How Lagos Budgets Performed In Four Years

The Banquet Hall, State House, Ikeja was filled to capacity. Commissioners in Governor Babatunde Fashola’s cabinet, Permanent Secretaries, local and international pressmen filled the hall. It was a time to give an account of how the Lagos budgets in the last three years fared.

Commissioner for Economic Planning and Budget, Mr. Ben Akabueze was the anchor man, who explained to newsmen how the budgets had fared since 2007 when the administration came into office. Since 2007, the state government had a budget of N1.49 trillion out of which it raised N1.1 trillion to cater for the needs of Lagosians.

In 2007, N274.762 billion was budgeted; 2008, N403.401 billion, 2009, N405 billion and in 2010, N411.571 billion.

Prudent budget management to turn a myriad of socio-economic challenges confronting the metropolitan state to a huge world of opportunities has been the key to transforming the state.

For clearer understanding, Akabueze offered an insight into the state of Lagos’ economy prior to when Governor Babatunde Fashola took over from former Governor Bola Tinubu whom he said laid down a robust road map to confront the socio-economic challenges of Africa’s emerging model mega-city.

Akabueze cited Ten-Point Agenda (TPA), Millennium Development Goals, MDGs, Lagos State Economic Empowerment and Development Strategy, LASEEDS, resolutions of Lagos Economic Summits, global computerization programme, revenue diversification and deepening, and enhanced transparency and accountability relating to internally generated revenue, IGR as key policy documents and initiatives currently being implemented to achieve high budget performance since 2007 and transform Lagos to a desired city. According to him, the Fashola administration was faced with lots of challenges when it came into power in 2007, some of which are poor resource profiles, huge infrastructural gaps, high crime rate, growing unemployment rate, inadequate institutional capacities, influx of immigrants from neighbouring states, prevalent poverty and socio-economic problems.

He disclosed that the budget projection of the state stood at about $50 billion to be spent within a period of 10 years. Studies carried out by the present administration in 2007, according to him, showed that Lagos infrastructure funding gaps would gulp $50 billion.

As indicated in the studies, water development requires $3 billion; road and drainage needs $20 billion; power will also gulps $10 billion; ICT needs $5 billion, transportation requires $9.3 billion and water and sewage will require $2.7 billion.

He said broad socio-economic strategies had been deployed “to achieve the change agenda. This includes revenue diversification and deepening; enhanced transparency and accountability; efficient allocation of resources across sectors; tighter operating expenditure control, quarterly review of budget performance; more effective project monitoring as well as pegging capital and recurrent expenditure ratio at 60:40. This approach has proved effective and efficient in the state fiscal management.”

This is precisely what Akabueze said was responsible “for the state exponential improvement in its budget performance from 2007 to 2010. About 70 percent performance was recorded in 2007; 71 percent in 2008; 73 percent in 2009; and 80 percent in 2010. In this light, Lagos State has since 2007 been recording best budget performances across all the states of federation, and by extension, other states in West African sub-region within the period under study.”

The commissioner added that the international standard 9-sector classification of functions of government (COFOG) was introduced in 2008 to replace previous 4-sector classification. Away from the 4-sector classification, the commissioner attributed the state budget performances to the new standard, which he said specifically placed more emphasis on such sectors as infrastructure development, social protection, education, environmental protection, health, general services, public order and safety.

Akabueze said the key outputs of the budgets “include increased internally generated revenue, IGR, from N85 billion to N176billion (i.e. N7bn to N15bn monthly) anchored on Medium Term Sectoral Strategy, MTSS; Medium Term Expenditure Framework, MTEF; Medium Term Budget Framework, MTBF, applied to strengthen public expenditure management. The state’s MDAs now have functional ICT units, statewide Implementation of Electronic Document Management System, EDMS, improved staff competence”.

The sectoral reviews showed graphic performances of the state budgets between 2007 and 2010. Akabueze cited the public order and safety sector, which he said, had witnessed an optimal decline in term of crime rate, while attributing the decline “to the establishment of the State Security Trust Fund, LSSTF, two helicopters purchased for security and emergency management; Central Security Surveillance, CSS; 500 patrol vehicles, 18 Armoured Personnel Carriers, APCs; arms and ammunition purchased for the police command.

“The key outcomes were that armed robbery incidents and stolen vehicles decreased by 89 per cent in 2008 and 54 per cent in 2009 respectively. Murder cases fell from 221 cases in 2007 to 94 incidents in 2010, representing about 75 per cent decline. For every 10 cars stolen in 2009 at least nine were recovered in the same year, and quicker disposition of cases (in term of judgement delivered in criminal charges filed in the state) improved by 61 per cent, especially those related to criminal cases tried in 2010 from 13 per cent in 2007,” he disclosed.

Akabueze stated that budget implementation had really helped the state government improve food security in the last four years, adding that this accounted for an improved and increased local food crop production “from 1.452 million metric tons in 2007 to 2.103 million metric tons in 2010; increased livestock from 1.765 million metric tons in 2007 to 2.005 million metric tons in 2010; increased aggregate fisheries production from 0.249 million metric tons in 2007 to 0.255 million metric tons in 2010, while beneficiaries from the state Agricultural Youth Empowerment Scheme, Agric-YES Project had improved from 300 in 2007 to 1,500 in 2010.”

Quoting the United Nations Development Programme (UNDP) report, Akabueze’s presentation showed a downward movement of unemployment rate to 20 percent. This does not include undergraduates engaged in Enterprise Registration and Identification Development Agency, ENTRIDA Project; partnership with Messrs Elsewedy Electric Nigeria Limited on the production of transformers and cables; 70 persons employed at take-off in 2010; commencement of physical development of Lekki Free Trade Zone, LFTZ and deployment of 1,273 high capacity buses to enhance public transportation all parts of the Lagos metropolis.

On the unspent funds, Akabueze said the state “does not run the silos kind of accounting system whereby funds are allocated to MDAs to prosecute their projects and retire whatever is unspent at the end of the fiscal year to the treasury office as it is done at the national level. The state MDAs are encouraged to go to the treasury for cash backing when they are ready to pay contractors for projects they want to implement.”

His clarification on the uncompleted projects pointed to the fact that the state “adopts the medium term expenditure framework, MTEF’ with a basic principle that budgetary plan spans beyond one fiscal year.”

Under this framework, he said, some projects were not designed to be completed within a budget cycle as many might be designed to last about three years to complete, adding that what is incorporated in each budget for such projects lasting longer would be estimated cost value of jobs to be accomplished within such a fiscal year.”

He stated that impressive budget performance “is not a rocket science, though requires effective project preparation, monitoring and implementation. We ensure that pre-contract preparations like drawing and other issues have been done. If you release money before that is done, the money might have been spent” before actual site work is ready to take off, while harping on stringent project monitoring to ensure the contractor was not defaulting at any stage of project implementation.

The commissioner argued that it was difficult for any contractor in Lagos State to abscond because cash disbursement was tied to project need, stressing that in the cases where advance payment was issued, the contractor must provide advance payment guarantee from a reputable financial institution.

“So, if the contractor runs, we can always hold the guarantor responsible. So, the success of any budget is dependent on the preparing as well as monitoring of project which remains pivotal for budget performance. If you do not monitor the projects, it would never happen.