Jimi Agbaje: Rescuing Lagos for creative governance, optimum performance, By Ben Ugwu

Posted by News Express | 17 September 2018 | 1,685 times

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•Dr Jimi Agbaje

To elect a state governor is actually electing someone to take economic decisions on your behalf, for a space of four years. He will determine the pace of development, quality of business environment and sustainability index for the state, for the four-year period.

A good state governor will know how to create an enabling environment for businesses to thrive, in order to attract and retain investors in the state and promote opportunities for employment and wealth-creation. A good state governor will know how to manage available resources within the state to create the right value that will take the state to the desired heights, for the satisfaction of the people, without putting the people and businesses under undue pressure of multiple taxation and levying, in the name of increasing internally-generated revenue (IGR), nor mount unnecessary debt burden on the state while seeking alternative sources of funding the state budgets and projects, when the traditional sources seems inadequate. 

Electing a good state governor has nothing to do with party loyalty, nor sentiments. Rather, it has everything to do with being able to live in a conducive environment devoid of all forms of pollution; an environment that promotes good quality of life and living conditions that guarantees high standard of living, shared and inclusive opportunities, and prosperity; an environment of tranquility and opportunities for all to pursue their dreams and reach their goals in life. He must have the magic wand to make a success of every of his experiment in resource management to create the right value that will keep attracting talents and investments into his state.  

That is what a good governor should be and that can only be a person with the right skills with a proven track record in resource management, value creation, creativity and innovation in entrepreneurship and employment generation. That requires a person that is well grounded in people-management and politics to carry everyone along while maintaining transparency and accountability in governance. Civil servants and paid employees may not make a good resource manager of men and materials at the level of state government management, because of deficiency in business management and party politics exposure. And, overseeing a state government is no time to learn on the job, because the lives and destinies of millions of people are at stake. 

In Lagos State, for instance, the state is seen as a fiscal model for other states. But what is on the ground is a mirage, as Lagos State has one of the highest debt burden in the country and the most opaque financial records and deficiency in public utilities, even with its famous high IGR accruals, which is fast dwindling and putting the state finances in a precarious situation. As a result, only a person with a proven track record in wealth-creation and innovativeness can rescue the state. Lagos internally generated revenue, when compared to many of its peers is relatively high. Her IGR as at the end of 2016 was N287 billion from the 2015 levels of N268 billion. Previous audit reports from the government show that IGR rose from N236.19 billion and 276.16 billion in 2013 and 2014 respectively.  

In 2017, Lagos State planned a recurrent expenditure spending of N305 billion or N25 billion monthly.  With its IGR not significantly above N300 billion and the Federation Accounts and Allocation Committee (FAAC) revenue between January and June 2017 of 6.6 billion, the state currently meets its recurrent expenditure obligations. But, it won't be for long as the state has suddenly gone into deficit budget-financing for 2018 budget. And the IGR is falling short of expectations, due to a combination of some factors mentioned below and the FAAC allocations and other monies received from the federation account has been heavily mortgaged by the state debt obligation. Currently, there is a heavy reliance on the internally generated revenue as the major and principal source of state revenue, even when it is entirely tax-based and in a depressed economy. This is where creativity and innovation are needed in governance. However, amid the general backdrop of an economic downturn and recent recession, the state may choose to proactively reduce its overheads. 

Notwithstanding,  the general perception is that Lagos is a fiscal model for other states, although it bears mentioning that Lagos State’s financial statements are notorious for being opaque, containing scant useful information.  A priority for Lagos should be delivering on on-going projects. We recommend Lagos adopts a smaller recurrent budget size, diverting gains to close the infrastructure deficit holding down its pace of economic expansion.  The State is still some way away from achieving crucial schemes, including a functional light rail system, an efficient refuse disposal, a working drainage system and public water supply service.  The provision of road infrastructure and firefighting service/stations, as well as the reduction of its housing deficit, are some of the areas Lagos is still lagging in. As a major economic centre and the financial hub of Nigeria, it is critical for Lagos to continue to attract investments and talents. 

The state's proximity to the Atlantic Ocean and its huge population makes it the preferred destination to land undersea fibre cables, as investors continue to delve into Africa's telecommunication sectors. As no less than eight companies currently have their undersea cables running on Lagos waters, the state must deliver the requisite environment that secures and sustains these high-calibre investments.  

For instance, Lagos could tap into the growing number of companies within Yaba area to create " Yabacon Valley": a technology and innovation cluster that could be a major service-point for the over 86 million Internet users in Africa's most populous nation.  Significant investment to connect offices and homes to Internet access, upgrading infrastructure around Yaba, and developing new or existing incubation centres should help accelerate this transformation. 

The state's water body simultaneously holds huge aquaculture potential. Epe and Badagry are the two of several regions that could become major aqua-cultural hubs to situate Lagos in a global industry, which is projected by analysts to be worth $209.42 billion by 2021.

The Badagry and Lekki ports, upon completion, could also make both localities major manufacturing hubs, “provided these are completed with efficient road and rail networks, to enable the working population easily commute to and from the regions.” 

Finally, with the Federal Government’s growing focus on the Lagos - Ibadan railways, Lagos can lose some of its revenue (from taxing workers) to neighbouring states, given that personal income tax is paid to a citizen’s state of residence and not where they work. This is already being experienced in the Lagos population and development overflow into Ogun State, due to a number of factors, including proximity, a more amenable and amiable state laws and policies, which have seen businesses/companies and their employees migrate to Ogun from Lagos, taking with it the monies that ordinarily should have come to Lagos State purse. One way out of this is for Lagos to deliver decent affordable housing in line with demand, a majority of her working population residing in rented apartments, also is to twig the state laws and policies to be more accommodating to take in as many businesses and working population as  is possible, and to provide cutting-edge public service facilities and infrastructure, such as efficient statewide public transportation, public water supply service, efficient refuse disposal system, and affordable and fast-tracked property/land title documentation services. 

Lagos State, as it is today, can only be rescued and led to achieve its optimum height, if a man of experience in the new business creation, innovation and creativity, and political sagacity wields in to get things working again. That is, a man that has demonstrated in real terms the ability to make something out of nothing, and created lasting values, opportunities, enterprises and employment. For, as it is said: “Those who played no role in wealth creation cannot manage it” because, they know not the history nor the process, and are bedevilled with entitlement mentality; hence, they are prone to waste and cluelessness. 

Lagos Economic Dashboard

Net FAAC Allocation

2011: N111.5 billion; 2012: N118.5 billion; 2013: N117.4 billion; 2014:

N105.0 billion; 2015: N88.3 billion; 2016: N78.72 billion; 2017: N89.7 billion.

Lagos Internally-Generated Revenue

2011: N202.8 billion; 2012: N219.2 billion; 2013: N236.1 billion; 2014: N276.2 billion; 2015: N268.2 billion; 2016: N302.4 billion; 2017: N241.8 billion.

Lagos Total Debt Stock

2012: N325.9 billion; 2013: N428.5 billion; 2014: N479.8 billion; 2015: N456.8 billion; 2016: N737.7 billion; 2017: N841 billion.

Domestic Debt: 2016 - N311.76 billion; External Debt: 2017 - US$1.47 billion. Lagos State Budget

2016: N662.6 billion; 2017: N812.9 billion; 2018: N1.04 trillion.

Lagos State structure of revenue 2017: IGR 78.33 per cent; FAAC 21.67 per cent.

Ability to meet monthly recurrent expenditure commitment:

- monthly commitment recurrent expenditure: N25.44 billion.

- total average monthly revenue:  N32.08 billion.

- Net positive balance = N6.6 billion. 

Source: DMO, NBS, OAGF, World Bank.

Given the foregoing backdrop, only a man like Dr Jimi Agbaje, an accomplished entrepreneur, a wealth and opportunities creator and employer of labour, can fix Lagos State of today to regain lost glory and attain its position as a true metropolitan multi-cultural city of the 21st century; with the capacity to accommodate the best of talents and investments from around the world, for the benefit of Lagos and its residents. With Jimi Agbaje, a new working Lagos of international metropolitan standing is realistic. Let’s make Lagos work again. With Agbaje – a new normal is possible – let's make it happen! 

Dr Ben Ugwu, Mni, wrote from Abuja.

Source: News Express

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