Lagos’ budget promises more freedom for entrepreneurs, writes Seun Simpson
The Lagos State Appropriation bill for the year 2024 was presented before the State House of Assembly recently. The governor of Lagos State, Mr. Babajide Olusola Sanwo-Olu raised the bar among other subnational entities in Nigeria with a staggering N2.2 trillion for the 2024 fiscal year.
The pivotal role Lagos State plays in stabilising the Nigeria’s economy and the economic growth potential of the state, vis-a-vis massive infrastructure projects which will translate to more wealth for the state and the people necessitated the audacious budget proposal.
Lagos is the 5th largest economy in Africa. Its GDP accounted for 26.7% of Nigeria’s total and more than 50% of non-oil GDP. Over 50% of Nigeria’s non-oil industrial capacity is located in Lagos.
The State is also Nigeria’s financial hub with all major banks having their headquarters in the city. It is home to the Nigerian Stock Exchange [NSE]. It accounts for over 80% of the country’s foreign trade flows, and generates over 50% of Nigeria’s port revenues.
Lagos, as an economic force in West Africa, boasts of 29 Industrial Estates and four Central Business Districts [CBD], largest market in sub-Saharan Africa, home of the Nigerian Capital and Money Market [Financial hub],West Africa Oil/Gas Pipeline Project and National Power/Energy Load Centre, home to Nigeria’s chief ports – Apapa & Tin Can Island [70% of total National cargo freight], Media hub and international telecommunication gangway [over 50% of Nigeria’s PTO/GSM subscribers].
Other interesting socio-economic data on Lagos include hosting Nigeria’s busiest international/regional aviation hub – Murtala Mohammed International Airport, Ikeja with over 70.61% of international and 58.30 % of domestic traffic, over 70% of the country’s total industrial investment and 65% of its commercial activities, Internally Generated Revenue accounts for over 60% of State’s annual budget skewed in favour of capital expenditure, home to over 200 financial institutions
All these data and the economic dynamics of the State, raised the stake of governance in Lagos State. The pedigree of the helmsman in Lagos matters. From Asiwaju Bola Ahmed Tinubu, who had an accomplished career in Accountancy to Babatunde Raji Fashola, an erudite Lawyer and Senior Advocate of Nigeria, to the incumbent, Sanwo-Olu, who is a successful banker and financial services expert. These are the calibre of people that have been advancing the socio-economic development of Lagos State.
Sanwo-Olu has been consolidating the gains of his predecessors on many fronts, in the areas of human capital and infrastructure development. He innovatively decongested vehicular conflict points in the commercial hub of Yaba with an overpass bridge that made commuting on the axis seamless.
The same approach solved the gridlock at the Awolowo Road, Ikeja enroute popular Agege motor-road, via Lagos/ Abeokuta Expressway. In the same manner, the governor expanded the roads leading to the Ikorodu Roundabout, the major access road to the Ikorodu township, Sagamu, Itoikin and Epe. All the road improvements in all these locations were done with human face, taking into consideration the economic hardship in the country. Therefore the proposed budget is expected to advance the ongoing projects and various social interventions to the people of Lagos State.
The governor noted that the 2024 appropriation proposal will further cushion the effects of the fuel subsidy removal and other economic hardships on the people of Lagos. Sanwo-Olu added that the budget will consolidate the achievements recorded by his administration.
The proposed budget comprises N1.02 trillion recurrent expenditure, which is 45 per cent of the total budget, and N1.22 trillion capital expenditure, 55 per cent of the budget.
He said the process of putting the budget together was guided by his administration’s T.H.E.M.E.+ Agenda, which is building on previous budgets of his government since inception in 2019.
On the performance of the 2023 budget, the governor said his government had implemented 78 per cent of the budget as of the end of quarter three, and projected that at least 90 per cent implementation would have been achieved by the end of the year.
Meanwhile, the governor believed that revenue potential of Lagos if well harnessed will reduce the widening budget deficit. He shared the sentiment when he met with Mr. Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, and other members of the committee in Lagos.
He said that the state government was carrying out governance with huge fiscal burden as its revenue collections were far below its governance responsibilities, estimating that for the government to meet its socio-economic obligations for the people living in the state, it will require over N7 trillion yearly budget.
“For us in Lagos, we know too well that we have capacity to do a lot from the revenue generation standpoint; more importantly, from the effective generation and utilization of the tax. During our bilateral meetings in preparation to present next year’s budget, we pulled numbers up to N7 trillion based on our needs. But we are constricted by only the amount of revenue we can generate and pegged the value at N2.2 trillion.
“This speaks to the huge gap that we have in our capacity to develop the economy quicker and faster. We can no longer continue to complain. What are those things we can do to improve our revenue stream and our ability to be able to leapfrog and take governance in a more audacious way? This engagement with your committee is critical at this time, as you go round states to have feelings of what the bottlenecks are”, he added.
Sanwo-Olu lamented that the state government was carrying out governance with huge fiscal burden as its revenue collections were far below its governance responsibilities, estimating that for the government to meet its socio-economic obligations for the people living in the state, it will require over N7 trillion yearly budget.
He concluded, “We all need to work collaboratively on this objective. If all constraints are attended to, we should begin to see monumental changes in our revenue projection. The potential is there and the numbers show the results we can achieve if fully explored, but we cannot sit back and think things will change overnight if we did not take the right approach to resolve the issues”.
The fiscal year of 2024 promises to be interesting as a result of the sectoral allocations of funds for critical sectors of the Lagos economy. Jobs will be more available for young Lagosians and economic opportunities for the people.
Simpson writes from Lagos
