On March 10, 2019, the Independent National Electoral Commission (INEC) declared Seyi Makinde, the candidate of the Peoples Democratic Party (PDP), the winner of the Oyo State governorship election.
Makinde polled 515,621 votes to defeat his closest contender, Bayo Adelabu of the All Progressive Congress (APC), who polled 357,982 votes.
In another 6 months, the people of Oyo state will go to the polls again to decide who to give their mandate to, and Seyi Makinde is presenting himself again to serve them.
On April 7, 2022, he formally announced his intention to run for a second term as the chief executive officer of Oyo State. According to him, the decision for a second term is to further build on the solid foundation his government had laid, stressing that the “work is not done until all problems are addressed.”
“In the last three years, Oyo State has seen unprecedented development in all sectors with no zone left behind. We have worked hard in all four pillars upon which our Roadmap to Accelerated Development in Oyo State 2019-2023 is built. We are engineering a modern Oyo State. But, as every engineer would tell you, our work is not done until all problems are addressed. We believe we have laid a solid foundation for solving the problems of moving the good people of Oyo State from poverty to prosperity.
We would love an opportunity to build on that foundation. So now, the ball is, once again, in your court. “If you, the good people of Oyo State, desire it, then we will serve you for four more years,” Seyi Makinde said in his bi-monthly newsletter with thousands of subscribers.
As the people of Oyo state prepare for the polls next year, and as Makinde, as well as other governorship candidates, set to kickstart their political campaigns on October 12, 2022, to make known their plans for the state and its people, Dataphyte examines some important socio-economic indicators in the state and how they fared under the Makinde-led government.
Additionally, to bring certain critical issues in the state to the attention of the voters, especially as the campaign season gets underway and the candidates state their plans for the state.
GDP, IGR & Fiscal Sustainability
GDP
The most recent Gross Domestic Product (GDP) data by the National Bureau of Statistics (NBS) puts Oyo state’s total GDP at $16.12 billion. It is important to state that this data was released in 2012, and so far has been the only time that the subnational GDP reports have been published by the NBS.
However, the information published on the Oyo State Government portal puts the current GDP at $29.8 billion. Thus, we may not be able to determine the actual GDP growth rate, particularly from 2019, when Seyi Makinde assumed office as the governor of the state. However, to further increase the state’s GDP, candidates for the 2023 election should have a clear economic strategy in their manifesto.
IGR
A significant portion of each state’s revenue comes from internally generated revenue (IGR). It is generated by states through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes, and revenues from Ministries, Departments and Agencies (MDA)s.
Ideally, this should form the primary source of revenue for states. However, it has taken the second position as the majority of the states in Nigeria now depend on monthly statutorily allocations from the central vault to carry out their businesses.
For Oyo state, this is evident, as an analysis of the IGR and total allocations from the Federation Account Allocation Committee (FAAC) shows that the state is heavily reliant on FAAC allocations.
Admittedly, there has been a steady growth in the state’s IGR, particularly under the Makinde-led government. Oyo state saw a 42.23% growth in its IGR between 2019 and 2020, despite the COVID-19 outbreak in 2020 having a negative impact on the IGR of several other states in the country.
At the end of the first half of 2021, NBS reported that Oyo state had generated a total of N25.19 billion as internal revenue, placing it as the 7th state with the highest IGR. The state might surpass the total amount of internal revenue it generated at the end of 2021 if it maintained the same momentum in the second half of the year.
Nonetheless, data shows that the state is still dependent on FAAC allocation. Between 2019 to 2020, the state generated a total of N64.79 billion, while it received N109.46 billion as FAAC disbursement, indicating some level of reliance on disbursement from the federal government. This situation is concerning, especially as it exposes the state’s annual spending plans to risks from the volatility of crude oil prices, on which a considerable chunk of federally collected revenue depends.
While the state’s positive annual IGR growth is commendable, there is still more to be done by the state, particularly on charting a pathway to further reducing its dependence on FAAC. Moreso, the state’s IGR on a per capita basis is low. Oyo state’s IGR per capita stands at N4,235, lower than the country’s average IGR per capita of N4,616.
FISCAL SUSTAINABILITY
Using 4 indexes in 2021, BudgIT assessed the fiscal sustainability of the 36 states. The indexes used include a state’s ability to cover its operating costs, its ability to cover its operating costs and loan repayments without borrowing, its fiscal capacity to borrow more given its low debt burden relative to its annual revenue, and the prioritisation of capital over recurrent expenditures to determine the health of states.
In the 2021 ranking, Oyo state came 23rd place, up from its 26th position in 2020, indicating an improvement in its fiscal sustainability. However, the state has seen a considerable increase in both its domestic and foreign debts.
In 2019, Oyo state’s total domestic debt was N91.60 billion. Between that period and 2021, the debt rose by 55.63% to N142.56 billion, making it the 10th state in Nigeria with the highest domestic debt at the end of 2021.
The state’s foreign debt likewise increased. Although it is the 7th least indebted state in Nigeria (on foreign debt), however, between 2019 and 2021, its debt grew by 158.61%.
As pointed out in a report in 2021, Oyo state has several revenue options it can explore to improve its revenue which can potentially reduce its borrowings and heavy dependence on FAAC revenue and put it on a path to sustainable prosperity. In the 2023 election, these issues should be a key component of the manifestos of the candidates.
Unemployment rate
In the lead to the 2019 election, Seyi Makinde stated that job creation would be one of his administration’s key priorities.
“Employment is one of the best ways to fight rising crime rates, keep families together and build a stable society. One of the main priorities as your governor will be to provide an enabling environment for business so that more jobs can be created…,” he said.
Prior to his election in 2019, Oyo state had a 10.34% unemployment rate, the lowest in the country then. But now, the state’s current unemployment rate is 24.7%, according to the latest labour force statistics released by the NBS in 2020. This shows a 14.34% increase in the state’s unemployment rate between 2018 and 2020.
With a 37.63% unemployment rate, Oyo state is now the 4th state in Nigeria with the lowest unemployment rate and the 3rd in the South-West region. The governorship candidates should consider this increase in unemployment rates, and whoever emerges as the winner will need to develop implementable plans to reduce the unemployment rate.
Poverty rate
Increasing poverty is one of Nigeria’s numerous challenges, and at every point, the Nigerian government, both at the federal and sub-national levels, has pledged to address this menace.
When Seyi Makinde was elected governor of Oyo state in 2019, he stated that poverty reduction was one of his cardinal programmes for the state. Among other things, he has based his re-election campaign on the need to strengthen the foundation of moving the people of the state from poverty to prosperity.
Although his impact on socio-economic indicators cannot be assessed as no poverty headcount has been released since he assumed office as a governor; however, the 2019 data published by the NBS shows that Oyo state has a poverty headcount ratio of 9.83%. With this, the state is 5th with the lowest poverty headcount out of the 35 assessed in 2019.
However, there is a possibility that this might have increased over the years as the unemployment rate in the state has risen. Moreover, there has been an increase in the national poverty rate, according to the data from the Poverty World Clock. The World Bank has also projected that this year alone, 7 million Nigeria may be pushed into poverty because of high inflation, which currently stands at 20.52%.
Therefore, the strategies of all the candidates for reducing poverty in the state should be important to the voters.
Budgetary Allocation to Key Sectors – Education, Health & Agriculture
For states hoping to improve their human development and expand their economy, these 3 sectors are critical. Thus, the United Nations Educational Scientific and Cultural Organization (UNESCO) advises governments to allocate 15% to 20% of their total public spending for the fiscal year to education. While the Abuja Declaration stipulates that government should set aside 15% of its annual budget to improve the health sector. Likewise, the Maputo Declaration recommended that governments should allocate at least 10% of their public spending to agricultural and rural development.
A 3-year analysis of the Oyo state government budgetary allocation to the education sector shows that the least share of the annual budget the state has allocated to health was in 2020, which was 17.90%. It was higher in the preceding years.
However, the state’s budgetary allocations to health and agriculture have been below the recommended benchmarks.
For governments to improve their health sector, the Abuja Declaration recommends that governments allocate 15% of their annual budget to health. A review of the Oyo state health budget from 2020 shows that the state has never met the benchmark.
Likewise, the budgetary allocation to the agricultural sector. 3 years ago, the incumbent governor of Oyo state said that agriculture will be used to boost the state’s economy and emphasized that his administration would take real actions in this regard. With this, perhaps, one would have anticipated a higher financial commitment to the agricultural sector, but a review of the sector’s budget reveals that allocations have been less than 5%, far below the 10% that the Maputo decoration suggests.
The highest share of the Oyo state fiscal budget that has been allocated to the agriculture sector was in 2020 — 4.33%. Given the state’s enormous amount of fertile arable land suited for agriculture, more financial commitment could better position the state to benefit from the huge potential of the sector, especially in boosting its economy. This should be an important concern for the candidates in the upcoming election.
Number of Out-of-School Children
Another pertinent issue that should be at the forefront of the governorship candidates’ promises to the people is reducing the number of out-of-school children in the state.
According to NBS data, Oyo state has 418,900 out-of-school children, making it the South-Western state with the highest number of out-of-school children and ninth most nationwide. It is important to state that this data was published in 2018, thus, may not be the true reflection of the state’s current reality with respect to the number of out-of-school children, as the United Nations Educational, Scientific and Cultural Organisation (UNESCO) disclosed recently that the number of out-of-school children in Nigeria has risen to 20 million.
Although the report did not show the breakdown by state, however, with the increase in the number of out-of-school children nationally, Oyo state may likely experience a corresponding increase. Therefore, policies to address this issue should be part of the plans of the candidates for the state.
Ease of Doing Business Ranking
The Ease of Doing Business survey conducted by the Presidential Enabling Business Environment Council (PEBEC) last year ranked Oyo state 29th place out of the 36 states and Federal Capital Territory (FCT) on ease of doing business.
The 36 states and FCT were assessed on four thematic areas — Infrastructure and Security, Transparency and Access to Information, Regulatory Environment, and Workforce Readiness, with a total index score of 10.
Oyo state scored 4.86, coming in 29th place and worst among the South-West states. Oyo state will need to improve its business climate given the significance of a business environment in attracting investors and, in turn, growing a state’s economy. It is crucial for the candidates to look at the thematic areas assessed with a view to devising plans to improve them.
Under-5 Mortality Rate & Access to Health
Perhaps one of the most pertinent socio-economic indicators to give attention to in the state is the under-five mortality rate. According to the data, the under-5 mortality rate in the state is estimated at 64 deaths per 1,000 live births. This implies that at least 6 out of every 100 children born alive in Oyo State die before their fifth birthday.
This is higher than the average of 62 deaths per 1,000 live births in Lower-Middle-Income Countries in Sub-Saharan Africa and far above the Sustainable Development Goals (SDGs) target of 20 per 1,000 live births.
Improving access to healthcare and reducing the under-5 mortality rate in the state should be a top agenda of the candidates for the states and a top priority for the electorate to whoever they give their mantle to in the 2023 election.