(Date: 13 January, 2022)
It gives me great pleasure to welcome you all to this Media briefing on the Analysis of the Y2022 Budget tagged “Budget of Consolidation’’. It will be recalled that on Wednesday, 24th November 2021; a proposed Y2022 Appropriation Bill of N1.388trn was presented by Mr. Governor, Babajide Olusola Sanwo-Olu to the Lagos State House of Assembly for consideration and assent. After a very rigorous bilateral engagement with the respective MDAs, an amended Bill of ₦1.758trn was subsequently passed on Wednesday, 29th December 2021 by the Lagos State House of Assembly and was signed into law by Mr. Governor on Friday 31st December 2021.
The Y2021 Budget Performance
The revised Y2021 Budget of ₦1.257trn had a total revenue of ₦984.573bn and deficit financing of ₦271.994bn; the Capital to Recurrent Ratio stood at 59:41 i.e., Capital Expenditure of ₦743.224bn and a Recurrent Expenditure of ₦513.343bn. As at November 30th, 2021, the budget posted a performance of 73%. Our Revenue Performance was 75%, while Capital & Recurrent Expenditure performed at 65% & 83% respectively.
The 65% performance of Capex is the result of our closure of the 100billion Bond transaction, which was oversubscribed in December 2021. As a result, we believe that Capex performance will close at about 85% by December 2021. This therefore is expected to enable the state achieve a strong budget performance of about 89% by year end 2021 despite the daunting challenges in the year.
Y2022 Budget estimates
The Y2022 budget, which we have christened the “Budget of Consolidation” is a landmark budget in the history of the state both in its size and texture. The approved Y2022 Budget of ₦1.758trn made up of ₦1.167trn Capital Expenditure and ₦591.281bn Recurrent Expenditure, resulting in a Capital to Recurrent ratio of 66:34, which is strongly in favor of Capital Expenditure.
Total Revenue is estimated at ₦1.237trn while deficit funding requirement is ₦521.275bn, which at 21% of Debt service to Total revenue, is within the fiscal sustainability benchmarks of 40%.
Our overriding budget objective to achieve a budget of consolidation is:
Infrastructure is essential to statewide economic and social development. It is therefore important that we accelerate the completion of our ongoing project to release the inherent value of the projects to the people of Lagos. This is especially important given that this is the last full year budget of this administration. Accordingly, we have increased our investment in infrastructure by 86% over the prior year budget to N619billion representing 35% of the entire budget size.
All these projects are contractor funded, with structures that provide very beneficial payment terms that gives the state upfront value (front loaded) ahead of payments; thereby increasing the sustainability benefits to the state.
Human capital continues to be an area of deep interest to the state. We believe that the opportunities in the state can only be converted to value by a population that is healthy, skilled and inclusive. This year budget’s budget increased our investment in this regard by 30% to N325billion in Y2022 about 18% of the total budget size.
Under our human capital development initiatives, the Y2022 budget increased the allocation to the education family by 25% to N173billion representing 10% of the budget size while the health family received an allocation of N132billion representing 35% increase over prior year budget and 8% of the current budget size.
One of the major lessons of COVID 19 is that, as the consumption capital of Nigeria, Lagos can easily run out of food supply in the event of crisis. We have therefore continued since the outbreak of COVID 19 to increase our investment and attention on food security. We have completed the 5-year Agric road map to provide support to our farmers, create food banks and improve our food systems generally. In line with this posture, we have increased in Y2022 our budget to Agric by 34% to N27billion. We intend to complete the Imota rice mill, which when completed will have a capacity to produce 2.6million 50kg bags of rice per annum and employ over 350,000 people both directly and indirectly. In addition to this, we will be training and empowering over 40,000 women and youth in the business of Agriculture.
Lagos intends to be the technology hub for Africa a major incubation and acceleration destination for technology solutions. We have seen technology unicorn come out of Lagos and do believe that by expanding our support for that sector our creative and innovative youth population will find expression for enterprise of scalable proportion. We can have our young people develop skills and solutions that will produce jobs by providing service to corporate both in Nigeria and internationally from Lagos.
We have provided an increase in technology investment of 27% over Y2021 budget to N30billion. We will continue to invest in strengthening of our intelligence gathering/capacity building capabilities together with improving the ease of doing business through the SmartCity project, The Lagos new Data Center project, Eko Excel project and the Oracle upgrade project.
We will continue implementing in collaboration with private sector partners existing initiative like the 3,000 broad band fiber duct infrastructure project, Knowledge Innovation, Technology, and Entrepreneurship (KITE) Campus development at Yaba in addition to the Lagos Science Research and Innovation council (LASRIC). All this will strengthen our aspiration to be the technology hub for Africa.
Given the demography of Lagos, our investment in technology, the 8 stadia, Agriculture, Entertainment & Tourism are largely targeted at our youth development and engagement. We believe that Lagos has one of the most innovative youth populations in Africa, which we intend to continue to cultivate.
As earlier stated, there was a difference between the total budget size presented by the Executive and the final size passed by the Legislature. This difference is largely accounted for by the decision during the bilateral meeting with the MDAs to further accelerate already existing projects to bring them to substantial closure. While I have mentioned some of such projects above under the contractor financed programs some others worthy of mention include the following:
The funds for most of these projects are largely committed.
OVERVIEW OF THE Y2022 BUDGET
The Y2022 Budget is consistent with the THEMES agenda and designed to give priority to the completion of on-going projects [Stadia, Special Committee on Rehabilitation of Public Schools (SCRPS), Lekki-Epe Road, Fire equipment, New Massey Children Hospital, Opebi-Mende Link bridge, etc.] as well as ensure that every effort, investment, partnership, policy translates maximally into noticeable positive impact in the lives of our people.
Y2022 Total Budget Revenue
The total budget size of ₦1.758Trillion will be funded from a total revenue estimate of ₦1.237Trillion, comprising of the following:
|Total Internally Generated Revenue (TIGR):
|Deficit Funding Sources
|1. External Loan
|2. Internal Loans
|ii. CBN/Local Bank/DCRR Facility (Already Committed)
A total expenditure of ₦1.758Trillion is budgeted for Y2022, broken down as follows:
|Recurrent Expenditure (Debt Inclusive)
|Capital to Recurrent ratio =66:34
The components of the Recurrent Expenditure is as follows:
|Total Personnel Costs
|Total Overhead Costs
SECTORAL BUDGET ANALYSIS
The summary of the Sectoral allocations is as tabulated below:
|Y2022 SECTORAL ALLOCATION
|General Public Services
|Public Order and Safety
|Housing and Community Amenities
|Recreation, Culture and Religion
|Contingency Reserve (Including Special Expenditure-Statewide and Special Expenditure-Others)
|Loans (Repayments, CDSA & Debt Servicing)
|Personnel Cost (Service wide and Pension)
|Grants & Counterpart Fund
I want to assure you that our administration will leave no stone unturned in ensuring the full implementation of this budget.
May I also use this opportunity to make a passionate appeal to all the citizens of Lagos to fulfill their civic responsibilities by paying their taxes as and when due in order to ensure optimal performance of the budget.
Therefore, I wish to appreciate the members of the press for their doggedness in the coverage of the activities of our administration especially in the area of the state of our economy without mincing words. Your criticisms have emboldened us and we are determined to surpass our expectations.
On behalf of the Lagos State Government, I thank you for your support and cooperation, while we look forward to a more robust and meaningful relationship.
Thank you for Listening.
Igbega Ipinle Eko, Ajumo se ni!!!
Honourable Commissioner (MEPB)