Will Otu make a difference with N538.9bn from Ayade’s reckless budgeting?
- Infrastructure dev’t gets lion share of N333.3bn
- Diversification beckons for $9.3bn economy
Ben Eguzozie, in Calabar
As Governor Bassey Otu of Cross River signed the 2025 state budget into law last Christmas eve, economists and development experts are ready to scrutinise to measure if the Odukpani LGA-born former senator can make any significant difference from his immediate predecessor, Ben Ayade’s reckless budgeting that set the state’s development trajectory backward in eight years.
The new appropriation of N538.5 billion sets to achieve a significant sustainable development of the state, with infrastructure development as the cornerstone of the administration’s agenda. Christened “budget of sustainable growth,” the Governor said the budget reflects “our deep commitment to economic growth, infrastructure development, and improving the well-being of our people. Infrastructure is the backbone of sustainable development, and we are resolute in our determination to create world-class infrastructure for Cross River State”.
A significant 62% of the budget, amounting to N333.3 billion is allocated for capital expenditure. The funds will go into critical infrastructure projects, such as road construction, healthcare facilities, educational infrastructure, and other long-term initiatives aimed at fostering development and creating jobs.
The remaining 38% of the budget, equivalent to N250 billion, goes to recurrent expenditure, covering essential government operations, such as salaries, pensions, healthcare services, and education, ensuring a seamless functioning of public institutions and services.
Ayade’s reckless budgets
With bombastic names, which indicated no particular economic growth indices, Benedict Ayade, Cross River’s immediate past governor, rained on the state a rash of annual budgets that hardly made any socio-economic impact on the state’s $9.3 billion economy. At the end of his eight-year rule, ruin and humongous debt now harangue the state.
Ayade began bombastically with his “budget of deep vision” (of N350bn) in 2016, “infinite transposition” (of N310bn) in 2017, “kinetic crystallization” (of N1.3trn) in 2018, “qabalistic densification” (of N1.043trn) in 2019, and “olimpotic meristemasis” (of N1.1trn) in 2020 – the year of Covid-19 pandemic. By 2021, apparently with no significant economic progress achieved; rather the state nosedived, joining 30 or more other sub-nationals to queue at Abuja to receive bailouts from the federal government, he went down with “budget of blush and blish” (of N277bn). By 2022, it was “budget of conjugated agglutination” (of N276bn. In 2023, the Obudu LGA-born former senator came out with a “budget of quantum infinitum” (of N330bn) revised to N251bn. At the end of Ayade’s eight-year ruinous rule, with absolutely no completed project anywhere in the state’s 20,156 km2 vast landmass.
Otu’s gradual ascendance
By October 2023, barely five months on the saddle as the chief executive of the state, Governor Bassey Otu started with his modest “people first” budget of N250bn meant for the 2024 fiscal year. No doubt, he had to grapple with a humongous debt overhang of N220bn, according to the Debt Management Office (DMO).
His second budget of N498 billion, presented in October 2024 as spending plan for 2025, showed an ascendance of nearly 100% with a N248 billion addition. Later, the State Assembly led by Evert Ayambem increased the budget by roughly N40.5 billion. Ayambem shed light on the budget’s progression from the initial N498 billion, saying the legislature’s finance and appropriation committee reviewed and increased it to N538.5 billion. He said that the final budget breakdown includes N202.6 billion for statutory expenditure and over N333.3 billion for capital projects. Governor Otu applauded the state legislature for its diligence in reviewing and passing the budget in record time. “Their commitment has ensured that we remain on track with our budget timeline, enabling us to begin 2025 on a strong footing,” he said.
Development challenges lay ahead
By far, Governor Otu will require resoluteness in running a tight budget in 2025 to lessen deficits, if he wants to achieve a significant development change in a state that is the poorer sister of high-earning oil producing neighbours like Akwa Ibom, Rivers, Delta and Bayelsa. He must bring down unemployment and underemployment that are currently high. According to the Cross River Watch, the state’s H1 2024 external debt servicing went up by 256% to N7.8 billion when compared to N2.21 billion used for the same purposes in H1 2023. The difference of N5.56 billion showed a 254.9 percent increase according to figures from an analysis of the Federal Accounts Allocation Committee (FAAC) data released by the Nigeria Bureau of Statistics (NBS). Furthermore, the analysis shows that Cross River ranks among the top three of the 10 states with higher external debt servicing.
In 2025, Cross River’s debt burden is projected to increase significantly if a proposed loan is approved. Also, the state’s projected internally generated revenue is N43.38 billion, which is low compared to its debt burden. External debt servicing in outgoing 2024 was projected at over N20 billion per month, more than double the amount spent in 2023. This increase is likely due to the devaluation of the naira.
Additionally, Governor Otu will have to come out with a working model to diversify Cross River’s economy, which had tourism, a service offering, as its best option between 2000 and 2014, but is now headed southward. Most of its sites have dwindled in attractiveness due to utter neglect or outright abandonment by the Ayade administration (2015-2023). Roads to the sites are dilapidated. From the fishing creeks in Bakassi LGA to the mountaintop resort, Obudu Cattle Ranch, and Becheeve nature resorts in Obanliku, the story is the same —services are gone or old-fashioned.