₦airaland Forum

Lagos - Sound Government, Sensible Budget

By Nasir Ahmad El-Rufai

In continuation of our focus on state budgets’ with a view to analyzing their viability, fiscal prudence and accountability to citizens, the spotlight this week is on Lagos.

Lagos state is one of the 13 states in the country which 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.

Lagos State was created on May 27, 1967 by virtue of State (Creation and Transitional Provisions) Decree No. 14 of 1967, which restructured Nigeria’s Federation into 12 states. Prior to this, Lagos Municipality had been administered by the Federal Government through the Ministry of Lagos Affairs as regional authority, while Lagos City Council (LCC) governed the City of Lagos. The metropolitan areas (Colony Province) of Ikeja, Agege, Mushin, Ikorodu, Epe and Badagry were administered by the old Western Region. The State took off as an administrative entity on April 11, 1968 with Lagos Island serving the dual role of being the State and Federal Capital. However, with the creation of the Federal Capital Territory of Abuja in 1976, Lagos Island ceased to be the capital of the State which was then moved to Ikeja. With the formal relocation of the seat of the Federal Government to Abuja on 12 December 1991, Lagos Island ceased to be Nigeria’s administrative capital.

Mobolaji Johnson was the first Governor of the state; however Alhaji Lateef Jakande was the first elected Governor of the state who served from October 1979 to December 1983 under the Unity Party of Nigeria (UPN). More recent and significant Governors of Lagos are Buba Marwa (1996-1999), Bola Tinubu (1999-2007) and Babatunde Fashola who was elected in 2007.

Babatunde Fashola is a lawyer by profession who excelled in his professional career which spanned over a decade and a half leading to his recognition as a Senior Advocate of Nigeria. In 1999, he joined the public service and served in various capacities with the Lagos State Government until his rise to the position of Chief of Staff to Governor Bola Tinubu. In his first four years in office, marked improvements were noted within the state - the cleanliness of the metropolis which residents and visitors could attest to, improvements in roads and traffic within the state, improved transportation systems with the introduction of BRT and ferry services across the state - Fashola is without doubt, one of the few “performing” governors in the country and it must be credited to Tinubu that politically, his succession strategy has worked.

The ground work for most of what is visible today in Lagos was jointly laid by Tinubu and his team including the current governor Fashola. The result is focus and continuity in governance rather than “witch-hunting” of predecessors which has bedeviled other "anointment arrangements". Fashola's comparatively stellar performance in office makes many wonder if professional politicians are best suited to deliver on the difficult job of good governance!

Lagos is the most populous state in Nigeria with over five per cent of the national population estimate. Ironically, it is the smallest state in terms of land mass; the state has an area of 356,861 hectares of which 75,755 hectares are wetlands. Interestingly, of this population, Metropolitan Lagos, an area covering 37% of the land area of Lagos State is home to over 85% of the State population making it a densely populated state. UN estimates that at its present growth rate, Lagos state will be third largest mega city in the world by 2015 after Tokyo in Japan and Bombay in India, with a population nearing 30 million!

According to the World Bank and DFID, Lagos’ 2009 GDP is estimated at N4.163tn. Lagos which is a mega-city is the largest contributor to the national GDP at 18%. Lagos’ GDP ranks 6th after Cairo ($98 billion); Johannesburg ($79 billion); Cape Town ($75 billion). Its GDP equals that of Kenya ($29.5 billion) which has a higher population (30million) than Lagos. Lagos boasts of a higher GDP than Cameroun ($20.6 billion), Cote d’ Ivoire ($19.6 billion) and Ghana ($15.2 billion) which have populations of 19, 21 and 24 million people respectively.

The South-west zone of Nigeria is the most prosperous part of the country. According to National Bureau of Statistics Poverty Profile 2012 which studied poverty incidences nationwide using 2009 and 2010 data, poverty is classified in four categories; absolute poverty (based on daily food intake), relative poverty (determined by household expenditure) and purchasing power parity (dollar per day). 59.1% of the people in the region live above poverty line which is appreciable given the humongous 77.7% in the North-West region that live well below poverty lines. 50.1% of people in the South-West survive on about a dollar a day while only 25.4% are absolutely (food) poor which is impressive compared to other states in the country. Gini coefficients are used to measure income inequalities and in Lagos, a co-efficient of -26.2% indicates a decrease in income inequalities within Lagos State between 2003 and 2010 - something the governors should be proud of! Lagos has the highest percentage in Nigeria (85.4%) of people who can feed themselves. Statistics also indicate that 40.8% of the population in Lagos live above poverty lines. Though there is room for improvement in the poverty indices, it is much better than states like Bauchi and Sokoto where only 16.3% and 13.6% respectively live above poverty lines!

Lagos state is one of the few in the country which has a well detailed and structured budget made available to the public on the state Government’s website which is fully functional. The budgets are properly explained and broken down by the MDAs with expenditures and revenues properly accounted for. Also, the state posts its budget performance reviews online which indicates transparency and accountability in governance. It is ironic that even with the enactment of freedom of information and fiscal responsibility acts, most State Governments still hide their budgets and breakdowns from the citizens of their states and the general public.

In the 2012 budget, there was an increase from the previous years’ budget of N450.8b to N491.9b (9%). The total revenue for 2012 is estimated at N399.8b and impressively, the ordinary revenue (Lagos IGR, other IGR, dedicated revenue, etc.) of the state is N289.7b which is about 73% of total revenue. This is more than double of the N110.2b that Lagos expects from the federation account in 2012. Lagos is therefore not one of the numerous "parastatal states" that cannot pay salaries unless the FAAC meets in Abuja! Compared to some other states whose budgets have grown astronomically with no commensurate growth in IGR, the budget of Lagos state has steadily increased alongside its IGR as shown by an 8% (N262.6b to N289.7b) increase in ordinary revenues between 2011 and 2012. So while the federal government preaches fiscal consolidation without practicing, it is Lagos State that is practicing it without all the noise!

Comparing both years’ budgets, there is a projected increase in ordinary revenue (IGR inclusive) by about N27b between 2011 and 2012. Taking the case study of Bauchi state whose budget was analyzed last week, it’s projected increase in IGR for this year was just N1b! Unlike the case of Bauchi state where the government spends money on maintaining many commissioners and 924 aides that it's IGR cannot support, Lagos State Government has 23 commissioners and 20 Special Advisers, and yet is performing much better. In fact, looking at the revenue earning capacity of Lagos in comparison to many states of the federation is going from one extreme to another.

Capital expenditure for 2012 is N258.3b (53%) while recurrent expenditure is N233.6b (47%) of the total budget. Although the ratio does not meet the best practice of 70% for capital expenditure, it must be acknowledged that Lagos enjoys the dual advantages of limited geographic spread and legacy of inherited federal infrastructure, and therefore does not need as much greenfield infrastructural investments as other rural states. What it needs though is high levels of spending on maintenance and running costs. These are perhaps reflected in the higher recurrent portions of the budget.

The government, in 2012 increased its recurrent expenditures on education from N28.4b in 2011 to N35.4b and justifiably too as there has been continuous increase in both volumes and pass rates of SSCE candidates from Lagos. The number of candidates who obtained five credits in WASCE including English and Mathematics has improved from a miserable 7.58% in 2007 to an impressive 21.11% in 2010.The 2010 National Literacy Survey also shows that Lagos has the highest literacy rate in any language. Increased allocation of funds to this sector is definitely a commendable step in the right direction.

The environmental sub-sector of Lagos state which receives about 6% of the overall budget allocation, recorded a huge leap from the N335m revenue generated in 2011 to projected N2b in 2012. This is one sector which the residents of Lagos have felt a visible difference. There was a slight increase in health allocation from N32.9b in 2011 to N33.3b in 2012. In spite of the increase, the health sector is expected to double its revenue from N393m to N655m. Works and Infrastructure received 18% (N88.1b) of the budget reflecting investments to address existing infrastructure deficits. The transportation sector however, dropped in projected revenue by about N400m whereas its budgetary allocation increased by about 11% for the same reason.

The personnel cost budget for the entire Lagos State government for 2012 is about N81.6b. This is less than one third of its IGR and less than 5% of the federal governments (N1,600b) staff costs, yet many would say that Lagos runs better than Nigeria these days. Departments such as lands, environmental protection, works and infrastructure, transportation, and even the judiciary earn sufficient revenues to cover their personnel costs. In fact, the lands department earns enough to cover all its recurrent expenditures while the state’s Ordinary Revenue (N289.7b) can cover its total recurrent costs (N233.6b) with a surplus of N56.1b. That is how a federating unit's finances should be!

In year 2011, Lagos State High Courts alone made revenues of about N700m and are expected to earn about N1.2b in 2012 which is higher than the IGR of most states of the federation now depending on the Federal Government for monthly handouts. The lesson and experience of Lagos is this - each MDA is a revenue as well as a cost centre. Each government department that offers services charges some fees to cover all or part of the cost of the service. That is how to run a department, state, or country! My admiration for the business-like way Lagos is run is clear by now.

Lagos is only state in the country which can survive solely on its incomes from taxation. However according to the World Bank Doing Business rankings 2010, the state was ranked 25th out of 37 in Nigeria in terms of ease of doing business. Lagos is not an agrarian state, neither is it endowed with any mineral resources. It is therefore disturbing that despite the huge amount of private sector investment and potential, the business environment is far from friendly. The authorities need to create a thriving environment for businesses in Lagos especially since taxes and land charges are the major source of fiscal sustenance of the state.

All our states should learn lessons from Lagos not only in the areas of budget transparency but fiscal independence from Abuja, delivery of public services, investment in education and even governance succession. With these outlier qualities, it is not surprising that Lagos is run by a party other than the PDP of today!

dayokanu: I dont think ekt-bear wrote in Spanglish

If he has to break that simple English to you then its no surprise you are found in the company of Koro, Akala and Fayose


Just stick to posting pictures cos that seemed to be the only thing you are good at

Emylexray: i guess you are dumber!. I appreciated her human quality and not her qualification, speaking in real sense, how many women of her calibre and worth can you find today in nigeria? I gues a few. I'm not in to trade hot words with you and do learn to respects peoples opinion.

alj harem: 2015 is either North, GEJ or SE. Anyone is good so long as we can have a credible man.

The suffering of an Igbo man is the same as the yoruba man

Kilode?!:
Just to clarify, the main thrust of my comment was to address the issue of expectation. Both of NOI as a Public Servant and the States as a group. 

You cannot expect states to stop wasting money when you are busy enabling their wastage, actually, "enforcing their wastage" is a better term. The FG is like a rich thief with poor parental skills, The rich thief gave over 60% of his stolen wealth to his spoilt children, knowing they have never worked at earning a living in their life. 

It is stupid for that thief to now accuse his spoilt children of wastage, what was he expecting from them? Thriftiness? Prudency? 

@Brixtontuye, I offered a perspective on NOI's handicap WRT to her role as a Minister of Finance. I believe she can't solve nothing until we make deep and structural political changes. That I sympathized with the position she placed herself in does not mean I agree with her decision to take a job she cannot do. She's an economist trying to solve a problem that requires a much more political solution. Yes, She's out of her depth, but I can sympathize with her still. No?

Tropilo: Pls, remove ur hands from ur chin and stop wondering.
Some of us come here and call the "poor" woman names. What's that for? She came to help her father-land and it has turned to a curse. Someone has already hit d nail correctly about d problem being political and not economics. Point blank, our constitution is a fraud! How can it say a minister must be appointed from each state? For Heaven's sake there are some states u can even find a good primary school teacher yet d president is mandated to appoint a whole policy maker (minister) from there. GOD forbid!

Presidency: South-East may wait till 2027


BY CLIFFORD NDUJIHE, Deputy Political Editor

Tongue-tied Igbo leaders embark on consultations

IF current permutations are anything to go by, the South-East geo-political zone, which is considered as the country’s most socio-economic and politically marginalised area may not produce the President of Nigeria until 2027.

This is contrary to an alleged agreement between leaders of the zone and President Goodluck Jonathan that the South-East would produce the President in 2015.

The said agreement informed the block votes the region gave Jonathan at the 2011 polls. In consonance with the pact, the zone refused to vie for the positions of the president and vice president at the last election and threw its weight behind President Jonathan, who scored more than 95 per cent of valid votes cast in the South-East during the elections. South-Easterners in other parts of the country also toed the same line.

The move was also tailored to end mutual distrust and cement South-South and South-East relations following fissures and cracks created by the civil war of 1967-70.

Giving the thick and yet to be dispelled speculations that Jonathan will stand for a re-election in 2015, his endorsement by South-South leaders, vow by the North to reclaim the top seat, bold moves by the two camps to realise their quests and perceived unpreparedness on the part of the South-East, the Igbo-speaking zone may have to wait till 2027 to take its turn at Aso Rock.

According to permutations, the earliest time the South-East can get the presidency is 2023 if Jonathan did not run or 2027 if he ran.

How? If Jonathan quits or fails win rerun in 2015, power may move northwards and rotate to the South in 2023 after eight years. But if Jonathan runs and gets a second term of four years in 2015, he will quit in 2019.

Thereafter, power will rotate to the North for eight years and may move to the South in 2027 when the South-East will be in a vantage position to claim the slot because it would the only zone out of the three in the South remaining to produce the president.

Chief Olusegun Obasanjo of the South-West was in-charge between 1999 and 2007 after ruling as military head of state, 20 years earlier. President Jonathan is from Bayelsa State in South-South zone.

Thus, the South-East can only render these permutations meaningless by getting its acts together, strategising and snatching power in 2015. Whether or not the zone can do these is to be seen.

Jonathan’s push

Already, Jonathan’s kinsmen are pressuring him to run again contrary to his declaration that he would run for only one term and hand over in 2015.

At a gathering in Lagos last week, prominent Ijaw leaders and South_South elders such as National Security Adviser, General Andrew Azazi; Ijaw Leader Chief Edwin Clark; Niger Delta Volunteer Force Leader, Mujahid Asari Dokubo; Special adviser to the President on Niger Delta, Mr. Kingsley Kuku; Permanent secretary in the Ministry of Water Resources Dr. Godknows Igali; pioneer President of Ijaw Youth Council, Dr. Felix Tuodolo; oil magnate Mr. Dumo Briggs; NIMASA Director_General Mr. Ziakede Akpobolokemi; and ex_militant Ateke Tom, among others, reportedly expressed worry over Jonathan’s declaration in early 2011 that he would not re-contest.

Noting that there was a compelling need to get the president to change his stance so as not to mortgage the opportunity of the South-South to enjoy eight years presidency and given that “Jonathan is the only person in the South-South who could run and win the presidential election in 2015,” the leaders agreed that there was the need for all Niger Deltans to rally round Jonathan to ensure his re-election in 2015.

In the last couple of weeks, a host of South-southerners have been saying that Jonathan have the constitutional right to go for re-election and should do so irrespective of any pre-election agreement.

Indeed, a former president of the Ijaw National Congress (INC), the umbrella body of all Ijaws in Nigeria and in the Diaspora, Joshua Fumudoh, reportedly said it would said it would be against the principle of fairness, equity and natural justice not to allow the South-South to complete its eight years tenure, adding that Jonathan’s promise then to do one term was meant to douse tension in the land.

North talks tough, insists on 2015

However, the North, embittered that it lost two years of its first four-year tenure to the South-South following the death of President Umaru Musa Yar’Adua in 2009 and failed to stop Jonathan from being elected in line with the PDP zoning formula, is determined to fight for the presidency with all its might in 2015.

Two northern leaders, Alhaji Tanko Yakassai and Alhaji Lawal Kaita, picked holes in the South-South leaders’ stance and vowed that the North would oppose it.

Said Kaita, a former governor of old Kaduna State: “We hear rumours all over that Jonathan is planning to contest in 2015. Well, the North is going to be prepared if the country remains one. That is, if the country remains one, we are going to fight for it. If not, everybody can go his way.”

On his part, Yakasai said, “what brought about the endorsement of Jonathan at this material time when the man himself stated that he is not contesting in 2015 and has halted all talks regarding 2015?”

Igbo leaders consult

Contacted on the issue, Igbo and South-East leaders were not as forceful as their opponents. Most of them said they were still consulting and would come out with a collective position after the wide consultations.

However, Chief Chuba Egolum, a chieftain of the PDP said: “Politically speaking, I think it is only natural for the South-South to endorse a son of theirs for 2015. I am not quite sure I comprehend the permutation of 2027 as regards the South-East. Suffice it to say that what happens in 2015 or 2027 for that matter is more in the hands of God than in the hands of man.”

Relatedly, Senator Chris Ngige (Anambra Central, ACN), said the president promised to do a term and handover and had not said he was running, assuring that the South-East would respond appropriately when Jonathan makes his position known.

The President promised to do a term and had not said he was running. I heard him that he wants to run for one term, that was what he said. So, for now, I will hold him on to it. When 2015 comes we will know who and who will be alive. He has not said he has shifted from that former position. When he says it, we will then talk back to him. I think we better leave the issue for now. When we get to the bridge, we will cross it,” he said.

President of Igbo Youth Movement (IYM), Evang Elliot Uko concurred with the comments of Ngige. “This is not the time to ventilate personal opinions. South-East will consult widely before responding to the situation,” he averred.

Nevertheless, a veteran Igbo president candidate, who disclosed that he would begin his campaign for the top job next year, said there was no going back on South-East producing the president in three years time.

According to him, the pact between Jonathan and the South-East that the president would hand over to the South-East in 2015 must be respected. “Jonathan must abide by the agreement, there is no going back on the pact,” he asserted.

Chukwumerije’s warning

Last September, Senator Uche Chukwumerije representing Abia North Senatorial district, Abia State, warned that the Igbo aspiration to clinch the Presidential seat in 2015 was being threatened by activities of the Boko Haram sect, which he said was targeting same objective for the North.

“The issue of militancy in the Niger Delta has yielded them the Presidency. If you watch what is going on now, the illegal activities of a group called Boko Haram, a proper determination to win the second round of Presidential election in 2015, is again playing out itself. Igbo nation must produce the Presidency in 2015 and all hands must be on deck to achieve this noble task,” he had said.

Indeed, the race for the presidency over time appears to be won by the most violent group or one that can consistently make the country unstable. So far, the South-East has shown that it is more peace tolerant and less capable to hold the nation at her jugular.

It would be recalled that after the annulment of the June 12, 1993 presidential polls presumably won by late Chief MKO Abiola, the South_West through various civil society groups held the nation at the jugular until the zone was compensated with the presidency in 1999 through General Olusegun Obasanjo.

For the first time in the history of the country the then three political parties picked Yoruba persons (Obasanjo and Olu Falae) as their presidential flagbearers. Obasanjo stood on the plank of the PDP while Falae was a joint candidate of the AD/APP. Dr Ogbonnaya Onu, who won the APP presidential primaries was sacrificed when APP, which commanded more electoral posts elected to be the junior partner in the accord with AD.

And given the restiveness in Niger Delta orchestrated by militants, who fought against four decades of despoilation of their land via oil exploration, the nation was at peace with PDP’s zoning of the vice presidential slot to the area in 2007 when power returned to the North.

Upon late President Umaru Musa Yar’Adua’s death, Vice President Goodluck Jonathan succeeded him. He was to be elected as president in 2011 in spite of the PDP zoning formula ceding the topmost seat to the North.

With North having Boko Haram, the Niger Delta brandishing ex-militants, who are ready to return to the creeks at the slightest notice to resume hostilities, and the South-East boasting of no such group, it is not difficult to deduct where the pendulum of power may swing when the dusts settle.

http://www.vanguardngr.com/2012/04/presidency-south-east-may-wait-till-2027/

Beaf: The bolded is my exact point. If our LG's and states were not simply conduit pipes for money to divide, you wouldn't look to the FG.
It is unnatural to look to the FG for wellbeing, employment and technological progress. Those things are the duty of state govts and LG's; that is how things work in funtioning countries. Our "FG is everything" mentality is a throwback to our unfortunate past under military dictatorships; the harm to our national psyche is lasting.

If Nigeria were to break up today, the average person would be tremendously punched by the immediate collapse of the following:
1. Education.
2. Healthcare
3. Banking
4. Civil service salaries
5. Commercial flows
6. Police
7. Military
8. etc etc

Kilode?!:
Ola One and a few others already made the point. The biggest parasite is the Nigerian FG. It is a no brainer really.

You cannot "enslave" your States by controlling almost every avenue of income generation, then accuse them of depending on you. They have to break free first, until then, it's your responsibility to feed them. Same concept apply WRT the relationship between the Government AT ALL LEVELS and the People.

It is what it is, I sympathise with NOI, she did not cause Nigeria's problems, but she can't solve it either, at least not as a hired Finance Minister with no real political power or influence.

Some problems require structural political solutions. Economics can't solve this one by itself. I firmly believe that.

manny4life: No offense brother, but I think you're wrong on your numbers.

Capital Expenditures 1,319.00 27.77%
Recurrent (non-debt)Expense 2,472.00 52.05%
Statutory Transfer 398.00 8.38%
Debt Servicing 560.00 11.79%

Total 4,749.00 100%

The Recurring expense was 52% while stats transfer represent about 9% while a huge chunk was for debt servicing

Beaf: As for me, I pray that the country goes broke and grinds to a jarring hault. The ensuing mayhem will crack open any stiffened bolts in our collective IQ and we will suddenly realise the sacredness of the maxim; "those who don't work shall not eat."

There is no reason in Gods Good Book why our states and LG's are not developed and why the average person thinks more about a drop of oil money than demanding credible, visible and quality of life enhancing development from state and LG.

I keep asking if Nigerians actually think their state govs and LG chairmen are elected only for decoration, with their sole task being to do fuckall and still get awuf from Abuja to pocket.

Beaf: It is for you to note that the people in the highest echelons of govt believe in true federalism. It is for you to take that and run with it, the govt cannot force your legislator or senator to vote in its direction; that is your job. Go and do it, intead of expending energy in a fight to shoot yourself in the foot.

My brother, let us stand back and be wise. Nigeria is a tough place politically, always have your ear to the ground to know what is going on and what messages are being passed to you.