With numerous projects under execution, the Lagos State Government deems it fit to concentrate on completion, rather than creation of new projects in its 2010 budget estimate
By Kazeem Ugbodaga
The Lagos State House of Assembly was filled to capacity, 17 November 2009, when Governor Babatunde Fashola presented the 2010 Appropriation bill to legislators for approval. The document is tagged Budget of Consolidation. Unlike the 2009 Budget of Accelerated Growth designed to accelerate the tempo of infrastructural development of the state, the new bill aims at ensuring the completion and consolidation of all on-going projects/programmes, while only a few viable new initiatives will be undertaken. The budget estimate size is approximately N429.6bn, a 5.3 per cent increase over the 2009 budget of N405bn. It has a recurrent expenditure of N178.82bn and a capital expenditure of N250.8bn. The projected revenue is N307bn, as against N288.9bn of the 2009 budget. The expected Internally Generated Revenue of N204bn is less than the 2009 budget IGR of N208bn.
The state government expects to get N78bn from the Federal Allocation, N21bn higher than this year’s budget FA income of N57bn. Dedicated Revenue Estimate is put at N20bn and Extraordinary Revenue estimate N5bn. While the 2009 budget was predicated on a benchmark oil price of $45 per barrel, the proposed budget is predicated on a benchmark oil price of $50 per barrel, a state Gross Domestic Product growth rate of 8 per cent and 20 per cent interest rate on naira-denominated loans.
The Recurrent Expenditure in the bill is made up of total personnel cost of N55bn and total overhead cost of N123.7bn. The latter is further broken down as follows: overhead cost, N67bn; subventions, N18.9bn; transfer to other funds, N50mn; public debt charge, N17.7bn and dedicated expenditure, N20bn.
The Capital Expenditure of N250.8bn is broken down as core capital, N209bn; capital development, N22.8bn; matching grants, N5.021bn; counterpart funding, N5.25bn and special expenditure, N8.5bn.
Fashola outlined the goals and objectives of the 2010 budget as aggressive revenue generation, completion of ongoing infrastructure projects, maintenance of existing infrastructural facilities and public utilities, development of human capital and enhancement of institutional reforms in the state’s civil service and teachers’ welfare.
Others are enhancement of community-based vocational education, sustenance of the state’s free health-care services, assistance/empowerment of farmers/fishermen for food production and processing and expansion/construction of new water schemes. “We remain optimistic and confident that despite the current dismal global economic scenario, Lagos State is firmly on the path to becoming a major economic success story of our time. The 2010 budget is a critical bridge to the attainment of this goal. “Common sense and economic realities dictate that the 2010 budget must necessarily be a budget of consolidating the achievements of the last three years. Lagos does not exist in isolation and our budget will always be implemented within the context of global and national economic realities,” Fashola stated.
The governor intends to “maintain social equilibrium and keep the economy going” by focusing on completing existing projects. Owing to global and domestic pressures on public revenues, the state government will be placing greater premium on public-private partnership as a viable option for funding infrastructure expansion and renewal.
Fashola explained that the sectoral demarcation of the 2010 budget has been aligned to the standardised format set by international development agencies such as the World Bank and International Monetary Fund. In the sectoral allocation, Economic Affairs tops the list with N145bn; General Public Service has N105.6bn; Education, N60bn; Housing and Community Amenities, N36.9bn; Environmental Protection, N28.7bn; Public Order Service, N10.6bn; Recreation, Culture and Religion, N9.4bn and Social Protection, N3.018bn.
The governor said that embedded in the sectoral figures and attendant percentages were certain distinct policy thrusts and initiatives, which must be clearly enunciated for a better appreciation of the budget. No project or programme, he promised, would be abandoned by the current administration, and there would be emphasis in the maintenance of public order and safety.
The governor said that the sectoral allocation reflected the immense success his administration has recorded in its PPP schemes in different areas, including the Waste-to-Wealth projects, the Site and Service schemes of the New Towns Development Authority, NTDA, and the development of new housing schemes by the Ministry of Housing. He added that “we are also placing greater emphasis in the 2010 budget in improving the quality of life in our rural areas, particularly through agriculture-based micro-finance funding under the existing framework of the Lagos State Micro Finance Initiative. “The objective is to boost the rural economy, create rural-based employment and encourage more people to stay within their environment, which will enjoy greater local economic buoyancy,” he explained.
A critical initiative of the budget is the creation of investment incentive packages to boost economic growth and mitigate the liquidity crunch in the economy. The governor noted that “this basket of incentives will include bringing down some of our rates to reduce, for instance, the cost of land transactions, planning fees and mortgage rates with a view to stimulating domestic investment both locally and through the repatriation of funds from the Diaspora. An important component of the incentive package is in the area of real estate where we have now made it possible for legal occupants of housing estates in the state to possess title deeds and not just letters of allocations”.
The governor admitted that realising the budget would take hardwork, a great deal of sacrifice and tremendous discipline. But he remained optimistic: “We will, in the shortest possible time, realise our manifest destiny and rank among the most stable, secure and prosperous mega cities on earth.”
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