Y2015 Draft BudgetTo The

State House of Assembly

LAGOS STATE GOVERNMENT

Ministry of Economic Planning & Budget

25th November, 2014

OUTLINE

Introduction Y2015 Budget Objectives/Fiscal Strategy Y2015 Budget using PBB Approach Y2014 Budget and its Performance as at the end

of Q3 EXCO Approved MTBF Macro-Economic Assumptions Y2015 Budget Proposals Conclusion

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INTRODUCTION Y2015 budget is the Final Budget in the life of the present

Administration and aimed at further consolidating its landmark achievements

The Y2015-Y2017 Medium-Term Budget Framework (MTBF) was approved by the State Executive Council at its meeting held on Monday, 7th July, 2014

The MTBF Y2015-Y2017 projected a Budget Size of N514.175bn for Y2015, but upon approval EXCO directed that we retain the Y2014 Budget Size of N489.690bn , with no deficit

EXCO also approved marginal increases in allocations to Public Order & Safety, Housing & Community Amenities and Economic Affairs Function Groups

The Planning and Contingency Reserves were also reduced to 1% from the 2.5% proposed in the MTBF

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INTRODUCTION……/2Function Disaggregation approved by EXCO reflected

Government priority on Power , Agriculture, Transportation and Housing (PATH)

Intra-Functional Disaggregation meetings/ negotiations within the Nine (9) Function Groups were held to drive resource allocation to MDAs

Guiding principles of the current year’s Budget (i.e. Y2014) in the areas of Payment of Outstanding Liabilities, Completion of all on-going Projects and Maintenance of Public Infrastructure were also sustained

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Y2015 BUDGET OBJECTIVES

State Economic Policy thrust remains “Poverty Eradication and Sustainable Economic Growth through Infrastructure Renewal and Development”

Consolidating the Medium Term Sector Strategy(MTSS) approach through the adoption of the Program Based Budget (PBB)

Sustenance of the Goals of Job Creation

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Y2015 BUDGET OBJECTIVES…./2

Poverty eradication and wealth creation Ensuring effective and efficient service

delivery to the entire citizenry of Lagos State

Support for Private Sector to create job opportunities, and

Improvement of general well being of our citizens

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Y2015 BUDGET :FISCAL STRATEGY

Setting the Y2015 Expenditure at sustainable level, especially in view of declining Federal Transfers

No Deficit Financing allowable for Y2015 Budget Effective and Efficient Tax Administration (Assessment,

Collection and Enforcement) Maintaining the Capital: Recurrent Expenditure ratio in

the Policy Range of 60-50% (Capital) and 40-50% (Recurrent)

Keeping Total Public Debt at sustainable level; and Promoting non-oil growth and expansion of Revenue

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Y2015 BUDGET USING PBB APPROACH

i. Year 2015 Budget was prepared using the Programme Based Budget (PBB) approach, alongside the existing Legacy templates

ii. PBB is a systematic approach to planning of Public Expenditure towards achieving clearly defined results, policy objectives or routine services

iii. It is based on Programme budget structures which consist of breaking functions into programmes and developing a template to capture the cost of each programme

iv. It ensures that each programme has an organic link to the broad policy goals of the sector

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Y2015 BUDGET USING PBB APPROACH…/2

v. Each programme is a cluster of activities that are mutually exclusive, i.e., no duplications

vi. There are 15(fifteen) maximum programmes made up of 6(six) Generic ones common to all MDAs while;

vii. The remaining 9(nine) allow MDAs room to reflect their core mandates and activities, which at a later stage can be broken down into a maximum of 12 (twelve) sub-programmes

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BENEFITS OF USING PBB APPROACH

PBB is a Plan-Led System linked with State Development Plan/Sector Strategies as against existing Budget-Led system which is less robust and not as clearly linked to Policy Objectives

It is aimed at building greater transparency, accountability and comprehensiveness into the budget process by facilitating tracking of expenditure, monitoring and evaluation in line with policy goals

It provides a better basis for monitoring and evaluating outputs on Annual basis

Core Programmes were developed for MDAs and bilaterally agreed as listed in Annexure XII

Present departmental/directorate structure of MDAs not affected by the PBB approach

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CHALLENGES OF FULL IMPLEMENTATION OF PBB APPROACH

Inability to complete and configure the new Chart of Accounts into the Oracle System before the Preparation of the Y2015 Budget commenced

Integration of Chart of Accounts with Budget Classification

Scheduled Upgrade of Oracle Applications, including migration of PSB to Hyperion not yet implemented

As a result, MDAs were requested to upload their Y2015 Budget using the existing seven segment Chart of Accounts (Legacy Template)

Financial Systems Mgt. Bureau (FSMB) however assures that migration to PBB on Oracle would be hitch-free upon completion of the upgrades 11

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Y2014 REVISED BUDGET AND ITS PERFORMANCE AS AT THE END OF Q3

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NB Performance as published in Y2014 Q3 Budget Appraisal

Details Revised Prov.Pro-rated (Jan-Sept.)

N’bn

Actual (Jan-Sept)

N’bn

Perf. %

Ordinary Revenue 349.880 292.860 84Total Capital Receipts 17.388 19.311 111Total Recurrent Expenditure 177.799 168.547 95i. Personnel 66.016 63.155 96ii. Overhead 111.783 105.392 94Total Recurrent Surplus 172.081 124.313 72Total Capital Expenditure 189.469 145.622 77Financing – Surplus/(Deficit) - (1.998) -Budget Size 367.268 314.169 86

Y2015 BUDGET PROCESS

Major Revenue Generating Agencies provided inputs into Y2015 –Y2017 Fiscal Strategy -13th May, 2014

Y2015 –Y2017 MTBF approved by EXCO -7th July, 2014

Half-Year Budget Performance Appraisal - 22nd July, 2014 Budget Consultative Forum held to obtain stakeholders inputs into Y2015

Budget -30th July, 2014 Intra-Functional Group disaggregation supervised by COFOG Champions - 5th -

7th August, 2014 Bilateral discussions held with MDAs(Programmes and Projects not

accommodated within envelopes were compiled for STB/EXCO consideration)- 1st to 17th Sept., 2014

Presentation of draft Y2015 to STB on 30th October, 2014 Presentation of draft Y2015 to EXCO on 3rd November, 2014 Presentation of Appropriation Bill to House of Assembly on 10th November,

2014

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EXCO APPROVED MTBF Y2015-Y2017

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Item 2014RevisedBudget

N’bn

2015 EXCO

ApprovedN’bn

Proposed MTBF Projection (N’bn)

2015 2016 2017

Total Revenue 489.690 489.690 514.175 539.884 566.874

a. Internal Revenue 327.206 337.971 348.855 365.991 386.661

b. Federal Transfers 139.300 139.300 142.535 151.139 154.370

c. Capital Receipts 23.184 12.419 22.785 22.754 25.843

Total Recurrent Expenditure

234.665 235.415 240.415 249.401 252.515

a.Personnel Costs 87.921 90.671 90.671 90.041 91.090

b.Overhead Cost 146.744 144.744 149.744 159.360 161.425

Total Capital Expenditure

255.025 254.275 273.760 290.483 314.359

Financing Component - - - - -

Budget Size 489.690 489.690 514.175 539.884 566.874

MACRO-ECONOMIC ASSUMPTIONS

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SN Indicators/Years 2015 2014

1 GDP Growth 10% 8%

2 Inflation rate 7.0% 7.3%

3 Average Naira to USD Exchange rate N160 N160

4 Forecast/Benchmark oil price $78 $77.5

5 Oil Production 2.38mbpd 2.38mbpd

6 Unemployment (Lagos State) 8% 8%

Source: NBS; LBS; CBN; BUDGET OFFICE, ABUJANote: Current trends do not support some of these indicators and impact of such has been taken into account in the Y2015 Budget Proposal

Y2015 BUDGET PRIORITY AREAS

Power Agriculture Transportation (Multi-modal) Housing Security Education Health Water Environment e-Governance

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Y2015 BUDGET

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SN Item Y2015 Proposed

(Nbn)Post-TB

Y2015 Proposed

(Nbn)TB

ApprovedY2015 MTBF(Nbn)

Y2014RevisedBudget

N’bn

A. Total Revenue 489.690 505.582 489.690 489.690

B. Total Internally Generated Revenue (IGR)

363.690 365.782 367.910 350.390

i . Internally Generated Revenue (IGR) 337.450 339.542 344.491 327.206

C. Capital Receipts 26.240 26.240 23.419 23.184

D. Federal Transfers 126.000 139.800 121.780 139.300

E. Total Recurrent Expenditure 239.948 242.100 235.415 234.665i. Personnel Cost 113.170 113.170 90.671 87.921

ii. Overhead Cost 126.778 128.930 144.744 146.744

F. Total Capital Expenditure 249.742 247.590 254.275 255.025G. Financing Surplus - 15.892 - -H. Budget Size 489.690 489.690 489.690 489.690

Y2015 FUNCTION ALLOCATIONSDetails Y2015

Proposed(Nbn)

Post-TB

% Y2015 Proposed

(Nbn)

TB

% ApprovedMTBF Y2015(Nbn)

% RevisedY2014 Budget(Nbn)

%

i. General Public Service 107.690 22.0 99.270 20.27 97.938 20.0 102.750 20.98

ii. Public Order & Safety 15.547 3.2 17.898 3.65 19.588 4.0 21.995 4.49

iii. Economic Affairs 146.306 29.9 143.202 29.24 146.907 30.0 153.206 31.29

iv. Environmental Protection

34.953 7.1 39.545 8.08 43.533 8.89 39.040 7.97

v. Housing & Community Amenities

49.033 10.0 49.445 10.10 51.711 10.56 50.171 10.26

vi. Health 44.617 9.1 46.665 9.53 41.623 8.50 38.592 7.88

vii. Recreation, Culture & Religion

3.118 0.6 3.447 0.70 3.182 0.65 3.485 0.71

viii. Education 82.114 16.8 83.639 17.08 78.350 16.0 77.281 15.78

ix. Social Protection 1.589 0.3 1.866 0.38 1.958 0.40 3.169 0.65

x. Planning Reserve 2.260 0.5 2.260 0.46 2.448 0.50 - -

xi. Contingency 2.448 0.5 2.448 0.50 2.448 0.50 - -

Total 489.690 100 489.690 100 489.690 100 489.690 100 18

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General Public Service Resolution of critical Pension Arrears Training and Development with the Goal of enhancing

productivity Service-wide Delivering Efficient Public Service ICT Infrastructure/e-Governance

Continuous Residents Registration and Issuance of Permanent Resident’s cards

Completion of Obas’ Palaces Public Financial Management System Reforms

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KEY FUNCTION HIGHLIGHTS

Public Order and Safety Computerisation/Automation of Judicial procedures, including

e-filing Completion of on-going High/Magistrate Courts projects Continuous Upgrade of Court Rooms and Judges Chambers Witness Support Unit and Community Service Scheme Publication of Updated Laws of Lagos State by Law Reform

Commission Improving Safety and Disaster Management Continuous Capacity Building of LASTMA, KAI, Neighbourhood

Watchers and VIS Officials by the Law Enforcement Training Institute(LETI)

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KEY FUNCTION HIGHLIGHTS………………/2

Economic Affairs Implementation of Solar System for Secondary Schools and

Primary Healthcare Centres(Phase ll) Rehabilitation and Maintenance of existing Streetlight Facilities Provision of Traffic Signal Lights in strategic locations Advancement of Ten-Lane Lagos-Badagry Expressway / Blue Rail

Line Corridor Completion of Multi-Agency Office Complex Completion of other on-going Road Construction Projects and

Pedestrian Bridges Agric-YES, Accelerated Food Expansion Program: Rice, Animal

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KEY FUNCTION HIGHLIGHTS………………/3

Environmental Protection Improvement/Maintenance of Drainage Channels Completion of New Sewage Treatment Plant at Odo Iya-

Alaro Implementation of on-going Water sub-sector Reforms Advancement of Adiyan Water works Phase II and

Improvement of water pipeline in Lagos West Solid waste management Continuous Mitigation of global warming through, Tree-

planting, Greening and Beautification Programme

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KEY FUNCTION HIGHLIGHTS………………/4

Housing & Community Amenities Lagos Home Ownership Mortgage Scheme (H.O.M.S) Implementation/Rehabilitation of small scale Rural

Water Schemes Provision of Rural Roads Completion of Isale-gangan re-development project Relocation of Okobaba Saw Mill Relocation of Ikeja Computer Village to Katangowa Electronic Certificate of Occupancy Continuous upgrading of slum areas

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KEY FUNCTION HIGHLIGHTS………………/5

Health Improving Reliability and Responsiveness of Healthcare System Enhanced Service Delivery through the flagship Primary Healthcare

Centres Preventive Medical Screening including immunizations Continuous upgrading of Health facilities and Completion of on-

going Health Facilities, including the MCCs at Epe and Badagry Establishment of Oxygen Plant Refurbishment of Infection Disease Hospital (IDH), Yaba &

Construction of additional Facilities Medical Research Activities Upgrading of College of Medicine Laboratory

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KEY FUNCTION HIGHLIGHTS………………/6

Recreation, Culture & Religion Completion/Maintenance of New and Existing Fire

Stations Purchase of Fire Fighting Equipment Maintenance/Development of Mini Stadia Hosting, Organizing and Participation in

various Sports Competitions including South West Games (D.A.W.N.)

Pilgrims Welfare

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KEY FUNCTION HIGHLIGHTS………………/7

Education Continued Rehabilitation/Upgrading of Public School

buildings/facilities Continued Provision of Free Textbooks and books

for Public School Libraries Improvement of Science and ICT facilities in Public

Schools, including e-libraries. Facility Management of Public Schools Provision of School Furniture Continuation of World Bank funded EKO Projects in

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KEY FUNCTION HIGHLIGHTS………………/8

Social Protection Skill Acquisition Centres Economic Empowerment Programmes, including

microfinance support Advocacy programmes for Persons Living with Disability Continuous upgrading/Completion of Youth Centres Maintenance and upkeep of Old Peoples Home, Boys and

Girls Remand Homes Maintenance and Upkeep of Ketu Special Children’s Centre Upkeep and Maintenance of the Transit Home for victims of

Domestic Violence

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KEY FUNCTION HIGHLIGHTS………………/9

Y2015 TOTAL REVENUESN Details Y2015

Proposed(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget

(Nbn)

A. Total Revenue 489.690 489.690 489.690

B.Total Internally Generated Revenue 363.690 367.910 350.390

i. LIRS 279.153 279.153 265.860

ii. IGR (others) 34.945 49.164 37.676 iii. Dedicated Revenue 19.551 15.574 19.970

iv. Investment Income 0.700 0.500 0.500

v. Extra Ord. Revenue 3.100 0.100 3.200

C. Total Capital Receipts 26.240 23.419 23.184

i. Grants (Donor) 7.096 6.174 4.300

ii. Other Capital Receipts 19.144 17.245 18.88428

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Y2015 TOTAL REVENUE …./2SN Details Y2015

Proposed(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget

(Nbn)

D. Federal Transfers 126.000 121.780 139.300

i. Statutory Allocation 54.000 42.000 74.000

ii. VAT 72.000 78.000 65.000

iii. Extra Ord. Income - 1.780 0.300

Total Revenue 489.690 489.690 489.690

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Y2015 RECURRENT EXPENDITUREDetails Y2015

Proposed(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget

(Nbn)

Total Recurrent Expenditure

239.948 235.415 241.865

Total Personnel Cost 113.170 90.671 88.221

Total Overhead Cost 126.778 144.744 153.644

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Y2015 PERSONNEL COST

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Details Y2015 Proposed

(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget(Nbn)

Total Personnel Costs

113.170

90.671

88.221 i. Personnel Costs (Basic & Allowances) 77.326 72.911 71.432

ii. Personnel Costs (Consolidated) 2.462 2.596 2.659

iii. NYSC /Interns (Allowances) 0.300 0.347 0.320

iv. Other Personnel Cost (Contingency) 1.400 1.774 1.729

v. 7.5% of Basic, Rent & Transport as Govt. Share to Pension Contribution 3.762 3.700 3.500

vi. 2.5% Govt. Share to Pension Contribution 1.298 - -

vii. 5% BSA (Pension Redemption Bond Fund) 3.866 3.700 3.500

viii. Pension Redemption Bond Fund Shortfall 3.858   -

 -

ix. Pension & Gratuities (Civil Service/ Teaching Services) 3.200 3.500 3.200

Y2015 PERSONNEL COST

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SN Details Y2015 Proposed

(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget(Nbn)

x. 142% Pension & Gratuities (Civil Service/ Teaching Services)-Arrears

0.976

-  - 

xi. 6% Pension & Gratuities (Civil Service/ Teaching Services)-Arrears

0.074

 - - 

xii. 15% Pension & Gratuities (Civil Service/ Teaching Services)-Arrears

0.341

 - - 

xiii. Pension & Gratuities (Judiciary)

0.234 0.293

0.311

xiv. Retirement Planning/Contingency Expenses (Pensions)

0.200

- 0.370

xv. Pension Sinking Fund

1.200 1.200

1.200

xvi. Severance Pay (Pol. Off. Holders)

0.600 0.650

-

xvii. Subvention 12.072 - -

Y2015 OVERHEAD COSTSN Details Y2015

Proposed(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget(Nbn)

Total Overhead Costs 126.778 144.744 153.644

i. Overhead Costs 67.455 72.064 78.177

ii. Dedicated Expenditure 19.551 15.574 19.970

iii. Subvention 15.496 32.409 32.152

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Y2015 DEBT SERVICINGSN Details Y2015

Proposed(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget

(Nbn)

iv. Debt Charges (External) 2.185 1.128 0.922

v. Debt Charges (Internal) 22.080 23.589 22.423

vi. Debt Charges (Bond Administration)

- - -

SURPLUS ON CRF 249.742 254.275 247.825

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Y2015 TOTAL CAPITAL EXPENDITURESN Details Y2015

Proposed(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget

(Nbn)

Total Capital Expenditure 249.742 254.275 247.825

i. Core Capital 206.793 214.181 215.346

ii. Capital Development 19.144 17.245 17.884

iii. Grants 7.096 6.174 5.300

iv. Counterpart Funding 7.350 6.624 3.500

v. Special Expenditure 4.500 5.000 5.500

vi. Risk Retention Fund 0.100 0.105 0.100

vii. Staff Housing Fund 0.050 0.050 0.050

viii. Contingency Reserve 2.448 2.448 0.145

ix. Planning Reserve 2.260 2.448 -35

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Y2015 BUDGET FINANCING COMPONENTSDetails Y2015

Proposed(Nbn)

ApprovedMTBF Y2015(Nbn)

RevisedY2014 Budget(Nbn)

Financing Surplus/Deficit - - -Financing - - -

A. Financing Sources 90.818 90.818 99.746i. External Loans:

a. Development Policy Operations (DPO 3) 32.000 32.000 30.000b. Others 24.542 24.542 14.080

ii. Internal Loans 34.276 34.276 55.666iii. Bond Issue - - -B. Repayments 90.818 90.818 99.746

i. External Loan (Principal Repayments) 1.689 1.689 0.768

ii. Internal Loan (Principal Repayments) 27.384 27.384 34.985

iii.Consolidated Debt Service Accounts(CDSA) 61.745 61.745 63.993

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KEY POINTS ON Y2015 BUDGET

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SN DetailsY2015

ProposedY2015 MTBF

i. Total Personnel Cost/Total Rev 23% 19%

ii. Total Personnel Cost/ IGR 31% 25%

iii. Personnel Cost as % Recur. Exp 47% 39%

iv. Capital : Recurrent Ratio 51:49 52:48

v. Total Personnel Cost/Total Exp 23% 19%

vi. Total Ordinary Revenue N489.690bn N489.690bn

vii. Budget Size N489.690bn N489.690bn

viii. Financing Surplus - -

NOTES ON Y2015 BUDGET

Honourable members of the Lagos State House of Assembly are respectfully invited to consider as well as note that:

i. Y2014 Budget Q3 Cumulative Performance of 86% (Jan.- Sept)ii. Y2015 Budget proposes a Total Revenue of N489.690bniii. Capital Receipts of N26.240bniv. Y2015 Budget proposes a Total Recurrent

Expenditure of N239.948bn made up of : a. Personnel Cost - N113.170bn b. Overhead Cost - N126.778bn

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v. Total Capital Expenditure of N249.742bnvi. Y2015 Budget has a nil financing requirementvii. a performance target of 100%viii. All Core Programs developed for MDAs in Annexure XII, ix. Additional Requests were received from Thirty Seven (37) MDAs ,which amounted to N137,307,804,890 made up of: a. Capital Exp. - N105,427,344,791 b. Recurrent Exp.- N31,880,460,189

x. Y2015 Budget with Budget Size of N489.690bn/Total Revenue of N489.690bn

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Thank you for listeningEko o ni Baje o.

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