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‘N1.04tr Lagos budget reflects tasks ahead’

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Lagos State Government last month passed N1.04 trillion budget for this year. The budget size, though seen as huge, is still insufficient to optimally drive infrastructural development in the manner the state desires. In this interview with select finance reporters, Lagos State Commissioner for Finance Akinyemi Ashade speaks on ongoing infrastructure renewal projects and moves to boost Internally Generated Revenue (IGR) to fund the budget. COLLINS NWEZE, reports.

Will Lagos rely solely on Internally Generated Revenue (IGR) to fund this year’s N1.04 trillion budget?

IGR alone will not completely fund it. With IGR AND anf what we receive from the centre – we project that the state will receive about N897 billion – the balance will have to be funded through budget deficit financing. So, in the face of the developmental challenge that we are confronted with, we all have to be extremely committed and creative to generate the funding to surmount this. We will need to make sacrifices from time-to-time, and thankfully, Governor Akinwunmi Ambode is clearly demonstrating that these sacrifices are not in vain. His commitment to infrastructure renewal across the entire state is profound and the evidence is there for all to see. I will continue to appeal for cooperation and understanding from my fellow Lagosians in this journey towards building a mega city of the future that our children will be very proud of.

What informed this year’s huge budget figure for the state and what is the guarantee that it will be fully implemented?

When you examine the requirements of the state especially from the point of provision of social and physical infrastructure, you will find that there is still a huge vacuum that needs to be filled. And this is despite what has been done over the years especially since 1999. From roads to public housing, education, security, healthcare and even education, there is still so much that needs to be done. That explains why Governor Ambode is so anxious to turn things around in a systematic manner. There is so much that is going on in Lagos in terms of infrastructural development. In fact, it is a full infrastructural renewal that is in progress. The reconstruction and total redevelopment of Airport Road into a 10-lane expressway is underway and progressing very well. Oshodi is being completely overhauled into a modern transport interchange that will not only facilitate movement but drive businesses,  commerce and provide jobs for the people.

Like the Ajah and Abule-Egba flyovers, which Governor Ambode built in record time, the Pen Cinema bridge is also being aggressively worked on. The Pen Cinema bridge will help to provide relief to the millions of citizens who live in the Agege-Ogba-Oke-Ira areas of Lagos and their neighborhoods from the traffic congestion that has for decades been associated with the rapid expansion and population growth in that entire axis. Governor Ambode promised to deliver the project this year. There is also the embedded power project that will deliver independently produced power to Lagosians. Target completion date is 2018 and this project will deliver regular electricity to Lagosians. Now, can you imagine how that singular project on electricity will impact the lives of Lagosians? By how much it will help to unleash the entrepreneurial energy of the people and drive the efficiency of businesses and make life more convenient for the people? And there are lots of other projects in education, public housing, healthcare, security and other areas.So, you see, the budget is a reflection of the enormity of work that needs to be done by a responsive and responsible government.

Some people complain that despite the huge annual budgets, development hardly gets to their immediate localities making them to contribute to grade their streets, repair their transformers and even provide their own water. What is your view on this?

I think this question in a way provides some answer to your previous question. The N1.04 trillion budget may be huge indeed, but it remains insufficient to really drive development in the optimal manner that the state deserves especially given the fact that we have for many decades, considerably under-invested in infrastructure. Even for such a relatively huge budget, there are still limitations as to what it can achieve. That is why government has to be painstaking in the overall budgeting process. The idea is to deliver the greatest good to the greatest number of people and ensuring that in as many ways as possible, everyone enjoys dividends of good governance.

That is why you will find that all of the projects that are being implemented are those that will deliver the greatest impact to the highest number of people. This is not to say that we will not take projects everywhere. Ultimately, every ward, every street will benefit from one project or the other. Many of the projects I have mentioned are the big signature projects of this administration but there are lots of others. For instance, a BRT Lane will be constructed from Oshodi to Abule-Egba. There’s an eight Kilometer regional road to connect VGC with Freedom Road in Lekki Phase One and alternative routes to connect Lekki-Epe Expressway from Oke-Ira in Etiosa Local Government. Also in this budget, housing projects in Ajara-Badagry, Igbogbo, Iponri, Gbagada, Omole Phase I, Igando and Sangotedo will be completed on a rent-to-own basis.

Apart from these, there’s also the issue of social infrastructure, which we must also bear in mind. This year, for instance, we are making a provision of N126 billion for education which essentially represents 12 percent of the overall budget. Now, this is a record as I do not know any other state that is devoting as much to education. But then it speaks to the sophistication of the thinking of Governor Ambode. He is driving an aggressive infrastructure renewal across the state in order to deliver a Lagos of the future Another key area is healthcare to which N92billion or roughly nine percent of the budget is being devoted. So, provision of social infrastructure is an area in which the government is investing heavily and which impacts the lives of all of us, much more than we probably realise.

There is the view that the government size is too large, leading to higher recurrent expenditure as capital expenditure suffers. What do you think about the size of government?

Let me talk about the capital expenditure to recurrent expenditure ratio and assure you that in Lagos state, it is a very healthy one. In the 2018 budget, the ratio is two to one. Sixty-seven per cent of the budget is going to capital expenditure while 33 per cent goes to recurrent expenditure. And that is a very realistic and healthy ratio. So, we are devoting far more to capital expenditure than to recurrent here in Lagos. This is not to downplay the importance of recurrent expenditure, which also has a critical role to play in the economic value-chain. Governance as you know still must be carried out by functionaries at different levels. However, we continue to watch the government headcount very keenly but more importantly, Governor Ambode will always emphasize efficiency. It is not just about the headcount, it is also about how much the government is empowering its own people to deliver at their best. How much it is providing them with training tools and facilities to operate the machinery of government efficiently.

How do you plan to fund this year’s ambitious budget?

Well, you are right to call it an ambitious budget. But I am sure that the scenario I have painted so far, justifies why it needs to be ambitious if it is to truly deliver a better tomorrow to us and our children.To fund the budget, we are looking primarily at Internally Generated Revenue (IGR). As you very well know, dating back to the days of Asiwaju Bola Ahmed Tinubu, IGR has been a mainstay of our local economy in Lagos and that has been very critical to the progress we have continued to make as a state and set us apart from all other states in Nigeria.

Are you aware that some people are beginning to complain about high taxes in Lagos?

I very much appreciate where all of this is coming from, especially against the backdrop of the current economic situation. None of us, no matter how wealthy, is immune to the current economic situation. Even if you are, you must have friends, and relatives who are affected. But I assure you that everything we are doing is based on a fundamental premise which is not to burden any citizen with more than what he can conveniently shoulder. That is the explicit instruction of Ambode. That is why you will find that in every instance, we have incorporated a feedback mechanism so that any citizen who legitimately believes that what he is being charged may be excessive, has a right to seek clarification and even appeal. What has happened in the recent past is that government has made an effort to enhance the efficiency of the tax regime in the state as part of the overall reforms in the financial management of the state. You may probably have heard the Lagos Internal Revenue Service frequently complain that the tax burden in the state is shouldered by a small fraction of people. Many people who ought to pay tax do not pay. And this creates a problem for everyone. You may have read press reports of the Speaker of the Lagos House of Assembly lamenting recently that of the more than two million taxable properties in Lagos, only about 300,000 were actually paying Land Use Charge. In fact, this was one of the motivations for the review and repeal of the old Land Use Charge Law.

So, what has happened has been an attempt to redress this. For instance, there are taxes or levies that had over the years become obsolete. If you were paying a tax or levy of N50 in 2001 for instance, that may have been quite significant at that time, but certainly much less significant in 2018. So, on one hand, some of these taxes and levies had become obsolete. On the other hand, there was also the question of the inefficiency in the collection process. This is an area which we are aggressively striving to ramp up. For Land Use Charge, for instance we are enhancing the enumeration of properties across the state. We are doing this physically but also supporting it with the use of Global Positioning System (GPS) technology. But the complaint is that the Land Use Charge has gone up astronomically. Quite a few people have complained bitterly that the new rates under the land use charge regime may have negative impact on future property development in the state because of the land use charge rate. When the old Land Use Charge law was repealed by the Lagos State House of Assembly recently, one of the complaints the Assembly had was that there was a bit of opacity in that whole regime. So for instance you could be paying far more than someone living in a much bigger house on the same street because the method of calculation of Land Use Charge tended to be very subjective.

But the market rate approach for determining Land Use Charge has also led to very steep increases in Land Use Charge. Some people have said they got increases of over 200 per cent. Is the increase not too high?

First, I think that the use of percentages can be very misleading. Someone who has been paying say N1,500 since 2006 and who is now requested to pay N5,000, 12 years later, may say it’s a 300 per cent increase but you and I know what the value of N1,500 was 12 years ago versus what it is today. But more importantly, I want to say that the state g   overnment has been encouraged by the responses to the Land Use Charge. The officials started distributing the demand notices just a few weeks ago and so far, the responses have been very good. Very many property owners have proceeded to make payments. And we would continue to encourage property owners and those who have up to 10-year leases on properties to go ahead and pay as soon as possible because in doing so, you benefit from an additional 15 per cent relief on the Land Use Charge, which is one of the reliefs in the new Land Use Charge regime.

What do you mean by “reliefs”? Are you talking about discount. Is the Land Use Charge discounted?

By relief, I am referring to the several buffers that the law has put in place in order to reduce the amount that is eventually paid. So, even though properties are valued at market rate, in calculating the Land Use Charge rate to be paid, a general relief of 40 per cent is applied. And then of course, if payment is made promptly there is an additional 15 per cent relief. So in essence, one is paying just about 45 per cent of the chargeable rate if one pays in good time. Apart from this, retirees who are aged 70 years and above and live in their own houses are exempted. They do not pay any Land Use Charge. The same applies to properties that are used for religious and not-for-profit activities. They are also exempted. There are categories of exemptions and reliefs for the physically challenged as well.


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