Stakeholders Urge Sub-Nationals To Rethink Strategies for Fiscal Sustainability


Friday, September 25, 2020 / 3:59 PM / Ottoabasi Abasiekong for WebTV / Header Image Credit: Twitter; @BudgITng


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As the global crude oil price volatility ensues and Nigeria like other nations grapple with the disruptive impact of COVID-19, states have been tasked with the responsibility of rethinking governance and strategies for attaining fiscal sustainability. This was a major takeaway from the official unveiling of the BudgIT  "State of States 2020" report which focused on the theme "Fiscal Sustainability and Epidemic Preparedness Financing at the State Level".


The event which was a hybrid of a physical presentation (at Radisson Blu Hotel, GRA, Ikeja, Lagos) and a virtual participation by stakeholders. The event brought together policy makers, analysts, business leaders, and advocacy groups.


Giving the opening remarks at the event the Principal Lead of BudgIT Mr Gabriel Okeowo described the "State of the States report" as  a flagship event for the organization.


According to him since 2015 the "State of the States" report has provided data-driven research that looks at the sustainability of states.


For the 2020 edition the BudgIT's Principal Lead said it took 9 months of detailed research to produce the report, which covered the 36 states of the federation.


Mr. Okeowo said the methodology of the report was validated by other key stakeholders in the nation, before its final publishing.


"The StateofStates report provides actionable intelligence that serves state governments, citizens and advocacy groups, and is designed to inspire healthy competition amongst states".


This according to him was the first time the report launch was being hosted in Lagos, outside the Federal Capital Territory Abuja and is the part of the plan of BudgIT to extend the launch to other states in the country.


In his address at the event as the Special Guest the Governor of Lagos State Mr Babajide Sanwoolu commended BudgIT for its dedication to driving advocacy at the level of governance and public finance, covering the various tiers of government.


Citing some of the key points captured by the report, Governor Sanwoolu was happy to note that Lagos state had 22 or 23% of its revenue from FAAC allocation in 2019, which has reduced to about 21% as at August, 2020 revealing the state remains a sustainable  without reliance on FAAC allocation.


He also stated that the Debt Service to Revenue of the State was 23%(within the 30% global best practice threshold) even as Lagos seeks to De-Risk the Debt Portfolio it inherited.


Speaking further Governor Sanwoolu said Lagos state will be relying more on naira borrowing to reduce the risks to currency measures.


To reflect the COVID 19 economic realities the Governor mentioned that the state reviewed its budget by 20%.


Looking at the budget composition, Governor Sanwoolu asserted that over time Lagos has maintained a recurrent to capital expenditure distribution of 51%-49% and also 55%-45. Recently it went up to the range of 60% to 40% due to the COVID 19 pandemic which required expenditure on medicals and consumables for stabilization of the economy.


He informed stakeholders that Lagos remained the Sub-National with the highest health expenditure at the state level.


Going forward he said Lagos was exploring the 3Rs which include;

  • Responding appropriately to the COVID 19 Pandemic
  • Restarting the economy seamlessly
  • Reimagining the transformation of the Lagos economy Post COVID 19


The Governor stressed that the key areas of focus for the state will be food security, MSME support, ICT, Arts & Tourism and Transportation through which Lagos is targeting 29% GDP growth in 2021.


In terms of investments the Governor said Lagos has attracted about $600m into the Lekki Deep Sea Port, while it is determined to complete a 6,000km fiber infrastructure to drive the digital economy.


Looking at Agriculture the Governor said the Rice Mill in Imota when completed will provide 2.4m bags of 50kg Rice annually to citizens and will produce 250,000 jobs.


Presenting the Keynote address at the event Mr Teslim Shitta-Bey the Chief Economist/Managing Editor of Proshare who represented the Founder/Chairman Mr Olufemi Awoyemi, FCA lauded BudgIT for the launch of the #StateofStates2020 describing it as an intellectual art, that is easy to relate with and understand.


He described the annual report as an effective way to measure policy impact for states ,who have a wider influence over grassroot socioeconomic development than the Federal Government.


From the presentation he called on Lagos and the other 35 states to rethink, re-strategize and re-imagine governance and economic strategy.


Shitta-Bey highlighted the fact that five(5) states classified as sustainable by the BudgIT report namely Rivers, Anambra, Ogun, Lagos and Kano were economic hubs and had characteritics that drove growth in GDP and debt in a marriage of self reinforcing complexity.


On areas that states must address and take seriously based on the report, he listed the following;

  • Addressing the rising tide of debts
  • Addressing the high state overhead costs
  • Taking steps to reduce recurrent expenditure relative to capital outlays
  • Leveraging technology to boost agriculture rather than overdependance on labour
  • Explore partnerships and peer review mechanisms to enhance the quality og governance oversight, planning and direction


He advised states like Lagos to take steps in the area of articulating and implementing easily triggered "Disaster Recovery Plans (DRPs)" would that would position the states to respond to issue slikes pandemics and  ecological disruptions in a programmed and strategic manner rather than random actions taken aimed at dodging silver bullets. He emphasized the need for states to be prepared for both dark swan and grey swan occurences.


The Research Methodology of the #StateofStates2020 report covered the focus on four indexes which were;

Index A - Ability of States to meet their recurrent expenditure obligation with their internally generated revenue and Value Added Tax. (45%)

  • Index B- Reviews the States ability to cover all recurrent expenditure obligations with their total revenue, without sorting to borrowing. (35%)
  • Index C- States ability to manage their debts sustainably. (10%)
  • Index D- Evaluates the degree to which each state is prioritizing capital expenditure. (10%)


The formal launching of the report was performed by Mr Sam Egube who also joined in commending BudgIT in its role in advocacy and citizen engagement, especially in its interventions in ensuring governance transperancy.


The launch also featured a panel discussion that focused on the theme "Exploring Fiscal Dimensions for Epidemic Preparedness and Social Protection" with Mrs Toyosi-Akerele-Ogunsiji (Chairperson, Victim Support Fund;COVID 19 Task Force, Dr David Okelue Ugwunta(Commissioner for Budget and Planning, Enugu State), Ms Amina Ado (Chief Executive, Sana'a da limi Foundation) and Mr Sam Egube (Commissioner for Economic Planning, Lagos State).

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