Press Statement: Delta State’s 2025 Budget: More Of The Same?

NOVEMBER 15, 2024

On his inauguration day, Governor Sheriff Oborevwori vowed to bring creative thinking and proactive action to accelerate Delta State’s development. However, one and a half years later, his 2025 budget proposal, totaling N936 billion, falls short of this promise. Lacking bold, innovative ideas and proactive measures, the budget perpetuates the simplistic “Collect FAAC and spend” approach. This method has historically failed to boost the economy or increase Internally Generated Revenue (IGR).

Furthermore, Governor Sheriff Oborevwori’s claim about reducing Delta State’s debt stock through fiscal discipline and efficient cost control measures doesn’t quite add up. In reality, the increased FAAC revenue, stemming from President Bola Ahmed Tinubu’s APC-led federal government reforms, is the primary reason for the reduction, rather than the governor’s financial management. Since taking office, Governor Oborevwori has yet to introduce meaningful reforms as part of his MORE agenda to boost government revenue.

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The proposed budget’s over-reliance on FAAC allocations raises serious concerns about Delta State’s economic sustainability. By failing to substantially diversify revenue streams and move beyond oil and gas, the government reinforces a harmful dependency on federal allocations. This approach has historically stifled development, and a decline in FAAC allocations would leave the government struggling to fund its projects. Without a clear plan for sustainable economic growth, the state’s financial future hangs in the balance.

Delta State’s alarmingly low Internally Generated Revenue (IGR) of N140 billion raises red flags about its long-term financial stability and economic growth potential. The 2025 budget lacks concrete measures to address IGR challenges, unlike states like Lagos, Rivers, and Ogun, which have achieved impressive IGR figures.

Governor Oborevwori’s administration is facing significant challenges with its Internally Generated Revenue (IGR) contribution to the budget. The IGR contributuon has dropped from 17.35% in 2023 to 16.35% in 2024 and is projected to decline further to 15% in the new budget. This downward trend raises concerns about financial management and economic growth.

The current revenue collection system, established during Okowa’s tenure, relies heavily on party chieftains acting as consultants, collecting revenue and remitting a percentage to the government. This approach has failed to yield substantial IGR growth, sparking worries about revenue leakages due to inefficiency, underreporting, and fraud.

The low Internally Generated Revenue (IGR) also indicates successive administrations’ failure to drive economic growth and diversification by exploring alternative revenue streams beyond oil and gas. This lack of self-sustenance undermines the state’s economic potential.

Delta State’s rich natural resources, including crude oil and natural gas, remain largely untapped. Agriculture substantially contributes to the state’s economy, with oil palm, yam, and cassava crops being major produce.

The state’s failure to harness its tourism potential, despite boasting beautiful landscapes and cultural attractions, is a missed opportunity for revenue generation. The absence of a robust manufacturing sector and inadequate infrastructure stifles economic growth.
Though the budget prioritizes  these sectors, budgetary allocations are inadequate.

Delta State’s 2025 budget falls short of being a true Budget of Fiscal Consolidation due to its lack of a clear roadmap to reduce dependence on Federal Accounts Allocation Committee (FAAC) revenue and boost Internally Generated Revenue (IGR). It’s like building a house of cards, vulnerable to collapse at any moment.

To achieve fiscal consolidation and foster meaningful development, the government must adopt a multi-faceted approach. This involves exploring alternative revenue sources beyond FAAC, ensuring transparency in revenue collection, tackling underreporting and fraud, and bolstering IGR through strategic investments in vital sectors.

The New Delta Coalition urges Governor Sheriff Oborevwori to capitalize on President Ahmed Tinubu’s economic reforms, which have boosted FAAC allocations and created opportunities in agricultural and energy sectors. By introducing reforms promoting farming, food processing, and basic infrastructure, Delta State can break free from financial constraints, reduce dependence on FAAC revenue, create private sector jobs, and secure sustainable economic growth for its citizens.

Signed:

Godwin Anaughe
On behalf of New Delta Coalition