The Year 2017 remains a significant year in the history of Lagos State as we celebrated our Golden Jubilee anniversary colourfully and successfully. The year provided an opportunity not only for celebration but also for significant progress in our drive to becoming a globally competitive economy.
I want to sincerely thank all Lagosians, our leaders, statesmen and citizens for their superlative support thus far, most especially our tax payers throughout Year 2017.
In the outgoing year, we changed the face of Lagos for good in spite of the economic, social and security challenges as our investment in critical infrastructure development paid off and are visible across the length and breadth of the State.
Although the Nigerian economy is still fragile and just coming out of recession, commitment to our people made us work harder to deliver results as we continue our reforms to ensure a safer and more prosperous Lagos. Today, we are proud to say that our collective efforts and transformations have contributed immensely to the improvement of Nigeria’s ranking in the World Banks Global Index on the ease of doing business.
To get a clear picture of the economic challenges that have confronted our government, it is necessary to restate some important indicators. Crude oil prices have been dwindling from $US100.40 in 2014, $US 52.65 in 2015, $US43.81in 2016 to $US46.39 in 2017. Exchange rate increased from N156.44 in 2014 to N305.24 in 2017. The impact of this has been a sharp reduction in the inflow from the (Federal Government) Federation account and a huge increase in the cost of project delivery.
Despite this situation, our government has been able to initiate and deliver more high quality and high impact projects; more than ever before. We have achieved this using a mix of astute financial management and prudency; increasing our internally generated revenues, adequate allocation of resources across all sectors and an all-inclusive governance approach.
It is significant to note that our administration has not contracted any new external loan to fund our projects since assumption of office. We have only completed transactions which were already in place before we assumed office. This administration inherited external loans from various past administrations which make up 60% of all our loans. This figure is made up of some loans that have been running since 1989, about 30 years ago; and were contracted at an average of N80 to $US1. Today these loans are being repaid at an average rate of N305 to $US1 translating to 205% increase in the loan repayment rate.
The State has incurred huge exchange losses on its external loans in this year 2017. The exchange loss represent 35% of the State external loans stock due to exchange rate slump of the Naira from N197.50 to $1 to N305 to $1. This is one of the side effects of an economy in recession. Irrespective of these losses, it will be inappropriate to say that Lagos State has a high debt burden when situated with the level of development and infrastructural growth enjoyed presently by the State. We are certain that the loans have continually been used for the wellbeing of all Lagosians.
Despite the additional burden arising from devaluation of the Naira, our debt service ratio remains very strong on the back of our impressive revenue performance. The State’s net debt stock of N874.38bn represents just about 3% of the State GDP, while the Debt service charge to Revenue ratio stood at 15.61% compared to 13.32% in 2016 and 12.45% in 2015. I am proud to report to you that, today, your State remains financially strong and the most vibrant economy in the Nigerian landspace.
As part of the State’s commitment to fiscal sustainability we have continued to ensure that our deficit financing of capital projects remain within global benchmarks and our ratings internationally and locally have reflected our prudent management of public finance. The Year 2017 Golden Jubilee budget of N812.998billion was approved and signed into Law on January, 9th 2017 to fulfill the expectations and priorities of our people. As at November 2017, the 11 month period Revenue performed at N448.396bn/76% compared to full year’s performances in 2016 of N449.609bn/83% and N399.382bn/82% for 2015. Suffice it to say that the overall budget performance stood at 74% as at November 2017 and it is projected to close at by the end of the year 2017. The State average contribution to the National Gross Domestic Product (GDP) from 2015-2017 remains strong at about 30%.
Mr. Speaker, Honourable Members, distinguished guests, ladies and gentlemen, despite our modest achievements in 2017, there is still much work ahead and we must not relent in our efforts to give our people the best by way of continuous and efficient service delivery. Lagos has always been a trailblazer and we must consolidate on the economic gains made so far by initiating people-friendly programmes and projects that will attract more economic improvement in Y2018.
It is our resolve in Y2018 to strive and complete all on-going projects in order to meet their specified completion period and embark on new strategic projects. We intend to improve on our Internally Generated Revenue (IGR) in the face of the dwindling accruable revenue allocation from the Federal Government, sustain our vision on wealth creation and poverty alleviation.
The proposed Y 2018 budget christened ‘Budget of Progress and Development’ has a size of N1, 046,121,181,680 (N1,046tn). The budget will be used to consolidate on infrastructure, education, transportation/ traffic management, security and health with an added emphasis on mandatory capacity building for civil servants, all teachers in public secondary/primary schools, officers in the health service sector and women & youth empowerment alongside our Medium and Small/Micro Size Entrepreneurs (MSMSE’s).
The proposed budget amount represents an increase of 28.67% over Y2017 budget with the following key components:
Recurrent Expenditure -N347.039bn
Capital Expenditure -N699.082bn
Capital/ Recurrent Ratio – 67:33
The estimate of total revenue for year 2018 is N897.423bi11ion of which N720.123bi11ion will be generated internally. A total of N148.699billion will be sourced through deficit financing within our medium term expenditure framework.
Our investment in new technology and the reforms put in place will galvanize the efficiency of our revenue collection from our citizens.
The highlights of sectoral allocation for Y2018 include;
S/N COFOG Y2018 Proposed Budget
Total Allocation %Allocation
- General Public Services 171, 623,009,348 16.41
- Public Order and Safe 46,612,667,911 4.46
- Economic Affairs 473,866,339,451 45.30
- Environmental Protection 54,582,814,610 5.22
- Housing and Community Amenities 59,904,562,576 5.73
- Health 92,676,040,222 8.86
- Recreation, Culture and Religion 12,511,216,257 1.20
- Education 126,302,213,428 12.07
- Social Protection 8,043,317,877 0.77
Total 1,046,121,181,680 100
In 2018, economic affairs will continue to dominate and get the largest allocation of the budget as there is a lot to be achieved in the coming year.
Mr. Speaker and Honourable Members, it is our desire to maintain the tempo of continuous construction, rehabilitation, upgrading and maintenance of network of roads throughout the length and breadth of the State including those within the boundaries of Lagos and Ogun States.
With the favourable weather conditions prevailing now, this year’s Local Government Roads totaling 181 will be commenced as contractors will be mobilized immediately.
We have made provisions for continuous gridlock resolution, junction improvement, construction of more laybys and advancement of signalization that will improve traffic congestion especially along the Lekki-Epe corridor.
Other key projects that we have provided for include:
The Agege Pen Cinema flyover, Alternative routes through Oke-Ira in Eti-Osa to Epe-Lekki expressway, the 8km regional road to serve as alternative route to connect Victoria Garden City (VGC) with Freedom Road in Lekki Phase I.
Completion of the on-going reconstruction of Oshodi International Airport Road into a 10-lane road. The BRT Lane from Oshodi to Abule-Egba.
We will consolidate on the Lagos bus reform project with the introduction of high and medium capacity buses, construction and completion of bus depots at Oshodi, Anthony, Yaba and many more. In the area of job creation, we will construct an ICT Focus Incubator Centre in Yaba while the development of Imota and Igbonla Light Industrial Park as well as the provision of additional small scale industrial estate at Shala will commence. The State Employment Trust Fund will disburse more funds to Lagosians to support business and stimulate the economy. From feedback of Lagosians, more emphasis will be placed on the successes already recorded by the Employment Trust Fund to get more of our unemployed youths into gainful employment.
The process leading to the movement of Mile 12 market to Imota which commenced in Y2016 has reached an advanced stage and we will complete the infrastructure in the new location in good time to pave way for relocation next year.
We will vigorously pursue our planned direct intervention in the power value chain towards generating 3,000MW Embedded Power Program me; a 3-year plan to achieving 24/7 power supply for the State. The challenge of inadequate power supply must be resolved for our economy to perform optimally and we believe the provision of this essential utility can no longer be left in the hands of the Federal Government alone to solve. We must complement each other for the overall development of our nation.
We will continue to rekindle our efforts in the area of Tourism, Sports, Arts and Culture by ensuring that our objective of making the State the tourism, sporting and entertainment hub of our nation is conscientiously pursued. In order to achieve this we will focus on these projects:
Completion of the 5 new Art Theatres in Ajimosho, Ikorodu, Badagry, Epe and Ikeja.
Establish a Heritage Centre at the former Federal Presidential State House recently handed over to our government. Build a world class museum between the former Presidential Lodge and the State House, Marina.
Fast-track construction of the proposed 4 new stadia in Igbogbo, Epe, Badagry and Ajeromi Ifelodun (Ajegunle). Complete the on-going Epe and Badagry