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LAGOS STATE GOVERNMENT MINISTRY OF ECONOMIC PLANNING AND BUDGET

LAGOS STATE GOVERNMENT MINISTRY OF ECONOMIC PLANNING AND BUDGET. 3 rd QUARTER AND CUMULATIVE PERFORMANCE YEAR 2017 BUDGET APPRAISAL By Mr. Akinyemi Ashade, FCA Honourable Commissioner, Ministry of Economic Planning and Budget 18 th October, 2017. Outline. Purpose of the Presentation

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LAGOS STATE GOVERNMENT MINISTRY OF ECONOMIC PLANNING AND BUDGET

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  1. LAGOS STATE GOVERNMENTMINISTRY OF ECONOMIC PLANNING AND BUDGET 3rd QUARTER AND CUMULATIVE PERFORMANCE YEAR 2017 BUDGET APPRAISAL By Mr. Akinyemi Ashade, FCA Honourable Commissioner, Ministry of Economic Planning and Budget 18th October, 2017

  2. Outline • Purpose of the Presentation • 2017 Budget Overview • 2017 Budget Focus and Priorities • 2017 Key Implementation Strategies • Review of Q1 2017 Performance • Review of Q2 2017 Performance • Review of Q3 2017 performance • Highlights of Cumulative Budget Performance Review (Jan. – Sept. 2017) • Revenue Appraisal • Expenditure Appraisal • Comparative Analysis • Observations and Recommendations • Summary/Conclusion(s) • Annexures 2 2

  3. 2017 Approved Budget Overview 3 3

  4. 2017 Approved Budget • 2017 Budget of ₦812.998bn was signed into law on 9 January 2017. • The State’s Vision and Mission: • Vision: Africa’s model megacity, a global economic and financial hub that is safe, secure, functional and productive. • Mission: Eradicate poverty and promote economic growth through infrastructure renewal and development. 4

  5. 2017 Budget: Details of Function Group Allocation 5

  6. 2017 Budget: Projected Revenue Sources and Capital to Recurrent Ratio Capital / Recurrent Ratio Projected Revenue Sources 6

  7. 2017 Budget Focus • Security • Transportation • Economy (including agriculture & tourism) • Power • Housing • Infrastructure (road) • Education • Health • Environment • Water • Rural/Urban Development • Skill Acquisition/Microfinance • e-Governance • Enhanced capacity building 7

  8. 2017 Budget Key Implementation Strategies • Benchmark performance set at 100% • Bi-weekly Revenue Stakeholders’ meeting as a vehicle for sustained revenue drive • Central billing, revenue automation, multi-channels revenue payment • Quarterly budget performance appraisal • Tighter operational expenditure control • Strict adherence to the 2017 Budget Operational Guidelines • Continuous Implementation of Treasury Single Account (TSA) • More effective and efficient project monitoring and evaluation • Maintenance of Capital to Recurrent ratio of 62 : 38 8

  9. Highlights of Budget Performance Review 9

  10. Q2 2017 Budget Performance (Recap) 10

  11. Highlights of Q2 Budget Review • Overall Budget Performance for Q2 was ₦251.617bn/62%; • Total Revenue (TR) performed for Q2 was ₦241.433bn/75%; • Total Capital Receipts for Q2 was ₦8.567bn/67%; • Recurrent Expenditure for Q2 was: • Personnel Cost performed: ₦48.871bn/93%; • Overhead Cost performed: ₦89.298bn/105%; • Recurrent Surplus was ₦92.122bn/55%; • Capital Expenditure performance was ₦102.306bn/40%; and • Capital/Recurrent performance ratio closed at 41:59 for Q2. 11

  12. Q3 2017 Budget Performance Review 12

  13. Comparative Analysis of Y2017 Performance from Q1 to Q3 13

  14. Comparative Analysis of Y2017 Budget Performance from Q1 to Q3 • Q3 Y2017 performance was 99%/N202.010bn compare to Q2 65%/N131.411bn and 59%/N120.206bn for Q1. • The Overhead Cost performed at N54.069bn/127% compared to N45.373bn/107% in Q2 and N43.917bn/103% in Q1 • Capital Expenditure performance was N116.128bn/91% against N55.563bn/44% in Q2 and N46.743bn/37% in Q1. • Total Revenue (TR) performed at N123.116bn/77% which was higher than Q2’s N117.292bn/73% and lower than N 124.141bn/77% % in Q1 by N0.175bn in absolute terms.

  15. Comparative Analysis of Q3 Budget Performance from 2015 to 2017; (Jul-Sept) • The Budget performance for Q3 2017 was 99% compared to 67% in Q3 2016 and 69% in 2015. • Capex was 91% in Q3 2017 compared to 53 % in Q3 2016 and 69% in 2015. 15

  16. Third Quarter 2017 Revenue Appraisal 16

  17. Cumulative Y2017 Revenue Appraisal ; (Jan.-Sept.) (1/3) 17

  18. Cumulative Revenue Appraisal Y2017; (Jan-Sept) (2/3) % of Actual Performance 18

  19. Cumulative Y2017 Revenue Appraisal; (Jan.-Sept.) (3/3) • Total Revenue (“TR”) performed at ₦360.930bn/75% of target compared to N298.690bn/73% in Cumulative Q3 Y2016; ₦60.712bn more in absolute terms due to ongoing reforms in revenue collection. Total Revenue • Total Internally Generated Revenue (“TIGR”) was ₦262.005bn/73%, against ₦217.026bn/69% in Cumulative Q3 Y2016 and represents 72.47% of TR vs 73 % in Cumulative Q3 Y2016. Total IGR • Dedicated Revenue amounted to ₦14.206bn/80%, which is equivalent to 5.42% of TIGR and 3.94% of the TR. Dedicated Revenue • LIRS performance of ₦203.860bn/76% accounted for 77.81% of the TIGR and 56.48% of the TR, compared to ₦181.180bn/81%; 83% of TIGR and 53% of TR in 2016; ₦23.493bn more in absolute terms. LIRS • Capital receipts performed at ₦14.285bn/75%, 5.45% of TIGR and 3.96% of TR respectively. Capital Receipts • Federal transfers contributed ₦98.925bn/79%; 27.52% of the TR; Statutory Allocation (SA) contributed ₦30.876bn/85%, while VAT performed at ₦57.865bn/91% of provision. Federal Transfers 19

  20. Cumulative (Jan-Sept) Total Revenue Actuals For 2015 – 2017 20

  21. Comparative of Monthly IGR ; 2015 – 2017 21

  22. Comparative of Monthly Revenue of LIRS ; 2015 – 2017 22

  23. Cumulative Revenue Performance from Y2011 to Y2017; (Jan.-Sept.) 23

  24. Cumulative Y2017 Capital Receipts Appraisal; (Jan-Sept) 24

  25. Cumulative Capital Receipts Performance From 2011 to 2017 25

  26. Third Quarter 2017 Recurrent Expenditure Appraisal 26

  27. Cumulative Y2017 Personnel Cost Performance Appraisal; (Jan-Sept) • Total Personnel Cost (“TPC”) was ₦75.795bn/97%, recording an increase of ₦5.525bn in absolute terms over the same period in 2016 at ₦70.270bn • TPC accounted for 29% of TIGR, 21% of TR and 32% of Total Recurrent Expenditure. • TPC remained within the State Wage Policy of 25% ceiling of TR and 35% of IGR 27

  28. Third Quarter Overhead Costs Performance (Jan. Sept.) From 2015 - 2017 • Total Overhead Cost performed ₦141.803bn/111%; recording 60.50 % of the Total Recurrent Expenditure and 54 % of TIGR compared with N90.905bn/88%; recording 52% of the Total Recurrent Expenditure and 42% of IGR in 2016. • Overhead subventions to parastatal organizations/tertiary institutions performed at ₦14.607bn/46% as against ₦12.241bn/49% in 2016. . 28

  29. Third Quarter Recurrent Expenditure Performance From 2011 - 2017 29

  30. Third Quarter Capital Expenditure and Financing Activities Appraisal 30

  31. Third Quarter Capital Expenditure Performance From 2015 - 2017 31

  32. Third Quarter (Jan.-Sept.) Capital / Recurrent Expenditure Performance Ratio From 2012 - 2017 32

  33. Financing Activities: Cumulative Year Performance From 2015 – 2017; (Jan.-Sept.) 33

  34. Third Quarter Year 2017 Capital Expenditure and Financing Activities Appraisal • Capital Expenditure • As at the end of third quarter Y2017, CapEx performed at ₦232.865bn/61% as against ₦166.792bn/57% the same period in 2016; ₦66.073bn more in absolute terms. • The Capital : Recurrent ratio during the period closed at 50:50 against 41:59 recorded in Y2016 and shy of the projected 62:38 in 2017. • Financing Activities • The Y2017 third quarter showed a net revenue deficit of ₦106.152bn. • The State repaid ₦60.346bn as debt obligation by the end of Third quarter 2017. 34

  35. Observations/Recommendations (1/4) 1.0 Revenue: 1.1 Federal Allocation continues to nose dive despite the addition of 13% derivations which has only recorded 0.197/18% as at the end of third quarter. 1.2 All MDAs will have to perform well over 100% to meet up with the shortfall due to decline in Federal Transfers. 1.3 We will ensure that expenditure approvals is commensurate with the Revenue performance of each Agencies during the fourth quarter. 1.4 13% derivation fell below estimates as inflows only came from royalties while we still await distributions from petroleum profit tax. 35

  36. Observations/Recommendations (2/4) 2.0 Recurrent Expenditure: 2.1 Personnel Costs: • Personnel Cost performance of ₦75.795bn/97% is higher compared to ₦70.270bn/75% for the same period last year. 2.2 Overhead Expenditure: • The Total Overhead Cost running at ₦141.803bn/111% in Q3 2017 and ₦90.905bn/88% in Q3 2016 is a pointer that deliberate effort must be geared towards tighter control of overhead while ensuring improved funding of Capital projects. 36

  37. Observations/Recommendations (3/4) 3.0 Capital Expenditure: • The Total Capital Expenditure at 61% performance, revealing a Capex/Recurrent ratio (50:50). We need to support the delivery of infrastructure in critical areas such as road rehabilitation, transportation, security, environment, etc. to drive performance in 2017 (Q4). • MDAs must exhaust avenues to accommodate proposed capital expenditures within their budgetary provisions before seeking for state wide votes from MEPB. • Note that the Special Expenditure recorded huge performance (113%), it may not be available for use in the last quarter of the year. MDAs to note this. 37

  38. Observations/Recommendations (4/4) 4.0 Financing: • The bond issuance cumulatively performed 85bn/113% (that is 85bn of the expected 100bn in Y2017 was realized). Thereby, enhancing performance of CapEx in the third. • The internal and external loans performed immediately at 56% and 41% respectively. 38

  39. Conclusion: The EXCO is Invited to Note: • 2017 Budget size was ₦812.998bn, with a Q3 pro-rata size of ₦609.749bn Total Capital Expenditure Capital Receipts Recurrent Expenditure Total Revenue Third Quarter Performance Budget Size • Third Quarter performed ₦202.010bn/99%; compared with to N340.416bn/69% for same period in 2016 • Total Revenue performance was ₦360.930bn/75% compared with ₦305.138bn/75% in Third Quarter Y2016 • Total Capital Receipts for the period amounted to ₦14.285bn/75% • Total Recurrent Expenditure for the period performed ₦234.217bn/102% (Total Personnel Cost ₦75.795bn/97%; Total Overhead Cost ₦141.803bn/111%) • Total Capital Expenditure performance was ₦232.865bn/61% 39

  40. Conclusion: The EXCO is Invited to Note: • Capital: Recurrent Expenditure Ratio closed at 50:50 vs 62:38 target for Y2017 Capital / Recurrent 40

  41. Itesiwaju ipinle Eko lo je wa l’ogun! Thank you. Comments, Observations & Questions? 41

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