Even as many states reel from economic scrunch, Lagos State recorded N432.6 billion, amounting to 81 percent of expected revenue during the first half of this year, despite the effect of the COVID-19 pandemic on economic activities, the state’s Commissioner for Budget and Economic Planning, Mr. Sam Egube, said on Thursday. This is coming against
Even as many states reel from economic scrunch, Lagos State recorded N432.6 billion, amounting to 81 percent of expected revenue during the first half of this year, despite the effect of the COVID-19 pandemic on economic activities, the state’s Commissioner for Budget and Economic Planning, Mr. Sam Egube, said on Thursday.
This is coming against the backdrop of the 2019 Annual States Viability Index, ASVI, released recently by Economic Confidential, which showed that only Lagos and five other states in the federation are economically viable.
He spoke during the 2019/2020 Annual Press Week Lecture of the Lagos State Governor’s Office Correspondents (LAGOCO). The theme of the lecture was: Rethinking Lagos For the Post COVID-19 Era.’
Represented by the Senior Special Assistant to the Lagos State Governor on Economic Matters, Mr. Lekan Balogun, the Commissioner who said despite the COVID-19 pandemic, the government has been able to re-strategise to meet with the demands of the present realities, stressed that a good government is one which has the ability to respond when crisis arise.
He said: “Lagos State economy remains the largest and arguably the fastest growing economy in Nigeria. The state’s economy was projected to grow at four per cent prior to COVID-19. However, COVID-19 has affected the possibilities of achieving such prosperous target.
“Having looked at the half of the year budget performance, it showed that despite the challenges of the COVID-19 pandemic, the total revenue recorded in performance is at 81 per cent of our initial target.”
He however, said while the state’s economy was projected to record a four per cent growth, the COVID-19 pandemic has brought in strains that demanded a contraction in the state’s budget by 21 per cent in response to constriction in economic activities.
According to him, the review of the budget was among others, necessitated by lower GDP growth, decline in demand for goods and services, and shortfall in revenue generation.
Egube said the review in the state’s budgetary plan was done to maintain a strong response to the effects of the pandemic on food, ensure job creation, economic stability and economic reforms for ease-of-doing business.
According to him, the experience of the lockdown brought the state government to the reality of the shortcomings in the state’s food storage system, which necessitated the increase of the allocation to agriculture to 2.8 billion.
Egube who stated that there is need for parsimony in government spending, stressed that with the experience of the COVID-19, the state government has created stabilisation fund at one per cent of yearly IGR to provide support during future emergencies.
In his remarks, Governor Babajide Sanwo-Olu who was represented by the state’s Commissioner for Information and Strategy, Mr. Gbenga Omotoso, said despite the COVID-19 crisis, “governance never stopped.”
According to him, as soon as the lockdown was eased, the piloting of the state commenced which has led to the commissioning of a number of completed projects, while those undergoing execution are set for completion.
Among the projects he said were completed during the COVID-19 lockdown include the rolling of new buses for ease of transportation, launching new boats and channel-routes for waterways; commissioning of new health facilities; housing schemes among others.
The 2019 Annual States Viability Index, ASVI, released by Economic Confidential, according to a Vanguard report, showed that only six states in the federation are economically viable.
The states include Lagos, Ogun, Rivers, Kwara, Kaduna and Enugu, while also listing the poor and insolvent states to include Katsina, Kebbi, Borno, Bayelsa and Taraba states, based on their poor internally-generated revenue, IGR, which is far below 10% of their receipts from the federation account.
The index proved that without the monthly disbursement from the Federation Account Allocation Committee, FAAC, many states remain unviable, and cannot survive without the federally-collected revenue, mostly from the oil sector.
The IGR are generated by states through Pay-As-You-Earn Tax, PAYE, Direct Assessment, Road Taxes and revenues from Ministries, Departments and Agencies, MDAs. The IGR of the 36 states of the federation totalled N1.3 trillion in 2019, as compared to N1.1 trillion in 2018, an increase of about N200 billion.
Of the states that are not economically viable, Katsina, the home state of President Muhammadu Buhari, generated the poorest and lowest IGR compared to its federal allocation in 2019. The report on economically viable states by the Economic Confidential, an intelligence magazine, further indicates that the IGR of Lagos State of N398 billion is higher than that of 20 other states put together, whose IGRs are extremely low, and poor compared to their allocations from the Federation Account.
The Federal Capital Territory, which is not a state but the nation’s capital, generated N74 billion IGR against N30 billion from the Federation Account in the same period. Lagos State remained in its number one position in IGR with a total revenue generation of N398 billion compared to FAA of N270 billion, which translates to 147% in the 12 months of 2019.
It is followed by Ogun, which generated IGR of N70.92 billion compared to FAA of N92 billion representing 77%; Rivers with N140 billion compared to FAA of N219 billion, representing 64% and Kwara with a low receipt from the Federation Account, has maintained its impressive IGR by generating N30 billion compared to FAA of N80 billion (38%).
Others with impressive IGR include Kaduna, N44 billion compared to FAA of N129 billion(35%); Enugu, N31 billion compared to FAA of N103 billion(29%); Ondo, N30 billion compared to FAA of N103 billion(29%); Edo, N29 billion compared to FAA of N108 billion(27%); Anambra, N26 billion compared to FAA of N98 billion(27%), while Cross River earned N22 billion IGR against FAA of N99 billion representing 25%.
The 10 states with impressive IGR generated N894 billion in total, while the remaining 26 states merely generated a total of N440 billion in 2019. Katsina, the home state of President Muhammadu Buhari, generated the poorest and lowest IGR compared to its federal allocation in 2019. It realised a meagre N8 billion compared to a total of N136 billion ‘free money’ received from the Federation Account Allocation, FAA, in 2019, representing 6%.
It is followed by Kebbi, N7.3 billion compared to FAA of N100 billion(7%); Borno N8 billion compared to FAA of N121 billion(7%) and Taraba, N6.5 billion compared to N86 billion of FAA(8%). Others include Bayelsa, the home state of former President Goodluck Jonathan, with IGR of N16 billion compared to N176 billion of FAA, representing 9%; and others.