The Benue Economy: The Situation and how can we grow it? By UKERTOR GABRIEL MOTI
Being a Keynote Address presented by Professor Ukertor Gabriel Moti (Professor of Public Sector Management and Governance), Dean, School of Postgraduate Studies and Director, Abuja Centre for European Studies (ACES), Department of Public Administration, University of Abuja-Nigeria +2348033114425; +23490954318577 [email protected]; [email protected], at CLUB DE PALS maiden Annual Reunion & Awards Ceremony, at the Royal Choice Inn, Abuja, on 7th December, 2024
Preamble
It is a great pleasure and worthy opportunity to present this key note paper at the maiden reunion and Award ceremony of Club De Pals. It is indeed a reunion for me too haven not attended activities of the Club for over 10 years. That explains why even at a very short notice in the midst of very tight schedule, I accepted this invitation.
Benue is a very resourced State, rich in minerals, but better known for its rich agricultural produce – most of which are cash crops (yam, rice, beans, cassava, maize, soya beans, (Benue state accounts for 70 percent of Nigeria’s soya beans) sorghum, millet. This explains the name Food Basket of the Nation. Ironically, the situation of Benue state is a paradox of poverty in the midst of potential wealth.
The state has an estimated population of 6.67 Million people with largest stretches of Rivers system in the country, a great potential for viable fishing industry, dry season farming and Inland Water Highway.
State of the Economy
BUDGIT 2022 State of States Report puts Benue Gross Domestic Product (GDP) at N4.27 trillion making the state the 2nd with the largest GDP in North Central Nigeria just below Niger state with N4.55 trillion. Benue is the 3rd in the North, but 12th in Nigeria after Lagos, Rivers, Akwa Ibom, Imo, Delta, Anambra, Ondo, Ogun, Bayelsa, Niger and Kaduna.
With a GDP per capital of N698.241, Benue is the 14th in Nigeria, 2nd in the North after Kogi with N830.3. These seemingly impressive numbers when compared with States in the South, Benue is very low and far much improvement is needed to raise the living standard of the people.
Internally Generated Revenue (IGR)
IGR is an indicator that demonstrates financial strength and capacity to drive long-term economic activity, boost employment and offer effective public services. A little comparative and trend analysis reveals the vulnerable financial and economic situation of Benue state.
In 2018 Benue’s total IGR stood at N11.22Billion. In 2019 it increased by 53 percent to N17.18 Billion. However, in 2020, it dropped to N10.46 Billion, which can be attributed to the COVID-19 crisis. In 2021 it stood at N12.60 Billion and in 2022 it was N14.32 Billion. This made the IGR an average of N1.59 Billion.
This shows that the state’s revenue is relatively small, the least in North Central. The state’s reliance on Federation Allocation for survival is on the high side. Benue is the 4th most FAAC dependent state in Nigeria and this is dangerous for poverty reduction. The challenge here is to explore options that can potentially increase IGR and reduce the heavy dependence on FAAC allocation that can lead to fiscal sustainability.
Fiscal Performance Ranking
Based on the above, it is not surprising that Benue fiscal performance has been extremely poor. The State ranked 24th in Fiscal performance in 2019. 32nd in 2020. 34th in 2021 and 36th in 2022. This calls for discipline spending to increase fiscal sustainability. This is so critical now because in 2022 the domestic debt of the state stood at N1411.29 Billion making the state the 13th with the most domestic debt in Nigeria and 2nd in North Central. The cheering news is being that Foreign debt decreased from $33.42 in 2019 to $29.94 in 2022.
Overall this is not good enough for a state whose unemployment rate according the Nigerian Bureau of Statistics (NBS, 2022) calculating those who worked less than 20 hours per week as unemployed showed that out of a population of 6million persons only 2.83 million persons are in the labour force, with 339, 311 completely unemployed, a rate of 12 percent unemployment. The Multidimensional Poverty Index (MPI) says 75 percent of Benue population is dimensionally poor, it means they lack access to either good health, education, living standard or work and shocks. Overall poverty rate is put at 32.9 percent. This is a clear consequence of a weak socio-economic profile and reliance on transfers.
In 2024, under the Vulnerable Risk Profile, Fitch rated Benue state ‘B’, meaning the state is vulnerable and has weak ability to cover debt service with its operating balance because it depends on 80 percent Federation Allocation and less than 20 percent IGR. The Adjustability of the state is weak, sustainability is weak and it needs 35 percent of its resources to handle critical social sector services such as education, health and economic development.
In all these unfavourable circumstances, the ever persistent case of insecurity has not completely left the state. Insecurity reduces investor confidence, agricultural activities are stalled and poverty is rising. Insecurity has cast a long shadow over Benue leaving an indelible mark on its economic landscape. The consequence of insecurity which include fear and instability is manifest in various facets of the states’ economy, creating ripples far beyond immediate concerns. For instance, the large Zaki Biam international Yan Market is no more as a consequence of insecurity.
The state has a deteriorating operating economy which means its control over total expenditure is weak and is influenced by high inflation, rising abnormality prices and supply constraint. However, there is some good news. In 2024, the IGR grew by 27.81 percent and Gross Federation Allocation has increased by 53.55 percent which has given rise to capital expenditure of 104.6 percent. This explains why the state is currently engaged in infrastructure development, and industrial ventures under its investment platform, the Benue State Investment and Property Company (BIPC).
How to Grow the Economy
Economic growth is measured by an increase in gross domestic product (GDP), which is defined as the combined value of all goods and services produced within a country or state in a year. In every economy, economic growth often is driven by consumer spending and business investment. If consumers are buying homes, for example, home builders, contractors, and construction workers will experience economic growth. Businesses also drive the economy when they hire workers, raise wages, and invest in growing their businesses.
Investments, innovation, policy and finance all play a central role in defining the economic growth model of the 21st century. Unfortunately, these four critical factors that make economic growth sustainable, resilient and inclusive are not in high supply in the state.
The way forward is to develop a strong partnership between the government, the private sector and the people.
The Vision of the current administration is to build an economy based on functional education, employment generation, agricultural development and growth with a focus on food production and processing in a secured environment that ensures food security, wealth creation and poverty reduction. To achieve economic growth, the government needs to work hard towards the reduction of the challenges earlier noted and focus on:
Increased internal and external security across the state; reduce the high reliance on federal statutory allocation by increasing transparency and accountability in the generation and management of Internally Generated Revenue (IGR). Remove the distorted agricultural value chain by focusing on processing, agribusiness and industrial establishments. To rebuild the Benue economy would require deliberately bringing in the private sector to develop an agriculture-driven economy through agro-processing and small and medium-level manufacturing.
The government should in addition do three things:
- Improve Infrastructure: The government must prioritize investing in infrastructure development by rehabilitating roads, improving water supply, and expanding telecommunication networks, building of railways to conveyance of heavy duty haulage and provide affordable but efficient travel alternatives etc providing entrepreneurs with a conducive environment for business operations and growth.
- Tax Incentives: Creating a favourable tax regime for entrepreneurs, such as tax breaks, exemptions, and simplified tax procedures, can encourage business expansion, increase government revenues in the long run, and promote job and wealth creation.
- Enhance Electricity Supply: The government should collaborate with private investors to improve electricity generation, transmission, and distribution infrastructure, enabling reliable and affordable power supply to businesses.
These I believe would assist Benue rebuild its economy. But it is not going to be easy. Our business people must also be willing to go into joint ventures. Civil society organisations like Club De Pals must understand that the state is ours and we will always go back there. Invest in any little venture and grow the Benue economy.
I congratulate the Award winners and wish Club De Pals best wishes while commending it for its resilience.