Abia State Governor, Dr. Alex Otti, has unveiled a N750 billion budget for the 2025 fiscal year, aptly titled the “Budget of Sustained Momentum.” The proposed budget comes with a 30% increase over the 2024 budget, emphasizing capital projects to catalyze economic growth and address the state’s infrastructural challenges.

Speaking at the Abia State House of Assembly on Wednesday, Governor Otti explained that the budget demonstrates his administration’s unwavering commitment to development.

“Today, I had the honor of presenting the 2025 Budget to the Abia State House of Assembly. The budget, titled ‘Budget of Sustained Momentum,’ underscores our unwavering commitment to advancing Abia’s development. The proposed budget for the 2025 fiscal year amounts to Seven hundred and fifty billion, two hundred and eighty two million, two hundred thousand Naira only (N750,282,200,000),” he said.

Otti’s administration allocated N611.7 billion, or 82% of the total budget, to capital expenditures. These funds will primarily target infrastructure, healthcare, education, and industrial growth to ensure long-term socioeconomic transformation.

“This significant allocation to capital projects reflects our intent to sustain the progress achieved over the past 18 months. It is imperative to address infrastructural deficits and create a conducive environment for economic growth and investment,” he said.

The remaining N138.6 billion, accounting for 18% of the budget, will cover recurrent expenses, including personnel costs, social benefits, overheads, and debt servicing.

Health and Education, A Top Priority

Otti highlighted that 35% of the budget is earmarked for the health and education sectors, which is in line with the administration’s ongoing commitment to these critical areas. Specifically, 15% will be allocated to healthcare, while basic and secondary education will receive 14.63%, and tertiary education 5.42%.

“As in the previous year, the health and education sectors will receive approximately 35% of the budget. These allocations will address pressing challenges in these sectors, ensuring better access, improved quality, and greater capacity,” the governor explained.

The budget is built on optimistic revenue projections, with a focus on boosting internally generated revenue (IGR) and optimizing statutory allocations. Key projections include:

• A 213% increase in IGR to N100.6 billion.
• A 96% rise in statutory allocations to N183.4 billion.
• A 55% increase in grants to N25.5 billion.
• A 35% increase in VAT collections to N55.1 billion.

The governor clarified that 51% of the budget, amounting to N364.1 billion, would be financed through domestic and multilateral channels. However, he reiterated his administration’s stance against borrowing for recurrent expenses, noting that loans would only be secured for projects capable of generating returns to service the debt.

“Importantly, as with last year, we will not borrow to finance recurrent expenditures. Borrowing will only occur when necessary and will be used for projects that can repay the loans. We are pleased to report that no funds were borrowed in the 2024 fiscal year, and we have taken steps to repay old debts, maintaining zero indebtedness to contractors,” Otti said.

Reflections on the 2024 Fiscal Year

The 2024 budget performance has drawn both criticism and praise. Initially, the governor faced backlash for proposing to borrow N400 billion, with financial analysts labeling it “amateurish” and “unrealistic.”

“His plan to borrow N400 billion, 12 times his projected IGR as a subnational and four times the state’s existing debt, was a crazy plan. There were no lenders in the market,” a financial analyst said. “As you can see from the budget performance, his recurrent expenditure is 3x his IGR. This is bankruptcy. The increase in FAAC was his saving grace.”

Despite the initial skepticism, a detailed review of the 2024 budget shows fiscal stability and commendable performance. Economist Kalu Aja commended the state for its prudent financial management, noting significant improvements in key areas.

“The state spent only 17% of its total revenues on recurrent expenses like salaries but 50% on capital items, specifically infrastructure like roads. This is commendable because the state, an SME cluster, has suffered from a lack of basic infrastructure. The budget thus captures the intent of the state government to simply return the state to normalcy,” Aja said.

2024 Fiscal Year Performance Highlights (Q1-Q3)

• Budget Size: N567.2 billion.
• Revenue Performance: N255 billion (41%).
• Expenditure Performance: N177 billion (30%).
• Total Personnel Cost: N43 billion (17% of revenues).
• Capital Expenditure: N128 billion (50% of revenues).
• Total Borrowing: N3.9 billion (1.2% of the 2024 budget projection).
• Debt Servicing: N10.9 billion (with 23x revenue cover).

Otti’s administration maintained minimal borrowing, prioritizing international loans with lower interest rates over expensive domestic options.

“The state has also borrowed more internationally and has not accessed the expensive local Nigerian debt market for loans. Remember, it’s the interest cost of the debt, not the amount, that is material,” Aja added.

Notably, Abia State ranked among the top three destinations for foreign direct investment (FDI) in Nigeria in 2024, trailing only Lagos and Abuja.

“Overall, this has been a commendable start. This has been a budget of financial prudence, especially in terms of debt,” Aja concluded.

2025: A Vision for Sustained Growth

Otti’s ambitious 2025 budget seeks to consolidate the progress made in 2024 while addressing ongoing challenges such as inflation and exchange rate volatility.

“This budget reflects our resolve to sustain the momentum of development and transform Abia State into an economic powerhouse. We remain committed to transparency, accountability, and prudent management of resources,” the governor said in closing.

However, analysts believe that the administration’s ability to meet its revenue targets and implement critical capital projects will be key to achieving its goals.