The common accounting tool governments, companies, organisations and other institutions use for planning and controlling what they must do to satisfy the people, customers and succeed in governance, business and other areas of human endeavours is budgeting. Budgets provide a measure of the financial results a company expects from its planned activities. By planning for the future, government officials, chief executives, managers, administrators and others in leadership positions learn to anticipate potential problems and how to avoid them. Instead of subsequently facing problems, they can focus their energies on exploiting opportunities.
On Tuesday, November 9, 2020, Lagos State Governor, Mr. Babajide Sanwo-Olu, presented the state 2021 N1.155 trillion budget estimate, tagged “Budget of Rekindling Hope”, to the House of Assembly. Considering its sheer size as well as recent happenings in the state, the budget is, no doubt, audacious in outlook.
The proposed budget evidently mirrors the bold aspiration of the Sanwo-Olu’s administration to ensure that public resources are planned, managed and used effectively to make a positive impact on the residents’ lives. It details how the government intends to allocate resources for the restoration of economic stability, just as the state continues to navigate its way out of the negative impact of the COVID-19 pandemic as well the destructive impact of the recent #EndSARS protest.
Government’s limited resources logically requires making decisive verdicts about the kind of policies and programmes to fund and at what level. Precisely, the 2021 budget was carefully prepared to ensure heavy investment in the development of human capital, with special focus on youth employment and provision of social safety for the young people. It focuses on creating jobs and strengthening security for businesses to flourish.
Food security has a cumulative budget of N22.21 billion, while cumulative budget of N311.43 billion is to be committed to the provision of infrastructure. Also, N97 billion is earmarked for the health sector with N143.66 billion allocated to public education.
One distinct feature of the budget estimate is the high ratio of capital to recurrent expenditure. About N704 billion, representing 61 per cent of the total budget, is earmarked for capital expenditure in the proposed 2021spending. An estimate of N451.75 billion, representing 39 per cent, will go for recurrent expenditure, which includes personnel cost and other staff-related expenses.
This is consistent with the Sanwo-Olu administration’s move to keep the cost of governance low in the face of dwindling revenues and general inflation occasioned by multiple factors. No doubt, it is the same desire of shrinking overhead costs, in order to free more resources for fixed intensive investments, that informed the proposal to repeal the state’s Payment of Pension Law of 2007, which provides for the payment of pension and entitlements to former governors and their deputies.
From Mr. Governor’s inspirational speech at the budget presentation, it is certain that the budget passes the test of various pillars of contemporary governance such as integrity, openness, participation, accountability and strategic planning. Through the budget, the Sanwo-Olu administration desires to reinforce an essential keystone in the building of trust between the government and its citizens. It also reflects the craving to fortify the trust between the people and the government. It also underscores the government’s commitment to the rebuilding of Lagos.
Obviously, as it is with every government’s budget, funding and financing remain the singular biggest challenge to the implementation of the proposed budget. According to Governor Sanwo-Olu, the budget will be funded from a projected Internally-Generated Revenue (IGR) of N962 billion, while the N192.495 billion deficits will be financed through bond issuance, internal and external loans.
Until recently, members of the public, including political experts, focused on the approval of budget requests and ignored budget execution. In Lagos State, budget has always been embedded with a unique feature of reporting the performance of previous ones. The current budget presentation is not an exception.
In spite of obvious challenges of the current year, Governor Sanwo-Olu reported that as of September, 2020, the state’s total revenue performed at 98%, while total capital expenditure and total recurrent expenditure performed at
71% and 83% respectively. Some of the ongoing projects such as the Pen Cinema Bridge, Agege, which is nearing completion, Arabagun-Imeke-Mowo road, to connect Lagos Badagry Expressway in the Badagry axis; Iwaya and St. Finbarr’s roads – Abule-Okuta and Soluyi roads all
within the Somolu axis; Ijede, Agric Isawo and Oba Sekumade roads all within the Ikorodu, Ishuti road, Igando/Egan/ Ayobo road phase 2 & 3 (i.e. the bridge) in Alimosho axis; among other major roads and projects across
the state can attest to this claim.
Rasak Musbau, Assistant Director, Public Affairs, LASIAMA, Alausa, Lagos