The Ogun State Government has revealed that it plans to spend a total of N392.7 billion in infrastructure between now and 2025 as part of its plan to raise the economic status of the state and make it a leading one among its peers.
Education and health, being allocated 14.3 and 11 per cent of the sum respectively, are among the key priorities of the government as it looks forward to expanding the frontier of the state’s economy from manufacturing to service.
At the 2022 budget breakdown session, the Chief Economic Adviser/Commissioner for Finance, Dapo Okubadejo, said the government understood the importance of linking the state with Lagos as a necessary move to take into the Lagos investment market.
This year, the state is looking at a total expenditure projection of N472.2 trillion, which is about N4.7 per cent higher than last year’s budget. But the commissioner said the government focuses more on impact and performance rather than the size of spending.
He expects 2022 budget performance to exceed that of 2021, which was above 70 per cent, noting: “the audit of last year’s budget is not ready. But I expect it to be better than that of 2021 because we have progressively improved over the years.”
For him, efficiency and performance are not about maintaining a big government but incentivising private sector players to take advantage of investment opportunities. In recognition of this, he said, the government has executed some legal frameworks, including the Public Private Partnership (PPP) and the Office of PPP to make it easier for investors seeking economic opportunities in the state.
On the state’s debt, he noted that equity is often a more expensive funding option for an entity that is strategic in its debt management model. He noted that some of the projects the current administration funded with concessionary debts a few earlier would be twice more expensive if they were delayed to date for fear of debt.
As of September, the state’s debt stood at N241 billion. But Okubadejo argued the debt stock is not a big deal considering the capacity of the state, revenue potential, condition of the debt, and the opportunity cost of not borrowing among others. he dismissed the generalisation of sub-national indebtedness, saying states should be assessed based on their peculiarities and ability to pay.
Besides, he disclosed that the debt was about N141 billion when the administration assumed office with the foreign component standing at $121 million even while the outstanding pensions and gratuities were excluded from the state’s balance sheet owing to the limitation of the cash accounting system in practice.
In the real term, he added, the debt inherited by the administration was over N200 billion. Still, the state has attracted much value in terms of property appropriation as a result of the projects executed with borrowed funds.
“The sustainability analysis confirms the State Government’s ability to sustain its current spending, tax and other policies in the medium term without threat to the state’s solvency or default on some of its liabilities or proposed expenditure,” he said.