Chapter Three 

A COMPARATIVE ANALYSIS OF ACTUAL VS BUDGETED PERFORMANCE 1999-2004

	Table 3.1  -  Overview of Actual Vs. Budget Performance, 1999-2004
REVENUE / EXPENDITURE	1999		2000		2001		2002		2003		2004		TOTAL[4]
N' BILLION	BUDGET	ACTUAL	BUDGET	ACTUAL	BUDGET	ACTUAL	BUDGET	ACTUAL	BUDGET	ACTUAL	BUDGET	ACTUAL	BUDGET	ACTUAL
REVENUE
INTERNALLY GENERATED REVENUE	2.66	2.42	4.62	2.99	5.39	5.34	6.26	5.82	6.73	7.92	8.02	9.22	33.68	33.71
STATUTORY ALLOCATION	4.2	3.87	31.11	6.64	36.64	6.6	35.33	12.18	45.42	10.97	49.18	16.5	201.88	56.76
13% DERIVATION				18.71		26.9		29.31		38.87		56.23		170.02
SPECIAL ALLOCATION &				2.57		0.5		0.15		1.84		2.59		7.65
EXCESS CRUDE
SUB - TOTAL	4.2	3.87	31.11	27.92	36.64	34	35.33	41.64	45.42	51.68	49.18	75.32	201.88	234.43
VAT	0.9	0.72	1.19	0.96	1.32	1.61	1.46	1.85	1.87	2.31	2.3	2.47	9.04	9.92
FEDERATION ACCOUNT	5.1	4.59	32.3	28.88	37.96	35.61	36.79	43.49	47.29	53.99	51.48	77.79	210.92	244.35
CAPITAL RECEIPTS (LOANS ETC)	0.82	1.15	5.83	2.86	15.24	14.19	10.94	2.77	7.79	9.33	14.54	6.8	55.16	37.1
TOTAL REVENUE	8.58	8.16	42.75	34.73	58.59	55.14	53.99	52.08	61.81	71.24	74.04	93.81	299.76	315.16
EXPENDITURE
RECURRENT EXPENDITURE	4.54	5.44	16.14	13.76	19.06	22.1	27.08	31.41	32.71	42.7	39.15	52.24	138.68	167.65
CAPITAL EXPENDITURE	4.04	2.37	26.61	16.52	39.53	36.48	26.91	20.65	29.1	27.71	34.89	40.97	161.08	144.70
TOTAL EXPENDITURE	8.58	7.81	42.75	30.28	58.59	58.58	53.99	52.06	61.81	70.41	74.04	93.21	299.76	312.35
SURPLUS / DEFICIT	0	0.35	0	4.45	0	-3.44	0	0.02	0	0.83	0	0.6	0	2.81

3.1       INTERNALLY GENERATED REVENUE (IGR) PERFORMANCE

Actual IGR increased from N2.42 billion in 1999 to N9.22 billion in 2004, an increase of 280% over the period under review. In addition, IGR contributed 10.7% of total revenue accruing to the state during the period.

The growth of IGR in Delta State is mainly due to the innovations and incentives which the State Ministry of Finance introduced in the Board of Internal Revenue to improve their efficiency and effectiveness despite the Warri crisis which inhibited revenue collection during the period. Notwithstanding, over 80% of the state’s IGR is generated in Warri and the immediate environs.

Between 1999 and 2002, actual IGR was slightly below budget mainly due to the lingering Warri crises. In 2003, the State exceeded IGR projections by N1.19 billion (18%). This trend also continued in 2004 with the actual exceeding budget by N1.2 billion (15%). The IGR growth pattern is illustrated graphically below:

Fig 3.1

            PERFORMANCE BY THE BOARD OF INTERNAL REVENUE (BIR)

Table 3.1 below shows the performance of the Board of Internal Revenue (BIR) in Delta State covering the 1999-2004 review period.

Table 3.1 - Board of Internal Revenue (BIR), 1999-2004

S/NO.	SENATORIAL DISTRICT/HEADQUARTERS	AMOUNT (Nb)	%
1	Delta North	4.60	15.32
2	Delta Central	6.26	20.85
3	Delta South	18.76	62.47
4	Headquarters	0.41	1.36
Total:		30.03	100.00

The total collection of N30.03 billion by the BIR compares favourably with the amount of N33.71 billion which is the total amount of Internally Generated Revenue (IGR) of the State during the same period. The difference of N3.68 billion is accounted for by other revenue sources, which do not pass through the BIR such as revenue generated by other Government Ministries and Departments

The revenue performance by the Senatorial Districts and the Headquarters of BIR is shown graphically below as Figure 3.2

The above pie chart shows that Delta South generated 63%, Central 21%, North 15% and Asaba Headquarters 1% of the total revenue collected by the BIR during the period.

Detailed contributions by all the BIR offices in the three Senatorial Districts are shown in Volume II of this Report.

3.2              ALLOCATIONS FROM THE FEDERATION ACCOUNT

During the period under review, the actual revenue received from the Federation Account was N244.35bn. This is estimated to be approximately 4.6% of the revenue derived by the Federation from Delta State during the period. Receipts from the Federation Account exceeded the budgeted amount of N210bn by 16%. Between 1999 and 2001 receipts from the Federation Account was below budget. However, from 2002 to 2004, releases from the Federation Account exceeded budgeted estimates largely due to the continued increase in the world oil market price for crude oil, further depreciation of the Naira[5], stricter adherence to constitutional provisions for sharing revenue between the different tiers of government[6] and increase in Federation Account revenue paid as derivation to oil producing states.

Fig 3.3

It should be noted that during the period under review, over N170bn or approximately 70% of the statutory allocation released to the state was in respect of 13% derivation. Normal statutory allocation/excess crude amounted to N64.4bn. This is illustrated graphically below:

Fig 3.4

3.3              CAPITAL RECEIPTS

This consists essentially of bridging finance necessary to accommodate any shortfall in revenue required to finance development projects and also to ensure that projects are completed on schedule without financial constraints. Actual Capital Receipts amounted to N37.1bn compared to the budget amount of N55.16bn for the period under review. Capital receipts also included the N5bn Delta State Revenue bond of which N3.5bn was actually drawn.

Table 3.1 shows that the total revenue for the five year period 1999-2004 was N315.16bn which slightly exceeded the total budgeted revenue of N299.76 billion or 5.13%. During the period under review, the recurrent expenditure and capital expenditure were N167.65 billion and N144.7bn[7], respectively. This is illustrated graphically below:

 Figure 3.5

Fig 3.6

3.4              Significant increases in overhead and personnel cost are responsible for the higher than expected actual recurrent expenditure compared to budget thus reducing the amount available for capital expenditure. A more detailed analysis of the reasons behind the increase in recurrent expenditure is provided in chapter four.