Date Published: 05/04/10
Repositioning Bayelsa State for Foreign Direct Investment By Mildred Hayford
For some now, there has been some brouhaha about the transparency and accountability of financial management in Bayelsa State. Considering the fact that the management of funds is a critical aspect democratic practice. The EFCC have been on the prowl, arresting some key officials of the government on allegations of money laundering and fraud, ostensibly without conducting proper investigations, I decided to take on the challenge of investigating the goings-on in the State in respect of its financial management policy and associated initiatives of the Timipre Sylva administration:
I got to Bayelsa State Ministry of Finance & Budget and the my interaction with the personnel showed that the Ministry appeared poised to practically prove critics wrong on the notion that the state finances are being misapplied. In governance, financial management involves the optimum utilization of funds among all Ministries, Departments and Agencies (MDAs) for effective service delivery. Efficient financial management goal could be achieved by taking financial decisions which are desirable for the growth of both public and private sector.
I gathered from highly placed sources that the Ministry is engaged in planning, organizing and controlling the monetary resources of government, which helps in improving the allocations of resources within government for the accomplishment of government’s mandate as well as the delivery of social services. The ministry’s policy focus goes beyond wealth maximization, but integrates the other objectives of efficient financial management, which include the entrenchment of efficient procurement practices for cost-effectiveness;ensuring effective utilization and safety of funds, and the effective implementation of government policies and programmes. The goal of the State’s financial management policy include ensuring the availability of accurate and timely financial and socio-economic data on the State, increase in revenue (oil and non-oil) and improve access to funding from Public-Private Partnership (PPP). The formulation of a sustainable development plan also constitutes the nitty-gritty of the policy.
An official of the Ministry who claimed anonymity agreed that the principal objective of the administration’s financial package is to enhance the State’s share of federally allocated revenue by at least N2 billion monthly, improve access to funding from donor agencies, and ensure efficient and sustainable debt management. It is also the objective of Bayelsa’s financial policy to attain a growth rate of at least 50% in IGR, in 2010. This would require the critical analysis of all existing plans with a view to creating a new sustainable development plan for the State. The promotion of transparency and accountability would be realized by ensuring fiscal and budgetary discipline through effective monitoring and evaluation of all State projects.
A spokesman of the Ministry outlined the cardinal principles of the State’s financial policy to include transparency, which involves government’s disclosure of its fiscal objectives, the implementation of fiscal policy and publication of public accounts. This ensures that Bayelsans and other key stakeholders can scrutinize the conduct of the governments’ fiscal affairs to lend credence to the consequences of its decisions. So far, the Bayelsa State Government has been able to build some measure of financial legitimacy, and by allowing third party scrutiny, it reinforces the credibility of Government’s commitments to the people.
It was elucidated that the second principle is stability in the fiscal policy making process. The administration operates its fiscal policy with a reasonable degree of predictability that supports medium and long term growth of the economy. Already, some measure of reform has been carried out to ensure effective public financial management systems, processes and institutions to maximize the use of limited public resources and to create the highest level of transparency and accountability in government finances in line with the fiscal responsibility law of the State.
The third principle is responsibility. This involves the prudential management of public assets, liabilities and fiscal risks with a view to ensuring that the fiscal position of the State is sustainable over the long term. The fourth principle is fairness. The Timipre Sylva administration seeks to strengthen existing institutions to operate its fiscal policy in a manner that takes into account the financial implications of its spending on future generations, as well as the impact on the various programmes on the different segments of the people.
The coordinating Ministry according to reliable sources, is well positioned to ensure that each sector in the State engages in “bottom-up” reviews that begin by scrutinizing sector policies and activities with the objectives of optimizing its sectoral allocations in line with its own goals and objectives. This has entrenched a framework, which matches these costs with available resources through an interactive decision-making process.
It was also gathered that the State Government, in line with global best practices, established the Bayelsa Expenditure and Transparency Initiative (BEITI). It was revealed that the Bayelsa State Revenue Watch plays an advisory role to the Bayelsa Expenditure and Transparency Initiative with an established multi-stakeholder steering committee to track expenditure and evaluating impact of budget implementation. This dimension instils sufficient confidence in spectators that the Bayelsa economy is billed to bounce back. BEITI has been playing the role of capacity building to enhance community and civil society participation in the State's planning and budgeting process. It can be stated unequivocally, that Bayelsa State has one of the most sustainable budget implementation templates in Nigeria, concluded one analyst.
In addition, Bayelsa State has initiated the establishment of Debt Management Department to enhance the capacity of the State to access various sources of debt financing, consolidation of counterpart funding for sector-specific multi-lateral projects, publication of sustainable development plan in 2010, implementation of State Statistical Master Plan to Improve economic and developmental data gathering procedures. Other achievements include the implementation of Medium-Term Expenditure Framework (MTEF), deployment of infrastructure for improved financial management capabilities of the Ministry of Finance & Budget and Automation of tax administration for improved tax administration. It aligns government spending with its specific social, economic and developmental strategic priorities and policy agenda in line with the Fiscal Responsibility Law.
Finally, full transparency brings information to the public that allows them to make informed judgments about: the behaviour of elected and non elected public officials; about the public benefits arising from public expenditures; about progress being made on resolving societal problems; and the legacy they will leave to future generations living in the state.
It has been estimated that the introduction of the Medium Term Expenditure Framework as passed into law by the State House of Assembly, the Fiscal Responsibility Law and the Public Procurement Law have provided an appropriate machinery for sustainable economic growth. It will also enhance stakeholder’s participation and better climate for Foreign Direct Investment (FDI) which automatically translates to employment generation and multi-sector development. A financial expert said, the steps taken by the Bayelsa State Government so far are laudable and designed to reposition the State for accelerated development.
The 2010 Budget And FDI In Bayelsa State
There is a vast literature establishing the relationship between Foreign Direct Investment and economic growth especially in transitional societies. In a broad sense, Foreign Direct Investment (FDI) consists of a flow of capital, expertise, and technology into the host country or State. It also implies "an array of investments made to acquire lasting interest in enterprises operating outside the economy of the investor". Foreign Direct Investment is a form of lending or finance in the area of equity participation, which involves the transfer of resources, including capital, technology, management and marketing expertise. Because of the direct and spill-over benefits of FDI, developing nations have increasingly recognized the importance of foreign capital and investment to economic growth.
In the last few years, Nigeria has accorded serious attention to FDI in the country. This is in recognition of the its role as facilitator of economic growth and development, which is believed to lead to industrialization of the economy on the long run. Foreign Investment is known to play an important role in the future as a source of capital, managerial expertise and technology for both the developing economies.
It is against this background that most states in Nigeria are striving to promote FDI to promote economic growth. Analysts and experts alike have given a thumb up for (FDI) as a veritable booster to kick-start the Nigerian economy. This is more so with the advent of democratic rule. In fact, one important economic consequence of globalisation for developing countries has been the massive and unprecedented inflow of foreign private capital by way of investments. Indeed during the last decade private capital in-flows have contributed to macro-economic stability. However, many factors affect the FDI profile of Nigeria. These factors include: availability of natural resources, infrastructure, market size, level of human capital development, distance from major markets and labour cost. Others are openness of the economy to international trade, exchange rate and fiscal regime, non-tax incentives, monetary policies and the extent of liberalization accelerated by information and communication technology. In Nigeria, the most critical challenges to attracting FDI are poor infrastructure in terms of road, and industries power supply.
In Bayelsa State, government is trying to use the 2010 budget to attract FDI to stimulate the real sectors of the economy. The budget is now regarded as the alter ego of all financial estimates that government intends to work with. First, the budget affects the lives of the citizens in a special way as it shows how their wealth is distributed and their finances expended in areas of priority. The budget estimates therefore, represent the needs of the government and the people and how such needs are met.
The 2010 Budget of Bayelsa State is guided by the philosophy of budget discipline and fiscal responsibility. Accordingly the underpinning principles of the 2010 seek to direct government resources at existing viable ongoing projects that are targeted at achieving the developmental priorities of the State Government and enlist the active participation of the private sector in the infrastructural development of the State particularly in Agriculture and real sectors of the economy. The budget also seeks public/private partnership (PPP) arrangements, as this initiative would have huge potentials for employment generation and boost the general standard of living of Bayelsa people.
The budget is also designed to enhance efficiency in public expenditure management by strengthening the capacity of government institutions responsible for driving efficient and effective macro-economic variables. The State is poised would to pursue investment in safe and highly rated instruments for reasonable economic returns; perform periodic budget monitoring exercises to assess the efficiency and effectiveness of implementation of budget and ensure the optimization of the State’s internally generated revenue. The budget further seeks to improve the State’s access to donor funds and determine the issue of actual quota of crude oil produced in Bayelsa State.
Basically, in Bayelsa State, the cost of starting a business as expressed in the percentage of income per capita is very high. This is due largely to infrastructural deficit hence the real sector of the State’s economy has not witnesses any astronomical growth. It was to overcome these challenges that prompted the State Government to consolidate on the gains made in 2009 and open windows for new economic initiatives that would promote growth on the long run. In 2009, the Bayelsa State Government strategically put in place 3 Special Purpose Vehicles (SPVs) for the establishment of 3 functional and result-oriented companies in the Ministry of Agriculture. These include: The Nigerdelta Seafoods Ltd, Bayelsa Farms Ltd and Bayelsa Oil Palm Ltd. These are areas with which Government intends to galvanize the economy of the State in terms of job/wealth creation and poverty reduction. The involvement of local and international partners in the agriculture sector would attract robust FDI.
In the health sector, the State Government is concessioning the Chief Melford Okilo Hospital and the Prof. Diete Koki Diete Koki hospital to foreign medical experts. These would be transformed into centres of excellence and encourage medical tourism in the State. While adhering to the neoliberal concept that private sector involvement results in efficiency, government has not lost sight of the social contract of ensuring the protection of the healthcare of Bayelsans and to create more robust access of healthcare delivery in the State. The concessioning of these health facilities to expatriates would yield higher growth through higher efficiency in human capital, transition and diffusing technology as well as the introduction of alternative management practices, organizational arrangement, and improved entrepreneurial skills.
The hospitality industry is another sector where the budget has set out to attract FDI. In the 2010 budget, the State over the medium term has pledged to intensify the completion of existing projects nearing completion and existing projects with high commercial viability for private sector participation. In this regard, the Senatorial roads, Cargo Airport, Tower Hotel and Conference Centre will be accorded priority. Other projects include the construction of Yenagoa Gateway Guardian Angel Project, the works yard in Yenagoa and the maintenance of public buildings in the State.
In the same vein, the government will partner with Federal Mortgage Bank (FMBN) and other private sector investors to develop about 1,300 housing units for the State. Furthermore, government will continue the infrastructural development at the housing units at Ekeki phase 1, Okaka Housing estate and low cost housing scheme at Ewoama. Adequate housing creates an enabling atmosphere for industrialization. This conducive environment will support the proposed plastic industry, which would be operational by May 2010. The plastic industry is expected to generate employment and boost the economy of Bayelsa State.
There is also a critical need for boosting Foreign Direct Investment (FDI), which would attract foreign partners to develop the economy. By encouraging FDI, the administration would have garnered enormous goodwill from major global financial institutions to catalyze the local economy and increase her competitive edge in capital investments. This is feasible because, already, government has concluded arrangements with the World Bank to provide support in planning critical sectors of the economy as well as educate principal officers on financial management based on well tested participatory, bottom-up and all-inclusive principles.
This writer suggests that as part of the post-amnesty programme, the Federal Government should complement the State Government’s efforts by establishing cottage industries through public-private partnership to mop up the middle-level manpower existing in the State. Specifically, the Federal Government can build an ICT Park in Bayelsa State as part of strategies for engaging the youths in productive activities to complement the 3E programme of the Sylva administration. The nation’s aspirations to achieve the Millennium Development Goals in 2015 and Vision 2020 would remain a pipe-dream without boosting the ICT Sub-sector. There is no gain saying the fact that the 2010 budget has been designed to sow bountifully in the real sectors, such as the provision of physical infrastructure and human capital development to unleash the economic potentials of the people.
The 2010 Budget for the State has been christened a Budget of Impact because it is focused on delivering the objectives of the administration by enhancing investment in human development, critical infrastructures that will directly impact on the wellbeing of Bayelsa people. It is indeed a realist budge that would yield dividends for the people. The implementation template shows that the budget will improve the general macroeconomic and institutional frameworks, including stable and high economic growth rate of the State. As disclosed by the Honourable Commissioner of Finance & Budget, Dr. Opuala-Charles who said “The 2010 budget of Bayelsa State is intended to illuminate and unleash the hitherto moribund economic potentials of the State and revive the creativity of the people for optimum results. It is a budget that seeks to reduce public debt, moderate the arrogance of public officers, reduce spending and consolidate on the existing institutional mechanisms of transparency and accountability. Above all, it is a budget that places emphasis on entrepreneurship, job creation, poverty reduction and the provision of heavy infrastructure through partnership with other development agencies”
With the introduction of the Sylva Stimulus Package (SSP), its immediate implementation will boost the people’s confidence in the administration. Already, Bayelsans have expressed confidence and profound optimism that the implementation of the programme will engage the active segment of the Bayelsa populace and effect the Sustainable Development of the State. It may be said without any equivocation that Bayelsa State has a budget that encourages hard work and adds value to good governance in all its ramifications. This is an indication that Bayelsa State is working.
Mildred Hayford - a postgraduate student wrote from Benin City, Edo State