Governor Babajide Sanwo-Olu has presented the Lagos State’s fiscal plan for 2024, a robust N2.246 trillion budget tagged “Budget of Renewal,” emphasizing a strategic allocation towards capital expenditure during the presentation at the State House of Assembly.

The governor outlined the budget’s key components, delineating a substantial N1.22 trillion designated for capital expenditure, constituting 54.4% of the total budget. Recurrent expenses for the fiscal year were pegged at N1.02 trillion, encompassing overhead costs, personnel expenses, and recurrent debt service.

Highlighting revenue projections, Governor Sanwo-Olu indicated that the state anticipates a total revenue intake of N1.847 trillion for the year 2024. This projected income includes an estimate of N1.251 trillion from Internally Generated Revenue (IGR) and an expected allocation of N596.62 billion from the Federal Accounts Allocation Committee (FAAC).

Reflecting on the challenges of the preceding year, the governor acknowledged the hurdles posed by record inflation and the subsequent strain on living costs. However, he articulated that these difficulties serve as catalysts for opportunities, lauding the achievements of his administration across diverse sectors such as infrastructure, healthcare, education, and transportation.

Governor Sanwo-Olu also provided insights into the performance of the 2023 budget, indicating an impressive implementation rate of 78%, with capital expenditure recording an 80% accomplishment. He underscored the collaborative efforts between the state and federal governments, particularly in transportation and poverty alleviation, aimed at mitigating the effects of fuel subsidy removal on Lagos residents.

“We are actively collaborating with the Federal Government to implement relief measures, easing the burden of subsidy removal and high inflation experienced by the people of Lagos State,” affirmed Governor Sanwo-Olu during his presentation.

Expressing specific concerns about escalating transportation and food costs, the governor pledged the state’s commitment to aligning with the Federal Government’s targeted Food Security initiatives in 2024. Additionally, he confirmed the state’s full participation in the Federal Government’s initiative involving Compressed Natural Gas (CNG)-powered buses, a move intended to bolster public transportation with a substantial influx of these eco-friendly vehicles.

Lagos, in a league of her own

Lagos State has consistently presented the highest budgets among Nigerian states due to its economic significance and substantial Internally Generated Revenue (IGR). Comparing the state’s budget to other states’ budgets in Nigeria provides insights into the disparities in economic capacity and priorities across the regions.

For instance, Lagos State’s proposed budget of N2.246 trillion for the 2024 fiscal year places it far ahead of other states in terms of budgetary allocations. To provide a comparative view, we look at the budgets of other economically buoyant states in the country.

Rivers State: Rivers State is among the states with relatively high budgets after Lagos. For instance, for the 2024 budget, Rivers State presented N800 billion dubbed “The Budget of Renewed Hope.”

Akwa Ibom State: Akwa Ibom, another oil-rich state, typically presents substantial budgets, but they usually fall significantly below Lagos. In 2024, the state’s budget was approximately N845.632 billion.

Delta State: Delta State’s budget for 2024 stood at N714 billion, reflecting its significant economic activities as an oil-producing state but notably lower than Lagos.

Kano State: Kano, one of Nigeria’s most populous states, presented a budget of N350bn for 2024, significantly smaller compared to Lagos.

The disparity in budget sizes between Lagos State and other states in Nigeria can largely be attributed to Lagos’s status as the commercial nerve center of the country, with a higher IGR, more diverse economic activities, and a larger population.

It’s crucial to note that the specific figures can vary annually due to several factors including changes in revenue generation, federal allocations, infrastructure needs, and government priorities. However, Lagos State consistently maintains a significantly larger budget compared to other states, reflecting its economic prominence within Nigeria.

The recently released Nigeria Development Update (NDU) report by the World Bank for December 2023 has brought to light a potential breakthrough in poverty alleviation in Nigeria.

The report, titled ‘Turning The Corner (from Reforms and Renewed Hope to Results), which was read on Wednesday, forecasts that the removal of import restrictions within the country has the potential to lift around 1.3 million individuals out of poverty, addressing the disproportionate impact these limitations have on the most vulnerable households.

Lead Economist for Nigeria at the World Bank, Alex Sienaert, highlighted the significance of this move, stating, “Import restrictions disproportionately affect goods that are consumed more by the poorer households. Recent World Bank estimates show that removing import restrictions could lower the prices of affected items by 4.7 percent.”

Sienaert further elaborated, “This would lead to an overall increase in purchasing power which, in turn, would lift about 1.3 million people (around 0.6 percent of the population) out of poverty.”

The report highlighted the critical role played by staple items, such as rice, in the lives of Nigerian households, emphasizing that these commodities have been subject to price escalations due to import restrictions. With the removal of such limitations, the World Bank anticipates a marked reduction in the cost of these essential items, thereby directly benefiting the poorer sections of society.

In commending recent policy shifts, particularly the Central Bank of Nigeria’s (CBN) action to lift foreign exchange prohibitions on key items like rice, fertilizer, and cement, the World Bank emphasized the positive impact on consumer welfare.

“Recent reforms, such as the lifting of foreign exchange prohibitions, are seen as pro-poor measures that enhance consumer welfare,” Sienaert noted.

However, the report also highlighted regional disparities in the impact of this policy change. States like Kaduna, Ekiti, Enugu, FCT, Kwara, Anambra, Adamawa, Cross River, and Kebbi are projected as major beneficiaries, while others like Rivers, Akwa Ibom, Ondo, Abia, Imo, and Ebonyi may experience a smaller-scale impact.

Moreover, the report addressed the challenging trends in poverty over the past five years, with approximately 24 million Nigerians slipping below the poverty line between 2018 and 2023. The World Bank anticipates that ongoing reforms will gradually reverse this trend from 2024 onward.

“The number of poor rose from 79 million in 2018 to 104 million in 2023, with urban poor—more exposed to inflation—increasing from 13 to 20 million, while the number of poor people in rural areas increased from 67 to 84 million.

“In the medium term, the reforms will reverse this trend through higher growth and lower inflation, but to a limited extent, with poverty rates decreasing from 46 per cent in 2024 to 44 percent in 2026,” the world financial body wrote.

Additionally, Sienaert highlighted concerns regarding fuel pricing during the presentation, suggesting that the Nigerian government is still paying fuel subsidy even after announcing its total removal in May.

“If we estimate what is the cost reflective of retail PMS price of the would-be and assume that importation is done at the official FX rate, it does seem that petrol prices are not fully adjusting to market conditions so that hints at the partial return of the subsidy,” Sienaert said.

“Of course, the liberalization is happening with the parallel rates, the main supplier. The price would be even higher. These are just estimates to give you a sense of what cost-reflective pricing most likely looks like.

“We think the petrol price should be around N750 per liter more than the N650 per liter currently paid by Nigerians.”

You need to go way back to the days of Michael Iheonukara Okpara (Premier of Eastern Nigeria during the First Republic) to see a resemblance of what Abia State has in the 2024 budget. Chief Okpara built Aba and made it a hub of making things.

This is the sankofa moment and Abia is going back to the past, to learn, in order to improve the future. In the 2024 budget, Abia will put 84% to capital expenditure. Of course, civil servants will receive pay raises and all the support they need.

Abia State has a literacy rate of above 95% but we can get to 99%. So, education takes 20% of the budget: “Capital Expenditure took the lion’s share, claiming 84% of the total budget, while 16% was allocated to Recurrent Expenditure. This allocation pattern signifies a considerable commitment to boosting infrastructure and growth in the state. Notably, 20% was allocated to education and 15% to healthcare, underlining the government’s dedication to these critical sectors.”

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Abia 2024 Budget: This Shows We Are Determined To Rebuild Our State

We are determined to start afresh, construct roads, eradicate insecurity, and make our state conducive for investment both local and foreign to flow into the economy. This requires a lot of thinking, and doing… pic.twitter.com/bsf4jufGyG

— ARISE NEWS (@ARISEtv) December 12, 2023