LAGOS STATE GOVERNMENT MINISTRY OF ECONOMIC PLANNING BUDGET

LAGOS STATE GOVERNMENT MINISTRY OF ECONOMIC PLANNING & BUDGET Y 2015 BUDGET 4 TH QUARTER AND FULL YEAR PERFORMANCE APPRAISAL February, 2016 Q 4 & Full Y 2015 Budget Performance Appraisal 1

OUTLINE Purpose of the Presentation Y 2015 Budget Overview Y 2015 Budget Focus and Priorities Y 2015 Key Implementation Strategies Highlights of Budget Performance Review o Revenue Appraisal o Expenditure Appraisal o Comparative Analysis Observations and Recommendations Summary/Conclusion(s) Annexures Q 4 & Full Y 2015 Budget Performance Appraisal 2

Purpose of the Presentation üanalyze and deliberate on Q 4 and Cumulative (Jan- Dec. 2015) Budget performance ü establish areas that require improvement ü examine reasons for non-performance where applicable; and ü suggest the way forward Q 4 & Full Y 2015 Budget Performance Appraisal 3

Y 2015 Budget Overview Q 4 & Full Y 2015 Budget Performance Appraisal 4

Y 2015 Budget SN Details Y 2015 Budget (Nbn) i. Total Revenue 489. 690 ii. Total Recurrent Expenditure a. Personnel Cost b. Overhead Cost 241. 977 113. 300 128. 677 iii. Recurrent Surplus 247. 713 iv. Capital Expenditure 247. 713 v. Financing- Surplus/(Deficit) a. External Loans (i) World Bank - DPO (ii) Others b. Internal Loans vi Repayments vii Budget Size Q 4 & Full Y 2015 Budget Performance Appraisal 0 32. 000 24. 542 34. 276 90. 818 Y 2015 Budget of N 489. 690 bn was signed into law on 11 th of January, 2015. The State 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. 489. 690 5

Y 2015 Budget: Details of Function Group Allocation After Re-ordering SN 1 Sector General Public Service Total (N) % Allocation 120, 938, 518, 340 24. 7 15, 637, 202, 820 3. 2 145, 468, 122, 818 29. 7 2 Public Order and Safety 3 Economic Affairs 4 Environmental Protection 30, 139, 437, 321 6. 2 5 Housing and Community Amenities 46, 109, 336, 632 9. 4 6 Health 44, 632, 454, 037 9. 1 7 Recreation, Culture and Religion 2, 891, 387, 035 0. 6 8 Education 82, 274, 010, 367 16. 8 9 Social Protection 1, 599, 400, 250 0. 3 Total Q 4 & Full Y 2015 Budget Performance Appraisal 489, 689, 869, 621 100 6

Y 2015 Budget: Projected Revenue Sources and Capital to Recurrent Ratio Capital Receipts, Projected Revenue Sources N 20. 976 bn (4%) Capital / Recurrent Ratio Recurrent Expenditure 49% Federal Transfers, N 126. 000 bn (26%) Q 4 & Full Y 2015 Budget Performance Appraisal Capital Expenditure 51% Internally Generated Revenue, N 342. 714 bn (70%) 7

Y 2015 Budget Focus Power Water Agriculture Education Transportation (Inter- modal Health Transportation System) Housing Environment Rural/Urban Development Skill Acquisition/ Microfinance E-Governance Q 4 & Full Y 2015 Budget Performance Appraisal 8

Y 2015 Budget Key Implementation Strategies � Monthly Revenue Stakeholders’ meeting as a vehicle for sustained Revenue drive � Enhanced transparency and accountability � Efficient allocation of resources across sectors � Periodic review of Performance � Tighter operational expenditure control � Strict adherence to the Y 2015 Budget Operational Guidelines Q 4 & Full Y 2015 Budget Performance Appraisal 9

Y 2015 Budget Key Implementation Strategies. . /2 � More effective and efficient Project Monitoring and Evaluation � Benchmark performance set at 100% � Re-alignment of MDAs � Restructuring of Internal loans � Review of Capital project implementation strategies � Implementation of Treasury Single Account (TSA) Q 4 & Full Y 2015 Budget Performance Appraisal 10

Highlights of Budget Performance Review Q 4 & Full Y 2015 Budget Performance Appraisal 11

January – September Budget Appraisal ( Recap) Q 4 & Full Y 2015 Budget Performance Appraisal 12

Highlights of Cumulative Q 3 (Jan. – Sept) Y 2015 Budget Performance The Overall budget performance was 65%; below the set benchmark of 100% §Total Revenue - N 300. 835 bn/82% §Recurrent Expenditure - N 172. 674 bn/95% -Personnel Cost - N 74. 299 bn/87% -Overhead Cost - N 98. 374 bn/102% §Capital Expenditure - N 66. 098 bn/35% §Financing Requirement - N 62. 065 bn §Capital/Recurrent Ratio was 27: 73 as against 51: 49 benchmark per Y 2015 budget. Q 4 & Full Y 2015 Budget Performance Appraisal 13

Y 2015 Budget Quarterly Appraisal Q 4 & Full Y 2015 Budget Performance Appraisal 14

Comparative Analysis of Y 2015 Budget Performance from Q 1 to Q 4 SN Details i. Total Revenue ii. Total Recurrent Expenditure a. Personnel Cost b. Overhead Cost Q 1 Q 2 Q 3 Q 4 Prov. (Jan. Mar. ) Nbn Actual (Jan. Mar. ) Nbn Perf. % Prov. (Apr. June) Nbn Actual (Apr. June) Nbn Perf. % Prov. (July. Sept. ) Nbn Actual (July. Sept. ) Nbn Perf. % Prov. (Oct. Dec. ) Nbn Actual (Oct. Dec. ) Nbn Perf. % 122. 423 100. 587 82 122. 423 99. 697 81 122. 423 100. 551 82 122. 423 98. 546 80 60. 494 58. 022 96 60. 494 59. 410 98 60. 494 55. 242 91 60. 494 50. 330 83 28. 325 24. 440 86 28. 325 24. 117 85 28. 325 25. 742 91 28. 325 24. 238 86 32. 169 33. 582 104 32. 169 35. 292 110 32. 169 29. 500 92 32. 169 26. 092 81 iii. Surplus/(Deficit) on CRF 61. 928 42. 565 69 61. 928 40. 288 65 61. 928 45. 310 73 61. 928 48. 296 78 iv. Total Capital Expenditure 61. 928 15. 078 24 61. 928 22. 470 36 61. 928 28. 550 46 61. 928 61. 576 99 v. Financing Requirement – Surplus/(Deficit) - 27. 487 - - 17. 818 - 16. 760 - vi. Budget Size 122. 423 73. 099 60 122. 423 81. 880 122. 423 83. 791 68 Q 4 & Full Y 2015 Budget Performance Appraisal 67 (13. 359) 122. 423 111. 906 91 15

Q 4 (Oct-Dec. ) Y 2015 Revenue Performance Provision Oct– Dec. Nbn Actual Oct– Dec. Nbn 122. 423 98. 546 80 A. Internally Generated Revenue 85. 679 69. 694 81 I. L/S Internal Revenue Services (LIRS) 69. 788 64. 787 93 II. Internally Generated Revenue (Others) 10. 053 2. 987 30 III. Dedicated Revenue 4. 888 1. 420 29 IV. Investment Income 0. 175 0. 500 286 V. Extra Ordinary Revenue 0. 775 0. 000 0 B. Capital Receipts 5. 244 3. 254 62 C. Federal Transfers 31. 500 25. 598 81 I. Statutory Allocation 13. 500 8. 798 65 II. Value Added Tax 18. 000 16. 800 93 Total Revenue (A+B+C) Q 4 & Full Y 2015 Budget Performance Appraisal % Perf. 16

Q 4 2015 Vs Q 4 2014 (Oct. – Dec. ) v Budget Performance for the 4 th Quarter, Y 2015 was N 111. 906 bn/ 91% as against N 93. 712 bn/ 77% same period in 2014; N 18. 194 bn more in absolute terms than previous year. v Total Revenue (TR) recorded N 98. 546 bn/80% compared to N 89. 319 bn /77% for same period in Y 2014; a increase of N 9. 227 bn above Y 2014 v Recurrent Expenditure was N 50. 330 bn/83% as against N 61. 673 bn/91% in Y 2014, indicating a decrease of N 11. 343 bn in Government spending on recurrent expenditure. • Personnel Cost Performed N 24. 238 bn /86% as against N 21. 767 bn /98% in Y 2014 • Overhead Cost performed: N 26. 092 bn/81% as against N 39. 906 bn/95% in Y 2014 v Surplus/(Deficit)on CRF was N 48. 216 bn/78% as against N 27. 646 bn/53% same period in Y 2014 v Capital Receipts was N 3. 254 bn/62% against N 3. 197 bn/55% same period in 2014 v Capital Expenditure performed N 61. 576 bn/99% compared to N 32. 039 bn/55% same period in Y 2014 Q 4 & Full Y 2015 Budget Performance Appraisal 17

Cummulative (January – December) Budget Appraisal Q 4 & Full Y 2015 Budget Performance Appraisal 18

Cumulative (Jan-Dec. ) Budget Performance for Y 2015 SN Details 2015 Overall Jan-Dec. Revised Prov. (Jan-Dec. ) Actual (Jan-Dec) Perf. % i. Total Revenue 489. 690 399. 382 82 ii. Recurrent Expenditure 241. 977 223. 003 92 a. Personnel b. Overhead 113. 300 128. 677 98. 537 124. 466 87 97 iii. Surplus/(Deficit) on CRF 247. 713 176. 379 71 iv. Capital Expenditure 247. 713 127. 673 52 v. Financing Requirement – Surplus/(Deficit) - 48. 706 - vi. Budget Size 489. 690 350. 676 72 Q 4 & Full Y 2015 Budget Performance Appraisal Cumulative performance at 72% lower than 83% for Y 2014 Cumulative Capital expenditure performed at 52% However, Revenue performance recorded 82% which was within range for the period. 19

Comparative Analysis of Cumulative (Jan-Dec. ) Budget Performance for Y 2013 –Y 2015 SN Details 2015 2014 2013 Revised Prov. (Jan-Dec. ) Actual (Jan-Dec) Perf. % Prov. (Jan-Dec) Actual (Jan-Dec) Perf. % i. Total Revenue 489. 690 399. 382 82 466. 506 400. 180 86 416. 328 380. 482 91 ii. Recurrent Expenditure a. Personnel b. Overhead 241. 977 223. 003 92 241. 865 230. 650 95 214. 729 199. 377 93 113. 300 128. 677 98. 537 124. 466 87 97 88. 221 153. 644 84. 922 145. 728 96 95 83. 958 130. 771 80. 428 118. 949 96 91 Surplus/(Deficit) on CRF 247. 713 176. 379 71 224. 641 169. 530 75 iv. Capital Receipts 20. 976 8. 160 39 23. 184 7. 295 31 v. Capital Expenditure 247. 713 127. 673 52 247. 825 177. 662 72 vi. Financing Requirement– Surplus/(Deficit) - 48. 706 - - (0. 837) - (79. 865) (42. 415) 489. 690 350. 676 72 489. 690 408. 312 83 507. 105 429. 745 iii. vii. Budget Size 201. 599 10. 912 292. 376 181. 105 90 6. 848 63 230. 367 79 53 Q 4 & Full Y 2015 Budget Performance Appraisal 85 20

January – December Revenue Appraisal Q 4 & Full Y 2015 Budget Performance Appraisal 21

Appraisal v Total Revenue (TR) performed at N 399. 382 bn/82% of target compared to N 400. 180 bn/86% for Y 2014, a difference of N 0. 798 bn in absolute terms v Internally Generated Revenue (IGR) was N 274. 946 bn /80%, against N 267. 700 bn /82%, during same period in Y 2014; and 69% of TR vs. 67% in Y 2014; v Dedicated Revenue totaled N 9. 082 bn or 46%, 3. 3% of IGR and 2. 3% of the TR v LIRS performance was N 225. 041 bn/81%; it accounted for 82% of the IGR and 56% of the TR, compared to N 160. 341 bn/ 80% of IGR and 55% of TR in Y 2014; which shows a higher performance v Capital Receipts (CR) performed at N 8. 160 bn /39%, 3% of the IGR and 2% of the TR, respectively v Federal Transfers (FT) contributed N 116. 276 bn /92%; 29% of TR; Statutory Allocation (SA) contributed N 43. 235 bn/80%, while VAT performed at N 73. 041 bn/101%. Q 4 & Full Y 2015 Budget Performance Appraisal 22

Cumulative (Jan-Dec. ) Revenue Performance from Y 2010 to Y 2015 Year Provision Jan. – Dec. (Nbn) Actual Jan. – Dec. (Nbn) % Performance 2010 322. 027 279. 067 87 2011 352. 320 312. 037 89 2012 399. 834 340. 637 85 2013 416. 328 380. 482 91 2014 466. 506 400. 180 86 2015 489. 690 399. 382 82 Q 4 & Full Y 2015 Budget Performance Appraisal 23

Cumulative (Jan-Dec. ) Performance of Y 2015 Capital Receipts SN Details Provision N (billion) Actual N (billion) Perf. % i. Grants (Donor Agencies) 7. 096 3. 286 46 ii. Other Capital Receipts 13. 880 4. 874 35 Total Capital Receipts 20. 976 8. 160 39 Q 4 & Full Y 2015 Budget Performance Appraisal 24

Y 2015 Cumulative (Jan – Dec) Capital Receipts Year Provision N (billion) Actual N (billion) % Perf. 2010 28. 372 12. 087 43 2011 19. 261 9. 313 48 2012 25. 677 9. 613 32 2013 10. 912 6. 848 63 2014 23. 184 7. 295 31 2015 20. 976 8. 160 39 Q 4 & Full Y 2015 Budget Performance Appraisal 25

January – December Expenditure Appraisal Q 4 & Full Y 2015 Budget Performance Appraisal 26

Cumulative (Jan – Dec. ) Y 2015 Personnel Cost Performance Appraisal Total Personnel Cost (TPC) was N 98. 537 bn/87%, recording an increase of N 13. 615 bn over the same period in Y 2014. TPC performed 25% of Total Revenue(TR) and 36% of IGR within Wage Policy of maximum 25% of TR but exceeded 35% of IGR by 1% Q 4 & Full Y 2015 Budget Performance Appraisal 27

Summary of Cumulative Personnel Costs Performance (Jan – Dec. ; Y 2010 - Y 2015) Year Provision Jan. – Dec. (Nbn) Actual Jan. – Dec. (Nbn) % Performance 2010 55. 079 53. 947 98 2011 71. 429 73. 995 104 2012 76. 550 94 2013 81. 625 83. 958 80. 428 96 2014 88. 221 84. 922 96 2015 113. 300 98. 537 87 Q 4 & Full Y 2015 Budget Performance Appraisal 28

Cumulative (Jan- Dec. ) Y 2015 Overhead Cost Appraisal Total Overhead Cost performed N 124. 466 bn/97%; representing 56% of the Total Recurrent Expenditure gulping 45% of IGR compared with N 145. 728 bn/95%; representing 63% of Y 2014 Total Recurrent Expenditure and 58% of IGR Overhead Subventions to Parastatal Organizations/Tertiary Institutions totaled N 15. 812/98%. Q 4 & Full Y 2015 Budget Performance Appraisal 29

Cumulative (Jan-Dec. ) Capital Expenditure Appraisal Cumulative performance was N 127. 673 bn/52% as against N 230. 650 bn/95% for the same period in Y 2014. As at end of Y 2015, the cumulative Cap. Ex: Recurrent ratio was 36: 64 as against the 51: 49 budget target. This may be due to the following reasons: Non release of DPO III which could have pushed Core Capital Performance up to 75% Fall in oil prices which affected Federal Transfer Q 4 & Full Y 2015 Budget Performance Appraisal 30

Comparative Analysis of Recurrent Expenditure Performance (Jan – Dec. ; Y 2010 -Y 2015) 300 250 200 241. 865 230. 65 233. 62 178. 015 198. 182 183. 845 207. 366 214. 729 199. 377 241. 977 223. 003 156. 148 PROVISION (N bn) 150 ACTUAL (N bn) 100 50 0 2011 2012 2013 2014 2015 Q 4 & Full Y 2015 Budget Performance Appraisal 31

Summary of Cumulative Capital Expenditure Performance (Jan. –Dec. ; Y 2010 - Y 2015) PROVISIO N (N bn) ACTUAL (N bn) Performa nce% • Capital Expenditure Performed at 52%, lowest in recent years, 2010 178. 015 156. 148 88 2011 198. 182 183. 845 93 2012 233. 620 207. 366 89 • Repayments on debt obligations also constrained availability of funds for Capital Expenditure 2013 214. 729 199. 377 93 2014 241. 865 230. 650 95 2015 247. 713 127. 673 52 YEAR Q 4 & Full Y 2015 Budget Performance Appraisal • Non release of DPO III affected Capital Expenditure performance 32

Cumulative Capital Expenditure Performance (Jan. –Dec. ; Y 2010 -Y 2015) Chart Showing Comparative Cumulative Capital Expenditure From Y 2010 - 2015 (Provision Vs Actual) 300 250 200 150 PROVISION (N bn) ACTUAL (N bn) 100 50 0 2011 2012 2013 2014 2015 Year Q 4 & Full Y 2015 Budget Performance Appraisal 33

Financing Activities Q 4 & Full Y 2015 Budget Performance Appraisal 34

Cumulative (Jan-Dec. ) Performance Y 2015 Financing Activities Provision Jan – Dec. (Nbn) 90. 818 Actual Jan-Dec. (Nbn) (51. 689) 48. 780 % Perf. 54 32. 000 24. 542 34. 276 90. 818 14. 504 34. 276 100. 469 59 100 111 a. External Loans (Principal Repayments) 1. 689 1. 087 64 b. Internal Loan (Principal Repayments) 27. 384 43. 492 159 c. Consolidated Debt Service Accounts (CDSA) 61. 745 55. 889 91 SN Financing Surplus/(Deficit) i. Financing ii. Financing (Sources) a. External Loans (I) DPO (II) Others b. Internal Loans iii. Repayments Details Q 4 & Full Y 2015 Budget Performance Appraisal 35

Y 2015 Financing Activities Financing Activity for Y 2015 shows a surplus(Financing sources) of 48. 780 bn which enabled the State to repay N 100. 469 bn. World Bank’s Development Policy Operations (DPO 3) could not be accessed in Y 2015 Q 4 & Full Y 2015 Budget Performance Appraisal 36

Observations & Recommendations Q 4 & Full Y 2015 Budget Performance Appraisal 37

OBSERVATIONS/RECOMMENDATIONS 1. 0 Revenue: 1. 1 Dwindling Federal Allocation to the State had adverse effect on Capital Projects. 1. 2 The overall Budget performance of 72% falls short of the 100% target for the period. This could be attributed to the failure to draw down the DPO III in Y 2015. 1. 3 Y 2015 was an election year and there were slow downs in government activities within an extended electioneering campaign period. 1. 4 There is a need to intensify efforts by MDAs in shoring up Revenue Performance. Q 4 & Full Y 2015 Budget Performance Appraisal 38

OBSERVATIONS/RECOMMENDATIONS 2. 0 Recurrent Expenditure: 2. 1 Personnel Costs: Personnel Cost performance of 87% is still within Budget but has grown in absolute terms by v N 13. 615 bn thus impacting the World Bank recommended ratios negatively. Although this performance was driven by the payment of backlog of pensions which was a one-off intervention and not expected to reoccur 2. 2 Overhead Expenditure: The Total Overhead Cost was observed to be running at 97%. v Q 4 & Full Y 2015 Budget Performance Appraisal 39

OBSERVATIONS/RECOMMENDATIONS 3. 0 Capital Expenditure: v The Capital Expenditure at 52% performance, revealing a Cap. Ex/Recurrent ratio (36: 64) thus tilting towards Recurrent Expenditure. We need to support the delivery of infrastructure in areas such as Road Rehabilitation, Transportation, Security, Environment etc to drive performance in Y 2016. v Non availability of DPOs affected the performance of the Cap. Ex apart from the fact that 2015 was an election year. 4. 0 Financing: v Development Policy Operations (DPO 3), a critical financing component of the Y 2015 Budget had been approved by the National Assembly and Federal Executive Council. It is hoped that it will be drawn in the shortest possible time, to enhance delivery of Capital Projects in Y 2016. Q 4 & Full Y 2015 Budget Performance Appraisal 40

SUMMARY The Executive Council and the Body of Permanent Secretaries are invited to note that: i. the Y 2015 Budget size was N 489. 690 bn, with intra Function Group re ordering ii. Q 4 Y 2015 performed N 111. 906 bn/91%; compared to N 93. 172 bn/77% for same period in Y 2014; iii. the cumulative performance was N 350. 676 bn/72%; compared to N 408. 312 bn/83%; for same period in Y 2014; iv. the Total Revenue performance was N 399. 382 bn/82% compared to N 400. 180 bn/86% in Y 2014 Q 4 & Full Y 2015 Budget Performance Appraisal 41

SUMMARY. . . /2 v. the Total Capital Receipts for the period amounted to N 8. 160 bn/39% vi. the Recurrent Expenditure for the period performed N 223. 003 bn/92% (Personnel Cost N 98. 537 bn/87%; Overhead Cost N 124. 466 bn/97% vi. the Capital Expenditure performance was N 127. 673 bn/52%; vii. Capital/Recurrent Expenditure Ratio closed at 36: 64 vs 51: 49 target for Y 2015 budget; and ix. x. Consider all the issues, observations and recommendations; and finally approve The Y 2015 Q 4 and cumulative (Jan. – Dec. ) Budget appraisal as presented Q 4 & Full Y 2015 Budget Performance Appraisal 42

Itesiwaju Ilu Eko Lo je wa l’ogun Thank you Comments, Observations & Questions Q 4 & Full Y 2015 Budget Performance Appraisal 43