2023 third-quarter performance was disturbingly low at 33.4%.

 

“There is a huge increase of 33.1% in allocation for personnel cost from 2023. As of the third quarter of 2023, there was a 69.1% performance. Overhead costs decreased by 10.1% compared to the allocation for 2023, which had a Q3 performance of 30.3%. Noticeably, public debt charges decreased by 28.3%.

 

“The 2024 total draft budget has a per capita of N44,023, an increase from N39,710; while capital expenditure has a per capita of N30,523 from 25.419 in 2023.

 

“Worthy of note are increases in allocation for two key sub-sectors that the civil society has consistently advocated for. These are social development (an increase of 173%) and agriculture (2179.79).

 

“It is commendable that the State government has increased the number and allocation for youth-specific budget line items for women, youth, children, and PWDs. However, these allocations should be linked with relevant policies to ensure result-based service delivery.

 

“It is commendable that the State government has allocated over N11 billion to the social investment program. The lump sum allocation to social investment programs makes it difficult to track the breakdown. It is disturbing that the Equity Funds Basic Health Care Provision Funds (BHCPF) Counterpart Funds have not been provided for over a year,” the communique stated.