of Airport and Yams..

Of Airports and Yams

Give any casual observer a budget, ask him to score it, he will ask with a smart look? What is the Capital Expenditure of the budget?

why?

We have been told repeatedly that if a budget has more in capital than recurrent expenditure its better, why? Good people perceive Capital Expenditure as new Roads and Recurrent expenditure as Salaries…

So, Roads and “good” …Salaries are “bad”?

Ok, what about Airports?

Are airports good or bad? Remember capital expenditure is “good” and “recurrent” expenditure is “bad” …. Still can’t make up your mind?

Ok if Lagos was building an airport, its good, if Benue is building an airport, its bad

Why?

Good Lagos has 36% of Domestic air traffic and 70% of international air traffic, Benue has Yams…So, its ok for Lagos to build more airports to connect those passengers to airports across Nigeria, But not for Benue State.

To use economic lingo, Lagos has a comparative advantage in travel, Benue has a comparative advantage in Yam cultivation.

So, lesson 1. Capital Expenditure to build an airport in Lagos is “good”, but “bad” in Benue.

What about a Yam Processing plant?

Zaki Biam yam market in Benue State is the largest yam market in West Africa. Benue is Nigeria's largest yam producing state in Nigeria recording an average of 1.5 million tubers annually.

So, if Lagos invests in a Yam processing plant in Lekki, is it “good”? of course not,

Why?

Any investor must pay to transport yams to Lagos? It’s cheaper to process those same yams in Benue, then transport finished products to Lagos, less weight, less waste, more productivity, more profit.

So, lesson 2. A Yam processing plant in Lagos is “bad”, but “good” in Benue

In summary; what’s the overall lesson? Not all capital projects are good, some are just darn right silly.

For instance, consider the plan by Benue State to build an airport for N38b…yes Thirty-Eight Billion Naira?

It would be insulting to ask you the reader if spending N38b to build a new airport in Benue State is a good idea, very insulting.

The Governor says airport will facilitate the movement of agriculture good by air?

That’s hogwash

A serious Governor would build a Yam processing plants in Ukum LGA, to create the necessary commerce to facilitate and fund the operations of an airport in Benue…

Let’s assume an airport in necessary, there is already an airport in Benue State, owned by the Nigerian Airforce….so all the State needs to do is perhaps extend the airport runway and build their own terminal…this won’t cost N38b.

So, I can without reservation tell the tax payers in Benue State that their Governor will waste N38b of their wealth….

If I was a conspiracy theorist I will posit that as elections approach the Governor is building a slush fund for 2019, but I am not, so I won’t say it.

It’s our problem, we can fix it

@The Republican