By Rasak Musbau
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 require 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 at 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 acrossthe state can attest to this claim.
It is instructive to stress that the government was able to successfully restructure all existing internal loans from an interest rate of 20% to 12%, and in some cases single digit interest rates; resulting in a cumulative cost savings of 12 Billion. The debt portfolios will also be held as much as possible in Naira to reduce foreign currency exposure risk.
Since its inauguration, the Sanwo-Olu administration has demonstrated its resolve to the full implementation of budgets. This is partly why it remains committed to the completion of all inherited projects. Part of the concrete proofs of this are the Light Rail project, Pen Cinema Bridge, Oshodi-Abule-Egba BRT, Lagos Theaters, Lagos State Employment Trust Fund, LSETF among others clearly bear testimony to this.
In the past 18 months, the Sanwo-Olu administration has vigorously pursued its ‘Greater Lagos’ vision, as espoused in the T.H.E.M.E.S (acronyms for Traffic Management and Transportation, Health and Environment, Education and Technology, Making Lagos a 21ST Economy, Entertainment and Tourism and Governance and Security) Developmental Agenda. From all indications, with the availability of the required resources, the government would accomplish its objective of completing more projects that are meant to make life easier for the residents.
Expectantly, the Sanwo-Olu led government would continue to deploy international best practice models and reforms for effective mobilization, planning, allocation and utilization of public resources for the socio-economic transformation of the State.
In view of the position of Lagos State in Micro, Small and Medium Enterprises (MSMEs), the proposed budget would support entrepreneurship and expand the opportunity of MSMEs to facilitate socio-economic advancement. Hopefully, the State 2021 Budget will ensure the government’s aspiration to sustain economic growth and development is brought into fruition.
-Musbau is Assistant Director, Public Affairs, Lagos State Infrastructure Asset Management Agency (LASIAMA), Alausa, Ikeja, Lagos