Despite Recession, Lagos Shows Prospects


Despite the economic meltdown that threw many states into untold hardship in 2016, Lagos State under Governor Akinwunmi Ambode recorded historic improvement with a budget of N662.588 billion. And the state looks set for bigger progress with its 2017 governance outlook. Gboyega Akinsanmi writes

For Nigeria, 2016 was truly a nightmare, not only for the masses, but virtually for all social classes across the federation. In the first quarter, for instance, the national economy slid slightly by 0.36 per cent. It shrank further by 2.06 per cent and 2.24 per cent in the second and third quarters, respectively, thereby plunging the country into recession.

Since it tumbled into recession mid-2016, the story has not been the same for Nigeria. From 9.6 per cent in January 2016, according to the National Bureau of Statistics, inflation rose to 18.55 per cent by December 2016. Likewise, unemployment surged to 13.9 per cent largely due to massive job losses and some companies that relocated from the country.

Despite the country’s steady descent into economic meltdown, the Lagos State governor, Mr. Akinwunmi Ambode, said 2017 “is a special year.” Going by its socio-economic indicators, Lagos appears to be immune from the economic crisis, which perhaps is the most biting in the last 15 years. With a budget of N662.588 billion in 2016, first, the state recorded 78 per cent budget performance when other states are still reeling under the burden of unpaid salaries and debt.

Like other states of the federation, federal transfers to the state historically declined by about 20 per cent in 2016 compared to what it received from the Federation Accounts in 2015. Under Ambode, however, the state’s internally generated revenue rose by about 25 per cent. Before Ambode assumed office in 2015, Lagos had grown its IGR historically from N600 million in 1999 to N8.2 billion in 2007 and N20.5 billion in 2013. In 2016, it was N25 billion.

So, according to the governor, 2017 looks more auspicious for Lagos than 2016. Reasons for the state’s promising socio-economic outlook are not far-fetched. First, the state enjoys relative security compared with other states of the federation. Second, it enjoys political stability. Lastly, its revenue generation, according to projections, will surge by 15.57 per cent in 2017.

The last two years have been defining in the history of Lagos State. When compared to the previous administrations, Ambode has brought more dynamism to public governance in the state. At the time Ambode assumed office in 2015, Nigeria was neck-deep in crisis already, making it challenging to fulfil his election promises to the people.

Under the Babatunde Fashola administration, at least N2.415 trillion was appropriated between 2011 and 2015. From N445.18 billion in 2011, it budged N491.94 billion in 2012; N499.105 billion in 2013; N489.69 billion in 2014 and N489.69 billion in 2015. But that did not unlock the gridlock in the state or stop the deplorable condition of Lagos roads.

In 2016 alone, Ambode approved a fiscal plan of N662.588 billion, which according to the Budget Office, represented a 26.13 per cent increase. Under this fiscal regime, Lagos experienced unprecedented growth, which former Secretary to the State Government, Princess Denrele Adeniran-Ogunsanya, recently ascribed to Ambode’s prudent fiscal management.

A recent survey tracked strategic projects, which Ambode proposed under the 2016 fiscal regime. Aside 114 inner-city roads built across all the local councils, five expansive lay-bys, to which the president of Forward Nigeria Initiative, Mr. Lai Omotola, attested, had significantly eased traffic congestion on Third Mainland Bridge and its adjoining roads.

Omotola explained the significance of the lay-bys, which Ambode created along the Oworo-Alapere highway. He said the construction of lay-bys “fits into the concept of creative infrastructure. It is creative because traffic congestion on this axis has proved to be a dead end. The previous administrations could not work out strategies to unlock the Oworo-Alapere gridlock.”

But Ambode came up with this initiative when it seemed all hope was lost, says Omotola. Consequently, he said, the lay-bys “have decongested the Oworo-Alapere axis and Third Mainland Bridge. Also, travel time has reduced significantly. It now ranges from 25 and 30 minutes. Cases of traffic robbery have become a thing of the past on the entire axis.”

Also critical is the massive reconstruction of Ojodu Berger where multiple projects are currently executed. The projects comprises road networks, foot bridge, expansive lay-bys, sidewalk and street light, which programme officer of Afenifere Renewal Group, Mr. Segun Balogun, said, had already brought relative order to the entire stretch of Ojodu Berger.

Balogun described the project as a strategic facelift for the state. Under 15 months, he said, Ojodu Berger has been totally transformed and cases of hit-and-run accident have reduced drastically. With the on-going reconstruction, Balogun said the entire axis “is safer for pedestrians and more secure for motorists compared with what used to happen.”

Under 18 months, Ambode had come up with a number of policies, which he said were designed to make Lagos more conducive for residents and visitors. First, his administration introduced “rent-to-own and rental housing policies. The policies are put in place to provide affordable housing units across the state’s three senatorial districts.”

Likewise, a memorandum of understanding, which Ambode signed with the Kebbi State Government last year to produce at least 70 per cent of Nigeria’s rice requirement, has started yielding positive results. According to him, the first fruit of the partnership was released to the market December 2016 at 50 per cent less than the market value.”
For Lagos, the last fiscal year was a blessing. When other states of the federation were running cap in hand to the presidency for lifeline, the Ambode administration looked inwards for more opportunities. By implication, it increased the state’s IGR by about 15 per cent; created jobs through its Employment Trust Fund and built critical projects.

Future Outlook
Emboldened by the success his administration recorded in 2016, Ambode has rolled out an ambitious plan for 2017. For both capital and recurrent expenditures, Ambode proposed N812.998 billion under the current fiscal regime. The state’s budget is about 18.77 per cent higher than the budgets of all South-west states with the exception of Ondo State.

This might explain why a permanent secretary said the fiscal plan “is ambitious. No state has proposed such in the history of Nigeria.” Credible data, which the Commissioner for Finance, Mr. Akinyemi Ashade, recently presented, show that the state “has potentials to generate sufficient revenue to meet the rising demand of its teeming population.”

Unlike 2016, Ashade said the state had joined the league of oil producers. In aggregate, he said the state expected total revenue of N642.849 billion compared with N542.874 billion it generated in 2016. At the instance of its expected revenue, he said there was a shortfall of N170.15 billion, which he said, would be raised through a combination of internal and external loans.

Ashade put the state’s total IGR at N477.942 billion, representing about 74 per cent. He said the state expected the remaining N164.907 billion from federal transfers and 13 per cent derivation. So, under the regime, the state earmarked N512. 464 billion for capital expenditure and N300.535 billion for recurrent expenditure.

Analysts described the budget as progressive and people-focused. At a town hall meeting, recently, Ambode reeled off what his administration was able to achieve under one and a half years, especially in 2016. He also unveiled strategic projects, which he said, would be the focus of his administration under the 2017 fiscal plan.

Aside the 181 inner-city road projects the state government has started the process of reconstructing. Ambode named other key road projects to include Agric-Isawo-Arepo road in Ikorodu; Ajelogo-Akinomodo road; Oshodi-Murtala Mohammed Airport road; Ketu-Alapere Inner roads Phase II; Oke Oso-Araga-Poka road in Epe and Topo Garage-VIP Chalet road in Badagry.

He also named some transport infrastructure that had been slated for construction under the 2017 fiscal regime. He said bus terminals and depots would be constructed in Yaba, Ikeja, Oyingbo, Anthony, Ketu and Toll Gate to unlock gridlock and ease human movement. For the same purpose, he said, Oshodi-Abule-Egba BRT corridor will be constructed.

Ambode cited some critical projects, which he said, would be executed under the public-private partnership arrangement. Such projects comprise Oke Oso-Itoikin dualisation project; Okokomaiko-Seme road project and Ikorodu-Agbowa-Itoikin-Ijebu Ode road project, each of which would create a good number of direct and indirect employment opportunities.

Under the regime, there is hope for the on-going construction of light rail (blue line) and 10-lane Lagos-Badagry road. At least, Ashade recently said, N51.376 billion has been earmarked for these projects. He revealed the plan “to construct of jetties and terminals, mainly at Epe and Marina and procure ferries to improve water transportation and encourage tourism.”

Besides what it allocated for light rail project, Ashade disclosed that N138.249 billion “has earmarked for road infrastructure. The allocation will definitely help complete Abule-Egba Bridge and Ajah Bridge. It will also help pursue massive road rehabilitation in partnership with the 20 local governments and 37 Local Council Development Areas in the state.”

Great Expectation
Already, according to Balogun, expectation is unduly high given the size of 2017 budget. But for him, the fact that Nigeria “is still wallowing in recession is a real source of concern for us.” He said Lagos “is a sub-unit of our national economy. So, whatever happens to the national economy will have impact – negative or positive – on Lagos economy.”

However, former chairman of the House of Representatives Committee on Legislative Compliance, Hon. Moruf Fatai-Akinderu, said there was nothing to fear. He admitted that the condition of national economy “is a huge factor for every sub-economy.” But he cited two key factors, which would make Lagos economy “functions irrespective of what happened to national economy.”

Fatai-Akinderu first cited the performance of the state’s 2016 budget, which he said, stood at 78 per cent. He said the state recorded this performance despite about 20 per cent fall in what it earned from the Federation Accounts. Amid national crisis, he said, Lagos regularly paid its public servants; effectively executed strategic projects and created jobs.

He also cited the state’s drive for IGR. Under this regime, he said, the state projected to earn N360 billion, about 25 per cent higher than what it generated in the previous fiscal year. But the 2017 fiscal year, according to him, looks more auspicious than 2016 because the state has started earning 13 per cent derivation.

Alongside the state’s revenue generation potentials, Fatai-Akinderu cited Ambode’s prudent fiscal management, which is the hallmark of his administration.

Meeting people’s expectations is indeed a great task, according to Balogun. But, he explained, Ambode “has started well, especially when one looks at the structure of the budget. It is premised on a ratio of 62:38, respectively capital and recurrent expenditures.” But to really achieve much, he said Ambode should ensure at least 95 per cent budget performance.

Given what his government has achieved so far, Akinderu said the Ambode administration had truly brought a major shift to public governance, which no state of the federation “has been able to record. But the administration must work harder to meet public expectation.”