Excitement greets Lagos 2017 budget estimates

The perception of governance in Lagos State appears to be on a positive note, as observed by leaders like the governor of Kaduna State, Nasir el-Rufai, who applauded the state’s fiscal prudence and accountability to its citizens.  Lagos is one of the 13 states that have presented a fiscal responsibility bill to the state House […]

The perception of governance in Lagos State appears to be on a positive note, as observed by leaders like the governor of Kaduna State, Nasir el-Rufai, who applauded the state’s fiscal prudence and accountability to its citizens. 

Lagos is one of the 13 states that have presented a fiscal responsibility bill to the state House of Assembly, but unlike some states which have enacted the law and barely implemented it, Lagos State exhibits a high level of transparency and accountability in its budget presentation which is detailed and available on the Lagos State government’s website.

 Noting that irrespective of the manifesto espoused by politicians during campaigns, their annual budget is a perfect indicator of their intentions, the Kaduna State governor added: “For some reasons, the Lagos State government’s budget, since 1999 under Asiwaju Bola Ahmed Tinubu, has espoused good intentions, especially by the adoption of the Medium-Term Framework, which allows the government to make a three-year plan and take up bigger projects. That trajectory has been kept alive by successive government in the state.”

 This trajectory the incumbent Lagos State governor, Mr. Akinwunmi Ambode, has been working to maintain. Ambode disclosed in Badagry in August, while rendering accounts of his stewardship of the first half of the year, that despite the current challenging economic environment, the overall 2016 budget performance of the state by half year recorded 70 per cent, while total revenue recorded 73 per cent.

Analysing the budget, the governor said: “Your government spent a total of N115.624 billion on capital projects during the half year 2016 leading to the capital/recurrent ratio of 50:50, with the plan to improve this ratio to 58:42 provided for in the 2016 Appropriation Law in the remaining half of the year.

 Before the end of November, Ambode presented the 2017 budget proposal of N813bn to the House of Assembly. The budget is christened, “The Golden Jubilee Budget”, as it coincides with the state’s 50th anniversary.

 He said the budget would focus on physical infrastructure, while social sectors, especially health, education, youth and social development, would get adequate attention.

  Ambode explained that recurrent expenditure would gulp N300.535bn, while N512.464bn would be dedicated to capital expenditure, representing a capital/recurrent ratio of 63 per cent to 37 per cent.

 According to the governor, road construction, rehabilitation and maintenance would be one of the key focuses of the budget, adding that efforts would be geared towards roads that would open up the hinterlands, improve connectivity in the state and reduce travel time.

 He listed some of the road projects to include Murtala Mohammed International Airport Road from Oshodi, Agric-Isawo-Owotu-Arepo Road in Ikorodu, Igbe-Igbogbo Phase II- Bola Tinubu Way in Ikorodu, Ijegun Imore Phase II Amuwo in Ojo axis, Oke-Oso-Araga-Poka in Epe, Epe-Poka-Mojoda in the Epe axis and the completion of the Abule-Egba, Ajah and Pen Cinema flyovers.

 The governor also said that within the course of the budget implementation, his administration would enter into a public-private partnership (PPP) to execute some road projects, including Oke Oso-Itoikin dualisation in the Epe axis, Okokomaiko-Seme road dualisation in the Badagry axis and Ikorodu-Agbowa-Itoikin-Ijebu Ode road dualisation project in the Ikorodu axis, just as he disclosed that the phase II of the 114 local government roads project as well as the construction of the Fourth Mainland Bridge would also kick off in 2017.

 “In the course of the 2017 financial year, we shall carry out fundamental reforms on all our modes of transportation – roads, water and the walkways. In this wise, a public transport infrastructure bond will be issued in the course of the year.

 “The state government will embark on the urbanisation of the Marina axis, waterways channelization, establishment of more parks and gardens, as well as the community sports centres and stadiums in different locations across the state.

 “We will fully implement the medical health insurance scheme and deploy e-health/e-insurance health service solutions; and complete the on-going upgrading and extension work in the state General Hospitals and Ayinke House in Ikeja. Work will commence on our Medical Park in the 2017 fiscal year,” Governor Ambode said.

 On the revenue expected from federal allocation, the governor said a conservative approach was taken owing to the fall in oil prices, which, according to him, was about $41.98 per barrel at the time of finalising the budget.

He, however, expressed optimism that the state would get an increase in federal allocation” through the 13 per cent derivation from oil & gas in 2017.

 “In view of our financing gap, we shall continue to sustain deficit financing in the short-to-medium term and enhance revenue growth throughout the year on several initiatives, including automation and efficient revenue administration.

 The sectoral breakdown of the 2017 budget estimates shows N205.85bn for General Public Services, representing 25.32 per cent of the budget; N36.43bn to Public Order and Safety, representing 4.48 per cent; while Economic Affairs received a lion share of N295.84bn representing 36.39 per cent.

 Environment got 56.31bn, representing 6.93 per cent; Health got 57.29bn, representing 7.05 per cent; while Education got N92.4bn representing 11.37 per cent of the budget.

 A further analysis of the budget shows that it would be funded from a total revenue estimate of N642.849bn, while the balance of N170.150bn would be funded through a N100bn bond issuance programme and a combination of internal and external loans.

The state government expects N480bn, representing 74 per cent of the total revenue from its internally generated revenue, while N165bn, representing 26 per cent, is expected from federal transfers.

 The budget structure keeps faith with Ambode’s vision that federal allocation constitutes only 10 per cent of Lagos State’s total revenue.

 On how Lagos State would meet its drive for more revenue, Magnus Nmonwu, Regional Director for Sage in West Africa, suggested the need for the state government to deploy solutions that would make it more accountable, especially in tracking expenditures.  

“It is not everything you budget that you tend to expend, but you need a solution that gives you visibility as to how you are doing with your expenses, which will help on curtailing leakages,” he said.

Daniel Ikhouria, a Development Researcher and the Country Director of One.org, pointed out the importance for Lagos to generate more revenue to meet its huge infrastructural challenges.

 Ikhuoria said: “For a state like Lagos, N18bn in 2017 for water seems very small, especially if you look at a population of over 21 million residents. Providing safe drinking water has been a vital challenge for successive administrations, including the present administration.”

 The former Group Managing Director, Lagos State Water Corporation (LSWC), Engr. Shayo Holloway, had said that the state would require over 540m gallons of water daily to address the water shortage in the state, adding that its water requirement may increase following the influx of citizens of other states into Lagos.

 Holloway said: “With the population of the state, our current water demand daily is about 540m gallons per day. The state has an installed capacity of 210m of gallons per day, leaving the state with a shortfall of 330m of gallons per day.”  

Ikhouria posited that if the government can improve on the performance of the LSWC in the production of water and collection of water tariff, as well as encourage private sector investment in production and supply of power water, it could open another huge revenue basket for the state, in addition to solving the health challenge of diarrhoea, dysentery, cholera, malaria and typhoid fever.