93359 THE POWER OF PUBLIC INVESTMENT MANAGEMENT' Transforming Resources into Assets for Growth C O U N T RY C A S E S T U D Y Lagos State, Nigeria: PIM Investment in Infrastucture for a Modern Megacity Volker Treichel and Olubgenga Ebenerze Oyewole 2011 0 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity THE AUTHORS Volker Treichel Program Leader (Cote d’Ivoire, Benin, Burkina Faso, Guinea, Togo) Olubgenga Ebenerze Oyewole PFM Consultant, Lagos, Nigeria This case study is one of a number of country cases in the Public Investment Management Series. The country case studies accompany the volume, “The Power of Public Investment Management: Transforming Resources into Assets for Growth”, World Bank (2014), and apply a common methodology to assess PIM systems globally. ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity LAGOS, NIGERIA ! Lagos!State!is!one!of!the!fastest!growing!metropolises!in!the!world.!Under!the!Governor’s!TenPPoint! Agenda!(TPA),!Lagos!State!has!made!substantial!progress!in!creating!the!basis!for!sustained!growth! by! improving! infrastructure! and! strengthening! the! business! environment.! Improved! public! investment! management! (PIM)! has! been! at! crucial! element! of! these! reform! efforts.! This! paper! reviews! the! reform! efforts! of! the! Lagos! State! Government! in! strengthening! the! planning! and! execution! of! expenditures,! and! rates! the! quality! of! PIM.! The! study! make! the! case! that! the! overall! practices! in! PIM! in! Lagos! State! are! still! weak,! but! have! made! encouraging! leaps! toward! improvement,! including! passage! by! the! legislature! of! several! important! bills,! such! as! the! Lagos! State! Procurement! Bill! 2009,! Lagos! State! Tenancy! Bill! 2009,! Lagos! State! Public! Finance! Management!Bill!2010,!and!the!Criminal!Law!of!Lagos!State!Bill!2010.!However,!a!major!issue!that! will!continue!to!impose!hurdles!and!pressure!on!the!ability!of!the!State!Government!to!effectively! plan,!implement,!and!monitor!public!investment!in!a!systematic!and!comprehensive!manner!is!the! huge!relative!size!of!the!Lagos!State!economy!and!the!everPincreasing!population!of!the!State,!which! threatens!to!outpace!progress!in!developing!relevant!institutional!capacity.!! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 2 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Lagos!State,!essentially!comprising!the!city!of!Lagos,!Nigeria,!is!one!of!the!fastest!growing! metropolises!in!the!world.!With!the!economy!growing!annually!at!8!percent,!the!population!grew! from!an!estimated!5.8!million!in!1985!to!10.28!million!in!1995,!and!20.19!million!in!2010.!Still! growing,!the!megacity!is!projected!to!reach!24.6!million!in!2015!(UNPHABITAT!2008).!The!engine!of! growth!is!the!Nigerian!nonPoil!sector,!contributing!about!12!percent!of!the!country’s!GDP.!After!a! long!period!of!military!rule!characterized!by!economic!mismanagement,!pillage,!and!lack!of!longP term!planning!of!public!investment,!culminating!in!infrastructural!decay,!Lagos!and!all!other! Nigeria!states!came!under!the!first!period!of!continuous!democratic!governance!in!1999.! The!State!is!organized!into!two!tiers,!State!and!local!governments.!Local!governments!are! divided!into!20!local!governments!and!36!Local!Council!Development!Authorities!for!constitutional! and!administrative!convenience.!Since!2007!this!arrangement—together!with!the!determination! and!doggedness!of!State!leadership!in!implementing!existing!and!new!public!expenditures!and! financial!accountability!reforms—has!started!to!yield!significant!results!in!public!investment! directed!toward!infrastructural!and!other!challenges,!aimed!at!addressing!the!development!needs! of!the!people!of!Lagos.! Lagos!GDP!grew!annually!at!doublePdigit!rates!from!2001!to!2009,!faster!than!the!national! growth!rate!(figure!X.1).!The!services!sector,!which!accounts!for!about!75!percent!of!Lagos’s!overall! GDP!growth,!is!the!major!economic!driver,!with!wholesale!and!retail!trade!accounting!for!more! than!50!percent!of!the!sector’s!growth.!During!the!same!period,!the!manufacturing!sector! contributed!a!substantial!23!percent!to!the!state’s!GDP,!while!primary!activities!such!as!farming,! fishing,!and!mining!contributed!only!2!percent!(figure!X.2).!The!major!source!of!income!for!the! larger!segment!of!the!state’s!households!was!the!informal!sector!from!which!45!percent!of!the!state! economy,!in!terms!of!output,!derives.! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 3 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Figure+X.1++Lagos+GDP+and+National+GDP+Growth,+2001–09++ 40! 35! 30! %!of!annual!GDP!growth! 25! 20! Na.onal!GDP! LGS!GDP! Lagos!GDP! 15! 10! 5! 0! 2001! 2002! 2003! 2004! 2005! 2006! 2007! 2008! 2009! + Source:!IMF!World!Economic!Outlook!Database!and!Lagos!State!Bureau!of!Statistics.+ Figure+X.2++++Lagos+GDP+Breakdown+by+Economic+Sector,+2001–09+(%+of+GSDP)+ Lagos&GDP&Breakdown&(200152009)& 2%! 25%! Agriculture! Services! 73%! Industry! ! Source:+Lagos!Bureau!of!Statistics! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 4 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Lagos! State! has! been! ruled! by! the! Action! Congress! of! Nigeria! (ACN)! since! 1999,! a! minority! party! that! has! been! in! firm! control! of! the! executive! and! legislative! arms! of! the! two! tiers! of! government.!The!first!of!two!governors!had!two!fourPyear!terms!and!the!second!completed!a!first! term!and!secured!a!landslide!mandate!for!a!second!term,!with!all!40!members!of!the!State!House!of! Assembly! from! the! same! party,! as! against! 37! out! of! 40! members! during! the! first! term.! This! has! allowed!for!some!continuity!and!consistency!in!government!policy!and!development!priorities!over! the! last! 10! years.! The! Government! established! its! credentials! by! promoting! consultative! and! participatory! policyPmaking! inventiveness,! including! the! introduction! of! a! forum! (Ehingbeti)! that! involves! the! active! participation! of! private! and! civil! society! in! the! planning! process.! Lagos! State! Government! development! priorities! and! initiatives,! as! encapsulated! in! the! Governor’s! TenPPoint! Agenda!(TPA),!have!been!vigorously!debated!with!input!from!all!stakeholders!in!Lagos!State.!! TenNPoint+Agenda+Sets+PIM+Framework+ The!TPA,!initiated!in!2003,!forms!the!basis!for!the!State!Government’s!strategic!framework! and!includes!the!following!10!focus!areas:! • Roads.+ The! objective! is! to! rehabilitate! roads! in! all! local! government! areas! and! construct! new!roads!and!bridges.! • Transportation.! The! objective,! articulated! in! a! transport! master! plan,! is! to! create! an! integrated!mass!transit!program!with!emphasis!on!road,!rail,!and!water!transport!services! through! the! Lagos! Metropolitan! Area! Transport! Authority! (LAMATA).! The! State! is! set! to! implement! this! master! plan! through! publicPprivate! partnership! initiatives,! setting! up! the! first! statePrun! rail! services,! stimulating! privatePsector! investment! in! ferry! services,! and! strengthening!traffic!management!mechanisms.!! • Power+and+water+supply.!The!objective!is!to!increase!the!power!supply!through!the!Lagos! Independent! Power! Project! (IPP)! program! and! to! improve! the! financial! viability! of! the! water!company.! • Environment+and+physical+planning.!The!objective!is!to!make!Lagos!a!model!cityPstate!by! introducing!a!communityPbased!waste!management!system,!enforcing!the!implementation! of! emission! control! standards,! pursuing! systematic! physical! planning! for! sustainable! development,!and!establishing!a!disaster!management!agency.! • Shelter.! The! objective! is! to! ensure! provision! of! affordable! mass! housing! schemes! by! developing! a! more! effective! and! responsive! mortgage! market! and! building! new! satellite! towns.! • Health.! Improvement! of! the! reach! of! health! services! through! expansion! of! neighborhood! clinics,! pursuit! of! a! secondary! health! program,! expansion! of! the! existing! blindness! prevention!program,!control!of!malaria!with!a!focus!on!mothers!and!infants,!strengthening! marine!ambulance/emergency!medical!services,!and!enhancing!medical!personnel!welfare.! • Education.+ The!main!thrust!is!on!building!new!schools!with!better!structures!and!facilities,! tagged! Centers! of! Excellence! (Millennium)! schools! in! all! local! Government! areas,! reengineering!and!refurbishing!primary!schools,!providing!rehabilitation!and!maintenance! of!existing!schools!and!libraries,!and!making!provisions!for!school!furniture!and!equipment.! Reviewing! the! curriculum,including! entrepreneurial! training,! enhancing! teachers’! welfare! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 5 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity and! improving! communityPbased! vocational! education! are! all! key! elements! of! the! State’s! education! program.! Another! area! of! focus! in! education! is! enhancement! of! the! State’s! capacity! to! supervise! privatePsector! education! providers,! as! a! large! percentage! of! the! population!receives!education!services!from!the!private!sector.! • Food+security.!Priorities!include!facilitation!of!sustainable!food!production!and!processing,! empowerment! of! farmer! and! fishermen! cooperatives! societies,! and! support! for! strategic! preservation!and!farm!settlements!development.! • Employment.! Create! more! jobs! by! introducing! a! graduate! empowerment! program! and! executing!infrastructure!projects!generating!new!job!opportunities.! • Revenue+enhancement.!The!objective!is!to!diversify!revenue!sources,!widen!the!tax!base,! set!up!effective!revenue!collection!mechanisms,!and!develop!a!database!of!taxpayers.! These!goals!make!it!clear!that!rehabilitation!and!investment!in!new!infrastructure!has!been!a! major!thrust!of!Lagos!State!Government’s!strategic!vision!for!the!whole!of!Lagos.!Consequently!the! State’s!fiscal!deficit!has!widened!since!2004.!The!Government!has!sought!to!manage!the!envisaged! upsurge! in! public! expenditure! by! embarking! on! a! wide! range! of! fiscal! reforms,! especially! in! tax! administration,! aimed! at! encouraging! and! enforcing! payment! of! taxes! and! consumer! charges! in! 2002.! These! reforms,! especially! in! Land! Use! charges! and! the! integration! of! Small! and! Medium! Enterprises! (SMEs)! into! the! taxpayer! arena,! resulted! in! a! significant! increase! in! internally! generated!revenue!(IGR)!from!a!meager!₦600!million!per!month!in!2000!to!!₦15!billion!per!month! in!2010.!As!shown!in!table!X.1,!total!revenue!accruing!to!the!State!increased!from!₦83.65!billion!in! 2005!to!₦279.067!billion!in!2010;!IGR!accounted!for!₦42.281!billion!in!2005!and!₦144.19!billion!in! 2010,!representing!over!50!percent!of!the!total!revenue!for!each!year.1!! This! buoyancy! has! emboldened! the! State! to! increase! capital! spending! substantially! from! ₦15.96! billion! in! 2005! to! ₦173.11! billion! in! 2010,! while! recurrent! expenditure! increased! from! ₦67.69!billion!to!₦156.15!billion!during!the!same!period!(Lagos!2010c).!Significant!portions!of!the! increase! in! capital! expenditure! in! all! the! sectors! were! committed! to! new,! large,! and! sometimes! complex!projects,!rather!than!completion!or!maintenance!of!existing!projects!(examples!discussed! in! the! next! section).! With! an! actual! budgetary! expenditure! of! ₦37.74! billion! in! 2007! and! ₦123.96! billion!in!2010!in!the!economic!sector,!some!complex!projects!(as!shown!in!figure!X.3)!were!either! initiated!and!completed!or!were!ongoing.!!! ! ! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 6 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Figure+X.3+++Old+and+New+Modes+of+Transportation+in+Lagos++ & BRT–New+Transportation+Order+ Old+Transportation+System+ ! ! ! ! ! ! ! ! ! ( Model+of+New+Lagos–Badagry+Expressway+ ( OkotaNItire+Overhead+Link+Bridge+—Phase+II+ ( ( ( ( ( ( ( ( Source:!International!Press!Briefing!on!“Achievements!of!Y2007–Y2010!Budgets!and!Analysis!of!Y2011!Budget”!by!Ben! Akabueze,!Honorable!Commissioner,!Lagos!State!Ministry!of!Economic!Planning!and!Budget! As!a!reflection!of!the!State!Government’s!commitment!to!infrastructure!development,!there!is!a!plan! to!increase!the!portion!of!overall!expenditure!devoted!to!the!capital!budget!to!60!percent,!having! attained!54!percent!in!2009!and!58!percent!in!2010!budget!implementations!(Lagos!2010c). ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 7 2011 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Table&X.1:&Lagos&State&Finances,&2005–10,&₦’million& ! 2005 2006 2007 2008 2009 2010 Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Revenue 99501 83650 179450 110830 222080 168993 261999 227998 335787 243753 350354 291152 IGR 60201 42281 103034 60310 141687 86957 156996 134092 231963 168763 234027 183795 Federal:Transfer 37000 39490 50000 49810 60295 58493 80436 81941 57000 74990 88000 95270 Capital:Receipts 2300 1879 26416 710 20098 23543 24567 11965 46824 26207 28327 12087 Expenditure 112730 83650 224232 132160 274762 199137 403401 286595 405000 294710 411581 329257 Recurrent:Expenditure 65503 67690 115748 82080 145367 114277 159627 125574 159464 116296 178015 156148 Capital:Expenditure 47227 15960 108484 50080 129395 84860 243774 161021 245536 178414 233566 173109 : Fiscal:Balance ::::::::::(13,229) :::::::::::::::::G :::::::::(44,782) :::::::::(21,330) :::::::::(52,682) :::::::::(30,144) :::::::(141,402) :::::::::(58,597) :::::::::(73,835) (14,851) ::::::: :::::::::(61,227) (38,105) ::::::: : : : : Financing :::::::::::13,229 :::::::::::::::::G ::::::::::44,782 ::::::::::21,810 ::::::::::52,682 ::::::::::31,468 ::::::::::97,112 ::::::::::56,500 ::::::::127,017 ::::::::98,823 ::::::::::61,227 ::::::::38,105 Domestic :::::::::::13,229 ::::::::::13,229 ::::::::::44,782 ::::::::::21,810 ::::::::::42,795 ::::::::::31,468 ::::::::::87,000 ::::::::::56,500 ::::::::115,385 ::::::::90,000 ::::::::102,607 ::::::::51,636 :::::Bond ::::::::::::::::::G :::::::::::::::::G :::::::::::::::::G :::::::::::::::::G :::::::::::::::::G ::::::::::75,000 ::::::::::22,500 ::::::::100,000 ::::::::75,000 ::::::::::60,000 ::::::::32,500 :::::Commercial:Banks :::::::::::13,229 ::::::::::13,229 ::::::::::44,782 ::::::::::21,810 ::::::::::42,795 ::::::::::31,468 ::::::::::12,000 ::::::::::34,000 ::::::::::15,385 ::::::::15,000 ::::::::::42,607 ::::::::19,136 External:Loan ::::::::::::::::::G :::::::::::::::::G :::::::::::::::::G :::::::::::::::::G ::::::::::::: 9,887 :::::::::::::::::G ::::::::::10,112 :::::::::::::::::G ::::::::::11,632 ::::::::::8,823 ::::::::::48,508 ::::::::11,389 Repayments :::::::::(53,182) (83,972) ::::::: :::::::(114,531) (73,347) ::::::: Defict/Surplus:on:Financing ::::::::::::::::480 :::::::::::::::::G 1,324 :::::::::(44,290) :::::::::::(2,097) ::::::::::53,182 ::::::::::::: ::::::::83,972 :::::::::::::::::G ::::::::::::::G ! Source:!Lagos!2010a.!! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Figure'X.4''''Lagos'State'Trends'Nigeria'First'Lagos'State'Development'Policy'Credit' (P117237)'in''Expenditures'and'Revenues,''2005–09,'₦’'billions'' 350! 300! 250! Recurrent!Expenditure! 200! Capital!Expenditure! Total!Expenditure! 150! Total!Revenue! 100! IGR! 50! 0! 2005! 2006! 2007! 2008! 2009! 2010! ' Source:((Economic!Intelligence!Unit,!Lagos!State!Ministry!of!Economic!Planning!and!Budget! (MEBP)' Notwithstanding! the! upsurge! in! revenues,! principally! from! the! IGR,! the! amount! of! infrastructure! development! envisaged! is! well! in! excess! of! the! amount! available! from! government! resources.! This! means! that! the! State! has! to! resort! to! deficit! financing! from! internal! and! external! sources!to!plug!the!resource!gap.!The!fact!that!the!public!investment!requirement!far!exceeds!the! fiscal! revenues! of! Lagos! State! will! continue! to! pose! a! very! serious! challenge! to! maintaining! fiscal! stability!and!sustainability.!Thus!the!core!of!the!Government’s!fiscal!adjustment!program!is!to!tow!a! sustainable! fiscal! path,! with! programs! aimed! at! broadening! and! deepening! expenditure! reforms! (such!as!MTEF,!improvements!in!expenditure!management,!and!improvement!and!transparency!in! revenue!collection!administration)!which!the!State!has!already!introduced!under!its!Public!Finance! Management! (PFM)! programs.! Among! other! things,! these! programs! are! expected! to! achieve! the! following!results:! • stabilization! of! the! key! debt! ratios,! such! as! debtPtoPGSDP! (Gross! State! Domestic! Product)! and! debtPservicePtoPrevenue,! which! would! require! maintaining! the! fiscal! deficit! at! a! constant!level;!! • change! in! the! composition! of! expenditure! toward! growthPenhancing! expenditure! and! improve!its!management;!and!! • strengthening! of! revenue! mobilization! by! broadening! the! tax! base,! administrative! improvements,!and!stronger!efforts!at!reducing!collection!costs.! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 8 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity An!evaluation!of!some!key!elements!of!Lagos!State’s!mediumPterm!fiscal!program!is!contained! in!a!World!Bank!document!(Report!No.!54333PNG!of!February!18,!2011;!page!25),!and!states!that! “to! support! the! government! to! build! systems! and! institutions! to! improve! the! quality! of! spending! and! to! strengthen! the! investment! climate,! while! maintaining! fiscal! sustainability.“! With! a! 2009! baseline!deficit!of!0.7!percent!and!a!2013!end!projection!of!2.0!percent,!the!State’s!budget!deficit!as! a!percentage!share!of!GDP!stood!at!1.8!percent!in!May!2011.!The!real!growth!rate!of!IGR!had!a!2009! baseline!of!5!percent!and!was!in!line!with!the!December!2013!endPtarget!of!6!percent!in!May!2011.! The! capital! budget! execution! 2009! baseline! rate! of! 70! percent! was! maintained! with! a! move! to! achieving!the!December!2013!endPtarget!rate!of!80!percent.!! With! the! impact! of! various! reforms! and! the! need! to! limit! the! effect! of! the! budget! on! much! needed! largePscale! infrastructural! projects,! the! future! of! public! investment! in! Lagos! is! to! move! toward! placing! large! projects! as! “offPbudget! entities“(OBEs)! through! the! creation! of! “special! purpose! vehicles”! (SPVs)! and! publicPprivate! partnerships! (PPPs),! which! the! Government! has! embraced!in!the!last!four!years.! Recent'Trends'in'Public'Investment' For!some!time,!maintaining!fiscal!stability!and!debt!sustainability!in!Lagos!State!was!a!growing! challenge! in! the! development! process,! with! the! State’s! fiscal! balance! deteriorating! over! the! eight! years.!In!2004!the!State’s!fiscal!balance!as!a!percentage!of!gross!GSDP!was!a!surplus!of!0.1!percent,! deteriorating! to! a! deficit! of! 1.5! percent! in! 2008,! which! resulted! in! accelerated! accumulation! of! public! debt.! Although! it! appears! the! State! can! do! with! more! borrowing! considering! its! revenueP generating!capacity,!total!debt!stock!as!a!percentage!of!total!revenue!rose!from!27!percent!in!2006! to! 68! percent! in! 2009,! above! the! Nigerian! Investment! and! Securities! Act! statutory! limit! of! 50! percent.!In!view!of!recent!fiscal!reform!and!policy!changes!to!the!fiscal!adjustment!program,!Lagos’s! fiscal!situation!is!generally!sustainable.!The!foundation!for!this!fiscal!adjustment!program!is!rooted! in! the! State’s! current! elaboration! of! a! Medium! Term! Fiscal! Strategy! as! part! of! its! move! toward! mediumPterm!budgeting!in!the!form!of!a!Medium!Term!Expenditure!Framework!(MTEF).!However,! given! Lagos! State! Government’s! ambitious! capital! investment! in! infrastructural! development,! the! State! needs! to! be! vigilant! in! controlling! current! expenditure! and! must! continue! to! mobilize! internally!generated!revenue!to!maintain!fiscal!sustainability.!! An! International! Development! Association! “program! document! for! a! credit! in! the! amount! of! SDR!128.1!million!(US$!200!million!equivalent)!to!the!Federal!Republic!of!Nigeria!for!a!first!Lagos! State! Development! Policy! Operation”! (Table! 5:! Key! Fiscal! Indicators! in! the! Baseline! Scenario)! indicated! that! baseline! projections! for! the! period! 2009–18! portray! a! favorable! evolution! of! the! main! fiscal! indicators,! with! debt! levels! forecast! to! stabilize! at! 3! percent! of! GSDP! while! annual! budget! deficits! declined.! It! is! projected! that! debts! servicing! pressure! will! begin! to! ease! in! 2011! because! of! the! substitution! of! commercial! credits! due! in! the! next! few! years! with! concessional! World!Bank!and!development!assistance!loans.!Furthermore,!inherent!risks!to!stability!of!the!fiscal! outlook!remain!high,!given!alternative!scenarios!that!show!that!fiscal!indicators!are!highly!sensitive! to! a! more! rapid! increase! in! expenditure! and! lower! revenue! growth! than! under! the! baseline! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 9 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity scenario.! On! balance! it! seems! as! if! the! fiscal! framework! of! Lagos! State! can! be! sustained! in! the! mediumPterm!if!policies!of!strict!fiscal!discipline!and!debt!responsibility,!as!outlined!in!the!various! Lagos! State! Public! Financial! management! programs! and! the! provisions! of! the! Public! Financial! Management!Act,!are!enforced.! Over!the!last!few!years,!the!fiscal!performance!of!Lagos!State!has!been!marked!by!rapid!growth! of!both!revenue!and!expenditure.!Total!revenue!grew!by!an!average!real!rate!of!21!percent,!partly! as!a!result!of!high!oil!prices!leading!to!increased!federal!allocations.!However,!of!great!importance,! as! mentioned! earlier,! is! the! substantial! increase! in! the! State’s! IGR! collections,! which! more! than! doubled!in!real!terms!between!2003!and!2009,!growing!from!2.40!percent!to!4.05!percent!of!GSDP! during! the! period.! In! the! same! vein,! there! has! been! an! appreciable! increase! in! investment! expenditure!from!₦9!billion!in!2003!to!about!₦178!billion!in!2009,!representing!0.8!percent!and!4.3! percent!of!GSDP!in!the!respective!years.!Total!Government!expenditure!rose!from! ₦51.36!billion!in! 2003! to! about! ₦295! billion! in! 2009,! which! represents! 4.4! percent! and! 7.1! percent! of! GSDP,! respectively.! From!a!surplus!position!of!0.4!percent!of!GSDP!in!2003,!Lagos!State’s!fiscal!position!ebbed!to!a! deficit!of!0.36!percent!of!GSDP!in!2009.'This!significant!increase!in!the!fiscal!deficit!was!financed!by! both! domestic! and! external! borrowing,! with! debt! levels! rising! sharply! between! 2007! and! 2008! after! a! 2006! decline! as! a! result! of! the! debt! reduction! deal! arrangement! of! Nigeria! with! the! Paris! club!in!the!fourth!quarter!of!2005.!At!the!end!of!2009!Lagos!State!had!an!outstanding!debt!record!of! ₦98.83! billion,! about! 2.4! percent! of! GSDP,! compared! to! ₦13.2! billion! in! 2005,! representing! 0.7! percent!of!GSDP.!Domestic!debt!has!always!constituted!a!significant!proportion!of!total!debt,!rising! from! 38! percent! in! 2005! to! about! 92! percent! in! 2009.! It! is! noteworthy! that! since! 2008! the! government! significantly! substituted! commercial! lending! for! bond! issuance,! a! cheaper! source! of! borrowing!in!the!long!run.!! Given! the! commitment! of! Lagos! State! Government! to! its! fiscal! and! other! complementary! reforms,!its!goals!of!readjusting!major!public!investments!in!support!of!economic!growth,!thereby! maximizing!revenue!potential!and!increasing!the!State’s!ability!to!service!debt,!the!existing!gap!of! the! debtPrevenue! threshold! should! not! pose! a! threat! to! the! State’s! longPrun! fiscal! sustainability.! With!the!existing!lowPcost!IDA!credit,!put!at!about!US$434!million!in!outstanding!commitments!as! of! August! 2009,! and! the! large! proportion! of! bonds! in! the! domestic! debt,! the! State’s! debt! service! obligations! remain! below! 10! percent! of! annual! revenue.! In! addition,! since! 2004,! the! Government! significantly!kept!its!current!revenue!well!above!net!current!expenditures,2!and!with!the!deepening! of!tax!reforms,!the!State!sustained!the!rapid!growth!in!all!revenues.!These!improvements!enabled! the! Government! to! channel! new! debt! proceeds! to! financing! capital! expenditure,! as! opposed! to! consumption,!thereby!boosting!the!productive!capacity!of!the!State!economy.!! In!addition!to!borrowing,!Lagos!State!Government!has!also!amassed!some!contingent!liabilities! to! finance! the! gap! of! the! revenuePexpenditure! threshold! in! three! main! forms.! First,! several! large! state!investment!projects—such!as!the!Lekki!toll!road,!provision!of!electricity!to!Lagos!State!Water! Corporation!at!Akute,!and!power!supply!to!the!Government!Secretarial!complex—were!undertaken! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 10 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity under! PPP! agreements,! with! the! Government! developing! an! appropriate! institutional! and! organizational!framework.!Second!is!the!creation!of!several!OBEs,!such!as!Lagos!Heli!Ltd.,!Ehingbeti! Real! Estate! Services! Ltd.,! Lagos! Electric! Ltd.,! Lagos! Fashion! Week! International! Ventures,! Legal! Support! Services! Ltd.,! and! CG! Eko! LLP.3! Third,! unfunded! pension! benefits,! with! average! actuarial! estimate!of!₦3!billion!yearly,!are!projected!to!reach!a!level!of!about!₦14!billion!in!2015.! The!Federal!Government!of!Nigeria,!through!the!Federal!Ministry!of!Finance!and!the!Federal! Debt! Management! Office,! is! actively! involved! in! oversight! of! subnational! fiscal! and! borrowing! decisions!through!a!combination!of!rulesPbased!controls!and!direct!administrative!controls.!These! controls! require! federal! level! approval! of! State! borrowing! operations! and! prohibit! State! governments! from! directly! accessing! external! borrowing.! All! external! borrowing! is! under! the! control! of! the! Federal! Ministry! of! Finance! (FMF),! which! has! the! overriding! authority! to! provide! explicit! federal! guarantees! on! States’! external! borrowings! and! directly! participates! in! the! negotiation! of! such! credits.! At! the! same! time,! the! Federal! Debt! Management! Office! (DMO)! is! empowered!to!monitor!the!overall!debt!profile!of!individual!States!and!takes!responsibility!for!all! ongoing!debt!service!obligations,!which!are!recovered!later!through!automatic!deductions!from!the! monthly!Federation!Account!transfers!to!States.!The!Federal!Investments!and!Securities!Act!has!a! provision!limiting!annual!debt!service!payment!by!a!subPnational!government!to!40!percent!of!the! state’s!statutory!allocations!from!the!Federation!Account!and!the!state’s!total!debt!outstanding,!plus! proposed! new! borrowing! should! not! exceed! 50! per! cent! of! the! state’s! revenues! in! the! preceding! year.! In! addition,! a! subPnational! government’s! borrowings! must! be! linked! to! specific! investment! projects!whose!feasibility!studies!are!approved!by!the!National!Planning!Commission.!! On!the!revenue!side,!the!existing!monthly!system!of!sharing!oil!revenues!from!the!Federation! Account,! using! oilPpricePbased! rule! for! budgeting! revenues! to! the! three! tiers! of! government! (Federal,!State,!and!Local!Governments),!based!on!a!stable!formula4,!serves!as!a!major!stabilizer!of! State!finances.!Thus!States!are!able!to!predict!expected!inflows!from!the!Federation!Account!with! reasonable!accuracy.! Lagos'State'PIM'Organization' Lagos! State! is! organized! into! two! tiers,! State! and! local! governments.! As! mentioned,! the! local! governments!are!divided!into!20!local!governments!and!36!Local!Council!Development!Authorities! for! constitutional! and! administrative! convenience.! The! State! Government! implements! public! investment!through!the!State!annual!budget,!which!is!derived!from!the!Medium!Term!(three!years)! Expenditure!Framework!(MTEF).!Often!the!Government,!in!addition!to!direct!investment!in!public! infrastructure,! uses! such! vehicles! as! SPVs! and! PPPs! that! may! create! contingent! liabilities,! while! local!governments!implement!public!investment!through!their!annual!budgets.!! In!preparing!for!capital!expenditure,!the!following!specific!guidelines!are!to!be!observed!by!all! MDAs!(ministries,!departments,!and!agencies)!(Lagos!2010):!! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 11 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Adequate! justifications! and! explanations,! with! emphasis! on! activities! to! be! undertaken! and! targets! to! be! met! rather! than! the! objectives! of! expenditure,! must! be! prepared! for! all! major! proposals.! 1. Flagship!projects!(that!is,!projects!of!national!importance),!as!well!as!grantPassisted!projects! with! or! without! counterpart! support! from! the! Government,! and! projects! financed! by! committed!loans,!shall!be!given!higher!priority.! 2. Activities! or! projects! that! address! specific! commitments! of! the! Government! under! any! international,!bilateral,!or!domestic!forum!must!be!identified!prominently.! 3. New,!externally!assisted!activities!or!projects!shall!be!included!in!the!proposals!only!if!they! are! in! an! advanced! stage! of! negotiation! and! are! expected! to! start! within! a! period! of! six! months!into!the!new!fiscal!year.! 4. Preliminary!estimates!shall!be!used!as!supporting!documentation!for!the!writePup!on!new! constructions,! special! repairs,! or! renovations! of! existing! infrastructure.! In! the! case! of! activities!that!are!planned!to!be!carried!out!over!a!period!of!more!than!one!year,!the!writeP up!shall!indicate!the!full!scope,!the!total!financial!implication,!and!the!planned!execution!of! the!work!in!phases!by!year.! 5. Proposals/estimates!for!any!activity!or!project!the!execution!of!which!extends!beyond!the! budget!(fiscal)!year!shall!be!limited!to!the!amount!to!be!expended!within!the!fiscal!year.!The! amount! required! in! subsequent! fiscal! years! shall! be! projected! in! the! annual! budget! proposals! of! such! years.! The! preparation! of! forward! estimates! under! the! rolling! budget! mechanism!is!expected!to!facilitate!such!multiPyear!budgetary!estimations.! 6. MDAs! are! expected! to! identify! and! apply! the! lowest! possible! cost! and! the! most! effective! methods!in!estimating!the!costs!of!activities!and!projects!proposed.! 7. The!recurrent!implications!of!capital!projects!are!to!be!estimated.!In!addition,!the!recurrent! costs!of!capital!projects!completed!in!the!last!year!are!taken!into!account!when!estimating! the!recurrent!costs!for!the!next!financial!year.! 8. Projects! proposed! are! to! be! in! line! with! the! State! Government! Ten! Point! Agenda! and! any! strategic!plans!for!the!ministry,!department,!or!agency!that!have!been!agreed!upon!with!the! Executive!Council!of!the!State.! Lagos'Becomes'a'MegaSCity' At!the!onset!of!the!present!administration!in!2007,!the!State!Government!initiated!the!Lagos! MegaPCity! Project! to! demonstrate! its! resolve! to! transform! the! State! to! meet! its! status! as! a! model! megaPcity.! The! project,! estimated! to! cost! $50! million,! was! expected! to! be! mainly! financed! via! various! PPP! models.! This! culminated! in! the! enactment! of! the! Lagos! State! Roads,! Bridges! and! Highway! Infrastructure! (Private! Sector! Participation)! Development! Board! Law! to! provide! a! legal! framework!for!privatePsector!financing!of!infrastructure!such!as!roads,!bridges,!and!highways.!This! law!was!the!first!of!its!kind!by!any!government!in!Nigeria.!The!State!Government!also!established!a! PublicPPrivate! Partnership! Office! to! provide! assistance! and! guidance! to! MDAs! considering! a! PPP! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 12 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity procurement! option,! especially! in! the! following! areas! requiring! huge! capital! investment:! waste! management,! pipePborne! water,! roads,! rail,! ferry! services,! tourism,! real! estate,! and! communications.!The!State!has!seven!major!PPP!projects.!Four!(Akute!Power!Project,!the!Bus!Rapid! Transit! (BRT)! Scheme,! Health! facilities,! and! Waste! to! Wealth! Project)! are! fully! in! operation;! one! (LekkiPEpe! Expressway)! is! partly! operational;! and! two! (Lagos! Rail! Mass! Transit! and! Odomola! Water!Scheme)!are!under!construction.!Details!of!some!of!these!definite!PPP!strides!the!State!has! taken!are:! • The' Bus' Rapid' Transit' Scheme' (BRT).! This! project,! estimated! to! cost! $100! million,! is! geared!toward!easing!heavy!traffic!congestion!in!the!state.!The!project!is!a!partnership!with! the! National! Union! of! Road! Transport! Workers! (NURTW)! and! is! regulated! by! the! Lagos! Metropolitan!Area!Transport!Authority!(LAMATA).!! • Waste' to' Wealth' Project.! With! Lagos! State! generating! about! 3.3! million! metric! tons! of! waste! per! annum,! while! only! 1.25! mmt! is! being! collected! annually,! this! project! involves! Public! Sector! Partnership! (PSP)! operators! in! the! removal,! disposal,! and! conversion! of! the! deficit!domestic!and!Industrial!Wastes!in!Lagos!State.! • BOT' (Build,' Operate' and' Transfer).! This! is! an! arrangement! of! the! US$450m! LekkiPEpe! Expressway,!which!is!a!partnership!between!the!Lekki!Concession!Company!(LCC),!a!special! purpose! vehicle! and! a! subsidiary! of! Toll! Systems! Company! Ltd! (TSC),! and! the! Lagos! State! Government.!Section!1!was!commissioned!in!July!2010.! • Independent' Power' Project' (IPP).! The! 12.15! MW! IPP! plant! was! built! at! a! cost! of! $25.5! million!by!the!State!Government!in!conjunction!with!Akute!Power!Limited,!a!subsidiary!of! Oando!Plc.!The!project!was!commissioned!in!March!2010!to!provide!uninterrupted!power! supply!to!the!Lagos!State!Water!Works!in!Adiyan–Iju!and!has!reportedly!helped!the!State!to! save!the!sum!of!₦600!million!per!annum.! However,!MDAs!are!mandated!to!carefully!consider!the!increased!risks!arising!from!the!PPP!model! approach,! especially! as! a! result! of! the! reduced! availability! of! funding! for! privatePsector! projects! from!banks!because!of!the!global!credit!crunch.! With!a!performance!target!of!dedicating!60!percent!of!its!annual!budget!to!development!projects!in! an! environment! where! experience! shows! that! procurement,! especially! for! capital! projects,! has! a! high! risk! in! terms! of! leakages! of! public! funds,! the! Lagos! State! Government! decided! to! give! a! high! level! of! importance! to! monitoring! and! evaluation! of! capital! projects.! Monitoring! and! Evaluation! (M&E)! is! primarily! undertaken! by! the! Monitoring! and! Evaluation! Directorate! in! the! Ministry! of! Economic!Planning!and!Budget.!The!efforts!of!the!Directorate!are!complemented!by!the!following! bodies:! • Project!Implementation!Monitoring!Unit!(PIMU)!in!the!Governor’s!Office,! • Project!Monitoring!Committee!of!EXCO,!and! • Independent!Consultants!Monitoring!Team.! The!State’s!Monitoring!and!Evaluation!system!is!designed!to:!! 1. provide!constant!feedback!on!the!extent!to!which!the!projects!are!achieving!their!set!goals;! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 13 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity 2. identify!potential!problems!at!every!stage!to!keep!track!of!progress!and!review!operations! accordingly;! 3. monitor! the! efficiency! with! which! the! different! components! of! the! projects! are! being! implemented!and!suggest!improvements;! 4. assist!in!the!planning!of!future!projects;! 5. influence! sector! assistance! strategy,! that! is,! relevant! analysis! from! project! and! policy! evaluation! can! highlight! the! outcomes! of! previous! interventions,! and! the! strengths! and! weaknesses!of!their!implementation;! 6. incorporate!views!of!stakeholders:!participation!by!project!beneficiaries!or!users!in!design! and! implementation! brings! greater! “ownership”! of! project! objectives! and! encourages! the! sustainability!of!project!benefits;! 7. provide!a!source!of!information!for!budget!evaluation!works;! 8. enhance!the!confidence!of!the!citizens!in!the!activities!of!the!State!Government;!and! 9. ensure!transparency!and!accountability.! In! a! bid! to! plug! the! capacity! gap! identified! in! the! State’s! Monitoring! and! Evaluation! process,! a! personal!assistant!to!the!governor!in!this!area!was!engaged!on!a!fullPtime!basis,!and!the!office!has! been!collaborating!with!the!World!Bank!mission!in!Nigeria!to!build!the!capacity!of!the!Monitoring! and!Evaluation!department!of!MEPB!and!the!Project!Implementation!Monitoring!Unit!(PIMU)!in!the! Governor’s! Office.! This! has! resulted! in! better! performance! of! the! units! that! prepare! the! required! quarterly! M&E,! with! reports! rendered! as! required.! Yet,! capacity! constraints! still! remain! an! important!problem!affecting!the!quality!of!reports.!! PIM'Institutional'Setting' In!the!course!of!this!review!of!PIM!in!Lagos!State,!information!was!obtained!from!relevant! authorities! in! MDAs! whose! responsibilities! are! in! some! way! related! to! PIM.! Among! these! stakeholders! are:! Ministry! of! Economic! Planning! and! Budget,! Ministry! of! Finance,! Ministry! of! Justice,! Ministry! of! Works! and! Infrastructure,! Ministry! of! Physical! Planning! and! Urban! Development,! Ministry! of! Transport,! Lagos! Metropolitan! Area! Transport! Authority,! and! Lagos! Metropolitan!Development!and!Governance!Project!(LMDGP).! Before! this! period! of! sustained! democratic! governance,! the! Lagos! State! public! investment! cycle,! like! those! of! other! States! of! the! Federation,! was! linked! to! the! whims! and! caprices! of! frequently! changing! military! governments.! Public! investment! was! expected! to! be! routed! through! annual! budgets,! but! more! often! than! not,! budgets! were! as! good! as! the! paper! on! which! they! were! prepared.! Since! the! inception! of! democratic! governance! in! 1999,! the! public! investment! cycle! in! Lagos!State!has!been!better!linked!to!the!budget!cycle,!which!was!annual!until!2008!when!the!State! Government!started!a!multiPyear!budget!system!through!the!elaboration!of!MTEF.!The!MTEF!topP down!and!bottomPup!budget!process!has!been!the!recognized!institutional!framework!for!planning! Government! expenditure! for! threePyear! periods.! The! budget! of! each! year! of! the! MTEF! cycle! is! analyzed!and!approved!by!the!State!House!of!Assembly,!the!legislative!arm!of!government,!no!later! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 14 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity than!the!first!day!of!November!and!assented!to!by!the!Governor!not!later!than!the!fifteenth!day!of! December!of!the!preceding!year.!This!makes!it!legally!binding!on!subsequently!elected!government.!! In! line! with! international! best! practice,! Lagos’s! MTEF! involves! a! topPdown! estimate! of! aggregate!resources!available!for!public!spending!in!the!form!of!a!Medium!Term!Fiscal!Framework! (MTFF)! and! bottomPup! sector! programs,! with! appropriate! costing! by! way! of! the! Medium! Term! Sector! Strategy! (MTSS).! This! is! to! ensure! reconciliation! of! needs! with! resource! constraints! for! sectoral! resource! allocation! and! to! ensure! that! budget! execution! reflects! agreed! upon! plans! consistent!with!the!policy!focus!of!Government!over!the!budget!cycle.!! The! State! is! divided! into! nine! subnational! Classification! of! Functions! of! Government! (COFOG)! sectors,! with! each! sector! (with! full! participation! of! all! MDAs! in! the! sector)! taking! responsibility!for!the!preparation!of!its!related!MTSS,!with!the!Ministry!of!Economic!Planning!and! Budget! (MEPB)! supporting! and! coordinating! the! process.! MEPB! is! responsible! for! issuing! budget! circulars! to! kickPstart! the! budget! cycle,! scrutiny! of! recurrent! revenue! estimates,! and! overall! coordination!of!the!budget!preparation!and!approval;!in!addition,!it!scrutinizes!the!capital!budget! and!coordinates!technical!aid!and!grant!aided!programs.!The!Ministry!of!Finance!is!in!charge!of!the! State’s!debt!profile,!with!responsibility!for!managing!debt!and!debt!charge!estimates!and,!through! the!State!Treasury!Office!(STO)!and!Internal!Revenue!Service!(IRS),!it!makes!statutory!revenue!and! tax! revenue! estimates,! respectively.! For! projects! to! be! admitted! into! the! budget,! MEPB! holds! bilateral!discussions!with!each!sector!in!which!all!the!MDAs!in!the!sector!present!projects!to!their! respective!MTSS!for!negotiation!and!agreement.!! Thus! through! their! respective! sectors,! MDAs! are! responsible! for! proposing! and! preparing! investment!projects,!and,!when!the!projects!are!approved!and!included!in!the!budget,!MDAs!are!in! charge!of!implementing!and!overseeing!them.!In!implementing!public!projects,!each!line!ministry,! department,!or!agency!is!required!to!prepare!a!proposal!to!seek!the!approval!of!the!Commissioner! of! the! MEPB,! who! has! an! approval! limit! of! ₦10! million.! Before! granting! the! approval,! or! recommending! for! approval! where! the! project! cost! is! higher! than! his/her! approval! limit,! the! Honorable! Commissioner! (HC)! of! MEPB! obtains! technical! advice! on! costing! and! valuation! from! Ministry!of!Works!and!Infrastructure!if!the!project!is!related!to!physical!structure;!if!it!is!science!or! technology!related,!the!HC!MEPB!refers!it!to!the!Ministry!of!Science!and!Technology,!before!sending! it!to!the!Ministry!of!Works!and!Infrastructure!for!final!advice!on!costing!and!valuation.!On!approval! or!recommendation!for!approval!by!HC!MEPB,!the!documents!are!forwarded!to!the!HC!Ministry!of! Finance! (MoF)! for! the! attention! of! State! Treasury! Office! (STO)! to! process! release! of! funds! for! the! project.!! Evidence!shows!that!this!process!prescribed!by!the!Nigerian!budget!standard!is!adhered!to;! however,! there! is! still! evidence! of! some! MDAs! lobbying,! using! personal! and! political! influence,! to! shortPcircuit!the!requirements!of!control!of!capital!projects.!For!example,!capital!projects!with!costs! above! the! individual/entity! authority! limit! are! sometimes! broken! down! in! unusual! ways! to! accommodate!the!approval!limits!of!approving!authorities.! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 15 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Performance'of'the'PIM'System' Investment'Guidance'and'Preliminary'Screening' As!earlier!indicated,!Lagos!adopted!a!medium!term!(three!years)!budget!planning!process! that! clearly! defines! the! Government’s! overall! policy! thrust! and! programs! and! actions! to! be! implemented! during! the! threePyear! period.! From! 1999! to! 2007,! the! State! Government’s! policy! thrust! was! encapsulated! in! the! Lagos! State! Economic! Empowerment! and! Development! Strategy! (LASEEDS),!in!tune!with!the!National!Economic!Empowerment!and!Development!Strategy!(NEEDS).! NEEDS!was!a!Federal!Government!initiative!launched!in!2004!that!sets!out!national!priorities!in!a! number!of!areas,!such!as:! • Empowering! people! (health,! education,! environment,! housing,! employment! &! youth! development,!etc);! • Promoting! private! enterprise! (security! and! the! rule! of! law,! infrastructure,! finance,! privatisation!and!liberalisation,!regional!integration);!and! • Changing! the! way! government! does! its! work! (public! sector! reforms,! governance,! transparency!and!antiPcorruption,!service!delivery,!budget!and!expenditure!reforms).!! In! 2007! Lagos! State’s! policy! thrust! was! further! expanded! to! include! the! new! State! Government’s! Ten! Point! Agenda! (TPA),! and! from! 2009! it! was! tailored! to! fit! into! the! Millennium! Development!Goals!(MDGs)!and!the!Federal!Government’s!Vision!20:2020!to!a!large!extent.!Lagos! State! has! been! implementing! the! strategic! content! of! its! plan! since! the! 1999! democratic! dispensation.!The!budget!process!has!been!adhered!to!with!the!assistance!and!support!of!the!World! Bank,!UK!Department!for!International!Development!(DFID),!and!other!development!partners!that! are! generally! happy! with! the! level! of! seriousness! of! the! Government.! The! aforementioned! World! Bank! Report! (World! Bank! 2011)! rated! progress! toward! achieving! overall! Development! Policy! Objectives! (DPO)! as! “Satisfactory,”! and! Overall! implementation! progress! as! “Moderately! Satisfactory.”! The! World! Bank! study! observed! an! improvement! in! the! State’s! MTEF! system! in! the! following!areas:! • With! the! assistance! of! the! World! Bank’s! MTEF! team,! the! Executive! Council! approved! the! adoption! of! a! MediumPTerm! Fiscal! Strategy! that! is! supportive! of! longPterm! debt! sustainability!for!the!2010!budget.! • The! Ministry! of! Economic! Planning! and! Budget! adopted! a! macroeconomic! framework! to! determine! sectorPspecific! budgetary! resource! ceilings! and! envelopes! to! prepare! the! 2010! budget.! • In! addition! to! the! initial! three! ministries! (Health,! Education,! and! Environment),! the! MTSS! was!prepared!and!published!for!seven!ministries!(Women’s!Affairs!and!Poverty!Elevation,! Justice,! Physical! Planning! and! Urban! Development,! Transportation,! Works! and! Infrastructure,!Housing,!and!Youth,!Sports!and!Social!Development).! • The!2010!State!Budget!included!capital!projects!that!meet!readiness!requirements!set!out!in! the!expenditure!request!checklist!of!the!Ministry!of!Economic!Planning!and!Budget.! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 16 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Lagos'Sets'PIM'Example' Lagos!State!has!established!a!process!of!screening!projects!through!the!MTSS5!which!is!now! carried! out! for! the! nine! COFOG! Sectors! (Education,! Health,! Environment,! General! Public! Services,! Public! Order! and! Safety,! Economic! Affairs,! Housing,! Recreation,! Culture! and! Religion,! Social! Protection)! of! the! economy.! Bilateral! discussions! between! MEPB! and! the! sectors,! with! the! involvement! of! all! MDAs! in! the! sectors,! have! consistently! taken! place! to! screen! and! select! agreed! upon!projects!to!be!included!in!the!budget,!taking!into!consideration!available!resources!and!in!line! with! the! Government’s! strategic! focus.! With! strict! adherence! to! the! topPdown,! bottomPup! MTEF! budget!process,!sectors!are!guided!by!available!resources!and!the!strategic!focus!of!government!to! prepare! sector! strategies,! hence! there! is! little! or! no! room! for! including! projects! that! have! been! screened!and!rejected!in!the!budget.!Each!sector’s!MTSS!document!is!expected!to!clearly!spell!out! the!strategic!goals!of!the!sector,!which!must!be!in!line!with!the!State’s!strategic!goals!as!well!as!with! specific!objectives!and!must!contain!fully!costed!initiatives!geared!towards!achieving!the!goals!and! objectives!to!provide!a!basis!for!budgeting.! The! few! officers! of! the! Budget! Directorate! and! Economic! Intelligence! Unit! (EIU)! of! MEPB! that!have!garnered!reasonable!technical!knowledge!of!MTSS!are!inadequate!to!ensure!an!effective! elaboration!and!synchronization!of!sector!plans!and!resource!needs!into!the!MTEF.!Seminars!and! workshops! have! been! conducted! in! conjunction! with! UK! Department! for! International! Development! (DfID)! and! some! independent! consultants! to! train! relevant! officers! in! the! MEPB! Ministry! of! Economic! Planning! and! Budget! (MEPB)! and! the! other! MDAs;! Planning! Units! were! created!in!all!MDAs!manned!by!Planning!Officers!deployed!from!MEPB!to!assist!MDAs!in!preparing! their! MTSS! documents.! However,! many! remaining! technical! gaps! have! prevented! the! State! from! fully! achieving! the! goal! of! devolving! the! task! of! preparing! MTSS! to! the! MDAs,! with! attendant! problems!of!harmonizing!the!required!topPdown!and!bottomPup!MTEF!process.!! The! civil! society! and! the! private! sector,! including! those! outside! Lagos! State,! have! been! generally! appreciative! of! the! performance! of! the! State! Government! in! the! area! of! physical! and! infrastructural! development,! compared! with! past! governments! and! governments! of! other! states.! This! is! evidenced! by! the! noticeable! and! uncharacteristic! increase! in! the! number! of! voluntary! taxpayers! and! the! landslide! victory! of! the! party! at! the! last! election.! In! addition,! civil! societies! in! other!states!have!frequently!called!on!their!state!governments!to!replicate!the!Lagos!model.!! Formal'Project'Appraisal'of'Investment'Projects'' Since! 1999,! the! beginning! of! the! current! democratic! dispensation,! Lagos! State! has! significantly! developed! and! embedded! formal! program! and! project! appraisal! processes! for! all! projects,!irrespective!of!value.!All!project!appraisals!are!expected!to!include!cost,!timing,!benefits,! and! a! financial! plan,! as! well! as! challenges! of! implementation.! Documentation! for! public! projects! appraisals!must!include!the!following:' 1. Evidence!of!site!acquisition!with!a!view!to!ensuring!that!the!project!fits!into!the!Master!Plan! for!the!area;! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 17 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity 2. SignPoff! by! the! Ministry! of! Physical! Planning! and! Urban! Development,! evidencing! the! site! acquisition,!as!well!as!approval!of!a!Specific!building!plan;! 3. Proof! of! established! rightPofPway! in! the! case! of! road! construction,! accompanied! by! preliminary! designs! showing! concrete! drains,! utilities! duct,! walkways,! bicycle! lanes,! and! street!lights,!as!well!as!the!program!for!demolitions!where!applicable;! 4. Bill!of!quantities;! 5. Any! other! document! necessary! to! prove! the! preparedness! of! the! agency! to! execute! the! proposed!project;!and! 6. Documentation!that!the!prospects!of!using!capital!contributions!or!grants!from!multilateral! agencies! and! counterpart! funds! by! the! State! Government! to! match! such! grants! have! been! explored.! The!above!checklists!are!intended!to!help!meet!international!standards!and!the!professional! focus! of! the! government! of! the! day.! However! due! to! the! absence! of! an! independent! Procurement! Agency,! capacity! limitations! in! understanding! and! implementing! some! of! the! listed! technical! requirements,! the! cumbersome! bureaucratic! procedures! of! the! civil! service,! and! personal! and! political!considerations,!there!is!no!strong!evidence!that!the!procurement!of!capital!investments!in! Lagos!State!meets!these!documentation!requirements.! Project! appraisals! must! include! information! covering! project! contextual! particulars,! detailed! technical! analysis,! financial! analysis,! environmental! impact! analysis,! and! socioeconomic! analysis,!with!emphasis!on!the!activities!to!be!carried!out!and!targets!to!be!met,!rather!than!on!the! objectives! of! expenditure.! For! projects! planned! to! be! executed! over! a! period! of! more! than! one! budget! year,! the! appraisal! must! include! the! full! scope,! the! total! financial! implication,! and! the! planned!execution!of!the!project!in!yearPbyPyear!phases.!! The!Ministry!of!Physical!Planning!and!Urban!Development!has!developed!Master!Plans!for! different!areas!of!the!State!and!approves!specific!project!plans!to!ensure!that!projects!fit!the!master! plan!of!each!area.!These!have!as!much!as!possible!guided!MDAs!to!meet!the!set!requirements!in!the! project! preparation! process;! however,! the! limited! number! of! professionals! in! the! Ministry! and! MDAs! has! prevented! the! system! from! becoming! fully! effective.! This! shortage! has! led! to! the! engagement! of! external! consultants! whose! appointment! may! be! influenced! by! political! considerations! and! who! therefore! are! not! fully! autonomous! in! their! judgment.! Evidence! still! abounds!of!public!projects!budgeted!without!environmental!impact!or!socioeconomic!analysis!and! where!they!are!attached!to!projects!that!lack!technically!adequate!analysis.!! Independent'Review'of'Investment'Appraisals' Officially! Lagos! State! has! put! in! place! formal! project! appraisal! processes.! These! processes! are! being! complemented! by! reviews! undertaken! by! professionals! in! the! Ministry! of! Works! and! Infrastructure!who!carry!out!costing!and!valuation!of!all!projects!proposed!by!all!MDAs.!In!addition! to! this! arrangement,! the! Lagos! State! Consultancy! Board! is! in! charge! of! registering! external! consultants!who!are!engaged!to!carry!out!appraisal!of!projects.!Registered!consultants!are!expected! to!bid!and!tender!competitively!for!project!appraisals!as!they!come!up.!! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 18 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity For! conditional! grant! projects,! the! State! and! the! Federal! Government,! or! the! coPfunding! party,!will!usually!engage!consultants!for!independent!review!of!the!project!appraisal!under!a!joint! arrangement.! Although! consultants! are! engaged! to! undertake! independent! reviews,! the! independence! of! such! reviews! may! be! compromised! owing! to! political! factors! affecting! their! recruitment.!! Project'Selection'and'Budgeting' The! Lagos! State! budget! cycle,! which! was! transformed! from! a! yearly! cycle! to! a! multiPyear! (three!years)!cycle!in!2008,!is!primarily!guided!by!the!MTEF!mechanism!of!a!topPdown!estimate!of! aggregate! resources! available! for! public! expenditure! consistent! with! fiscal! stability;! bottomPup! estimates!of!the!cost!of!carrying!out!policies,!both!existing!and!new;!and!a!tool!for!reconciling!these! costs!with!aggregate!resources.!Projects!are!selected!and!budgeted!with!due!consultation!among!all! stake! holders! subject! to! aggregate! available! resources! and! in! agreement! with! the! policy! thrust! of! the!State!Government.!! MEPB!plays!a!central!role!in!the!Lagos!State’s!budget!cycle!by!coordinating!the!preparation! of!the!budget!as!well!as!serving!as!a!clearing!house!for!the!project!implementation!process.!Among! other!functions,!MEPB!undertakes!the!following!analyses:! • Review! each! budget! proposal! to! ensure! compliance! with! the! guidelines! in! the! budget! call! circular.! • Check! that! the! proposals! are! within! the! approved! limit! subject! to! sectoral! resource! envelopes.! • Verify!that!the!strategy,!projects,!and!programs!are!consistent!with!State!budget!policy!and! relevant!sector!strategies!and!objectives.! • Review! and! judge! the! reasonableness! of! the! project! and! program! costing! mechanism! in! each!proposal.!! • Review! the! performance! of! every! MDA! over! the! previous! budget! year! and! the! first! six! months!of!the!current!budget!year!using!various!performance!indicators.!! Upon! completion! of! bilateral! discussions,! MEPB! collates! the! agreed! upon! budgetary! proposals! that! are! then! presented! to! the! Governor! for! discussion! at! the! Executive! Council! by! the! State!Treasury!Board,!the!finance!committee!of!the!executive!arm,!after!which!they!are!presented!to! the!House!of!Assembly!by!the!Governor!as!an!Appropriation!Bill.!For!the!Appropriation!Bill!to!be! considered! as! complete! and! to! meet! international! best! practice,! it! contains! the! following! information,!among!others,!in!addition!to!necessary!information!on!revenue!and!expenditure:! • MacroPeconomic! indicators! and! assumptions,! actual! and! estimates,! such! as! aggregate! growth!rate,!inflation!and!exchange!rate,! • Fiscal!deficit!as!defined!in!line!with!international!standard,! • Funding!gap!with!anticipated!composition,! • Debt!stock,! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 19 ! ! ! Table!X.2:!Lagos!State!Sectoral!Allocation/Performance,!2007–10! 2007$ 2008$ 2009$ 2010$ $ $ $ Actual! Actual! Actual! Budget!(₦b)! (₦b)! %!Perf!ͣ! Budget!(₦b)! %!Perf! Budget!(₦b)! (₦b)! %!Perf! Budget!(₦b)! (₦b)! %!Perf! $ ! ! ! ! !(₦b)! ! ! Public!Sector!Services! 114.37! 98.727! 86! 110.028! 97.566! 89! 106.428! 75.131! 71! 111.93! 91.398! 82! ! ! ! ! !!!!!Capital!Expenditure! 36.6! 31.59! !! 41.81! 37.08! !! 42.571! 30.052! 47.01! 38.39! !! ! ! ! ! !!!!!Recurrent!Expenditure! 77.77! 67.13! !! 68.22! 60.49! !! 63.857! 45.079! 64.92! 53.01! !! ! ! ! ! Public!Order!and!Safety! 5.623! 4.042! 72! 11.888! 5.274! 44! 11.017! 6.267! 57! 12.489! 8.411! 67! ! ! ! ! !!!!!Capital!Expenditure! 1.687! 1.213! !! 3.804! 1.688! !! 3.856! 2.193! 4.746! 3.196! !! ! ! ! ! !!!!!Recurrent!Expenditure! 3.936! 2.829! !! 8.084! 3.586! !! 7.161! 4.074! 7.743! 5.215! !! ! ! ! ! Economic!Affairs! 49.634! 38.153! 77! 112.673! 70.183! 62! 105.961! 74.197! 70! 130.65! 125.8! 96! ! ! ! ! !!!!Capital!Expenditure! 28.688! 22.052! !! 81.913! 51.023! !! 78.411! 54.906! 96.681! 93.092! !! ! ! ! ! !!!!Recurrent!Expenditure! 20.946! 16.101! !! 30.76! 19.16! !! 27.550! 19.291! 33.97! 32.71! !! ! ! ! ! Environmental!Protection! 23.886! 10.719! 45! 44.367! 32.825! 74! 39.805! 34.007! 85! 27.727! 23.352! 84! ! ! ! ! !!!!!Capital!Expenditure! 13.997! 6.281! !! 31.66! 23.424! !! 28.660! 24.485! 19.963! 16.813! ! ! ! ! ! !!!!!Recurrent!Expenditure! 9.889! 4.438! !! 12.707! 9.401! !! 11.145! 9.522! 7.764! 6.539! !! ! ! ! ! Housing!&!Community!Amenities! 30.978! 4.732! 15! 34.852! 31.472! 90! 53.954! 53.371! 99! 37.153! 21.17! 57! ! ! ! ! !!!!!Capital!Expenditure! 19.206! 2.934! 22.096! 19.953! 36.149! 35.759! 26.527! 15.115! ! ! ! ! ! !!!!!Recurrent!Expenditure! 11.772! 1.798! !! 12.756! 11.519! !! 17.805! 17.612! 10.626! 6.055! !! ! ! ! ! Health! 15.739! 12.509! 79! 29.516! 17.377! 59! 24.643! 18.452! 75! 26.277! 21.782! 83! ! ! ! ! !!!!!Capital!Expenditure! 7.87! 6.255! 18.123! 11.816! 16.264! 12.178! 18.394! 15.247! ! ! ! ! ! !!!!!Recurrent!Expenditure! 7.87! 6.255! 11.393! 5.561! !! 8.379! 6.274! 7.883! 6.535! !! ! ! ! ! Recreation,!Culture!&!Religion! 4.891! 2.866! 59! 9.817! 4.984! 51! 8.438! 5.744! 68! 8.243! 4.209! 51! ! ! ! ! !!!!!Capital!Expenditure! 2.005! 1.175! 4.084! 2.073! 3.713! 2.527! 3.709! 1.894! ! ! ! ! ! !!!!!Recurrent!Expenditure! 2.886! 1.691! !! 5.733! 2.911! !! 4.725! 3.217! 4.534! 2.315! !! ! ! ! ! Education!! 27.251! 19.289! 71! 48.586! 25.288! 52! 51.577! 25.719! 50! 54.588! 31.335! 57! ! ! ! ! !!!!!Capital!Expenditure! 12.535! 8.873! 20.892! 10.874! 23.210! 11.574! 26.748! 15.354! ! ! ! ! ! !!!!!Recurrent!Expenditure! 14.716! 10.416! !! 27.694! 14.414! !! 28.367! 14.145! 27.84! 15.981! !! ! ! ! ! Social!Protection! 2.393! 1.129! 47! 1.673! 1.158! 69! 3.177! 1.822! 50! 2.508! 1.889! 75! ! ! ! ! !!!!!Capital!Expenditure! 0.718! 0.339! 0.586! 0.405! 1.112! 0.638! 0.888! 0.669! ! ! ! ! ! !!!!!Recurrent!Expenditure! 1.675! 0.79! !! 1.087! 0.753! !! 2.065! 1.184! 1.62! 1.22! !! ! ! ! ! ! Source:!Ministry!of!Economic!Planning!and!Budget;!MDAs.!Note:!!ͣ.!%!perf!means!the!percentage!of!actual!figures!to!budget!estimates. ! PAGE 8 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity ! Figure'X.5'''Lagos'State'Budgetary'Allocation/Performance,'2007–10,'₦ billions' 140! Budgetary(Alloca:on/Performance((2007C2010)( 120! 100! 80! N'billion( 60! 40! 20! 0! COFOG(Sectors( 2007!Budget! 2007!Actual! 2008!%!Perf! 2008!Budget! 2009!Actual! ! 2009!%!Perf! 2010!Budget! 2010!Actual! !!%!Perf! ! Source:!“International!Press!Briefing!on!Achievements!of!Y2007!–!Y2010!Budgets!and!Analysis!of!Y2011! Budget”!by!Ben!Akabueze,!Honorable!Commissioner,!Lagos!State!Ministry!of!Economic!Planning!and!Budget! Public! projects! are! usually! implemented! according! to! set! rules! involving! necessary! approvals! from! Ministerial! Tenders! Board! (MTB)! or! State! Tenders! Board! (STB)! according! to! the! approval! limit! for! each! project.! Public! projects! below! ₦10! million! are! implemented! at! the! line! ministries,!with!approvals!granted!by!the!MTB.!Projects!valued!at!₦10!million!and!above!have!to!be! approved!by!STB!to!be!implemented.!In!addition!to!the!Tender!Boards,!the!Lagos!State!Ministry!of! Justice! also! has! a! critical! role! in! the! project! implementation! process! through! its! participation! in! drafting! bid! documents,! tendering! processes,! and! eventually! drafting! and! ensuring! execution! and! safekeeping! of! contract! agreements! with! successful! contractors! to! ensure! that! the! contract! terms! are!adhered!to!and!protecting!the!interest!of!the!State!Government.!! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 8 25! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Public!projects!are!officially!subjected!to!competitive!bidding!in!which!prospective!contractors! through!public!advertisement!have!access!to!bid!documents!and!are!required!to!provide!bid!bonds! to!be!eligible!for!bidding.!Successful!contractors!are!then!selected!to!participate!in!the!competitive! tendering!process!and!the!contracts!are!awarded.!Apart!from!these!competitive!bidding!and! tendering!processes,!the!Government!uses!selective!tendering,!although!sparingly,!for!some! projects!awarded!at!the!discretion!of!Government,!usually!for!political!patronage!or!other! extraneous!considerations.!However,!with!the!recent!practice!of!publishing!contracts!above!certain! thresholds!on!the!State!website,!journals,!and!national!daily!newspapers,!it!is!expected!that!the! procurement!strategy!would!move!toward!a!competitive!bidding!method.!! There!is!commendable!evidence!of!implemented!projects!in!the!State!where!the!bid!process! and!approval!procedures!have!been!followed!to!a!large!extent.!However,!there!is!still!evidence!of! selective!tendering,!as!against!competitive!bids,!and!some!underhanded!dealing,!even!for! competitive!bids.!Approval!limits!are!at!times!circumvented!through!the!breakdown!of!projects!into! separate!parts.!The!lack!of!a!complementary!Public!Procurement!Act,!until!the!recent!enactment!by! the!legislature,!and!attendant!enforcement!institutions!have!not!helped!in!vouching!for! transparency!and!accountability.!' Project'Adjustment' Given! the! possibility! of! externalities! and! unavoidable! errors! in! project! appraisal! and! in! some! cases! implementation,! Lagos! State! Government! carries! out! periodic! sectoral! summits! to! consider! the! continued! relevance! of! ongoing! or! proposed! projects.! During! these! debates! and! discussions! few! projects! have! been! amended! or! outright! cancelled.! A! typical! example! of! a! project! that! was! cancelled! is! a! recreation! center! being! constructed! by! the! Ministry! of! Works! and! Environment! at! Ayobo,! a! suburb! in! the! Agege! area! of! Lagos,! valued! at! ₦300! million,! out! of! which! ₦100! million! had! been! expended.! During! a! monitoring! and! evaluation! exercise! by! MEPB! it! was! discovered! that,! contrary! to! extant! laws,! the! center! was! being! constructed! under! high! tension! electric! cables.! Another! example! of! adjustment! to! projects! is! the! temporary! suspension! of! toll! collection! on! the! Lekki–Epe! Expressway,! constructed! by! Lagos! Concession! Company! under! a! PPP! arrangement,! in! response! to! political! pressure! from! road! users.! While! the! latter! must! have! been! due!to!very!poor!project!appraisal,!the!former!was!a!result!of!inadequate!consultation!and!inability! of!the!Government!to!secure!the!necessary!buy[in!of!all!stakeholders!to!the!project.! The! Monitoring! and! Evaluation! Department! (MED)! of! MEPB! and! the! Project! Implementation!and!Monitoring!Unit!(PIMU)!of!the!Governor’s!Office!carry!out!periodic!monitoring! of! projects! to! ensure! they! are! being! implemented! according! to! plan! and! where! necessary! recommend! appropriate! adjustments.! The! Impact! Assessment! Unit! of! MEPB! prepares! quarterly! reports! on! costs! and! benefits! from! key! performance! indicators! that! are! designed! for! MDAs! implementing!public!projects.! Budgetary!allocations!are!made!for!projects!on!a!cash!basis,!with!the!likely!effect!of!inflation! considered!for!each!detailed!head!of!expenditure!expressed!at!the!prices!which!will!actually!have!to! be! paid.! In! order! to! hedge! against! the! possibility! of! serious! errors! in! estimating! inflation,! central! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 926! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity contingency!provisions!are!made!in!the!budget.!This!practice!has!resulted!in!switching!expenditure! from!one!budget!head!to!another,!with!the!potential!for!some!level!of!abuse.! Facility'Operation' In!the!last!five!years!Lagos!State!has!taken!steps!to!improve!the!system!of!asset!registration! and!valuation.!All!offices!now!have!an!Asset!Inventory!Card!where!office!equipment!and!furniture! are! recorded! under! the! supervision! of! resident! office! managers! and! auditors.! The! State! has! a! geographic! information! system! (GIS)! to! take! inventory! of! its! massive! portfolio! of! buildings,! land,! and!other!immovable!property.!! The!State!has!an!Oracle!Financial!System,!upgraded!to!the!latest!version!in!2011,!that!can!be! used! to! fully! implement! an! Integrated! Financial! Management! Information! System! (IFMIS).! However,!the!State!has!been!unable!to!optimize!the!potential!benefits!of!the!system!as!it!has!only! fully! used! the! Human! Resources,! General! Ledger,! Accounts! Payable,! Public! Sector! Budgeting! and! Fixed!Assets!modules,!which!represent!about!40!percent!of!the!system’s!capacity.!This!situation!has! not!only!prevented!the!upgrade!of!the!cash!management!and!capital!plan!systems!of!the!State,!but! has! also! resulted! in! reconciliation! problems! between! budget! execution! reports! and! financial! statements.!! Ex'Post'Evaluation' On! completion! of! projects,! the! Governor,! or! a! designated! state! official,! commissions! the! project!and!the!project!is!handed!over!appropriately.!If!it!is!a!community!project,!it!is!handed!over! to! a! Community! Development! Association! (CDA)! for! post! completion! maintenance! and! operation,! and! if! it! is! for! a! line! ministry,! it! is! handed! over! to! the! ministry.! MDAs,! such! as! LAMATA,! Hospital! Management! Board,! Public! Works! Bureau,! Health! Facility! and! Monitoring! Agency,! Lagos! State! Environmental! Protection! Agency! (LASEPA),! and! Staff! Housing! Board,! are! given! budgetary! allocations!for!running!and!maintaining!public!projects!in!their!care.!! Conclusions'' The! findings! of! this! study! reasonably! make! the! case! that! the! overall! practices! in! public! investment! management! in! Lagos! State! are! still! weak,! but! have! made! encouraging! steps! toward! improvement.!The!strategic!TPA!the!Government!is!committed!to,!plus!the!adoption!of!a!MTEF!and! complementary!reforms,!put!the!State!in!a!good!position!to!reform!the!PIM!system.!For!continuity! and! consistency,! and! a! good! basis! for! optimism,! Lagos! State! has! benefited! from! the! democratic! governance!of!a!political!party!that!has!the!overwhelming!support!of!the!electorate!and!successive! governors!who!have!taken!planning!seriously!and!provided!clear!strategic!focus.! Encouraging! improvements! include! complementary! bills! passed! by! the! legislature! to! give! legal! backing! to! public! procurement! and! investment! initiatives.! These! bills! are:! the! Lagos! State! Procurement!Bill!2009,!Lagos!State!Tenancy!Bill!2009,!Lagos!State!Public!Finance!Management!Bill! 2010,!and!the!Criminal!Law!of!Lagos!State!Bill!2010.!! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1027! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity However,!as!discussed!herein!and!as!outlined!in!the!Annex,!many!weaknesses!and!potential! sources! of! problems! were! identified! in! each! of! the! eight! basic! features! of! a! public! investment! management! system.! The! roles! of! MEPB! and! other! supporting! MDAs! in! providing! technical! guidance—from! project! appraisal! and! independent! review! through! to! selection! and! budgeting,! implementation,! and! monitoring! and! evaluation—are! still! to! a! large! extent! limited! by! capacity! problems!for!which!the!State!is!receiving!some!assistance!from!development!partners.!! It!is!noteworthy!that!a!major!issue!that!will!continue!to!impose!hurdles!and!pressure!on!the! ability!of!the!State!Government!to!effectively!plan,!implement,!and!monitor!public!investment!in!a! systematic!and!comprehensive!manner!is!the!huge!relative!size!of!the!Lagos!State!economy!and!the! ever[increasing!population!of!the!State,!which!threatens!to!outpace!progress!in!developing!relevant! institutional!capacity.!!! Table'x.3(((Summary'of'Preliminary'Core'PIM'Indicators'for'Lagos'State' Stage( Indicators(and( Findings( Rating( Dimensions( ! TPA;!MDGs;!LASEEDS;! The!main!planning!instrument!is!the!State! B! ! Vision!20:2020;!sectoral! Government’s!TPA!which!are!derived!from! 1.!Guidance! strategies.! LASEEDS!and!MDGs.!! and! preliminary! First!level!screening!to! This!can!be!achieved!through!elaboration!of! C! screening! ensure!strategic! MTEF!using!MTFF!and!MTSS.!However!being!a! alignment.! relatively!new!program,!there!are!capacity! ! issues!to!be!resolved!to!make!the!system! effective.! ! Clarity!of!roles!in!planning! Planning!process!is!very!clear,!with!MEPB!taking! B! ! process! a!leading!role.!! ! Formal!technical!guidance! MEPB!is!implementing!M&E!through!the! D! ! Monitoring!and!Evaluation!Department!and!a! ! Senior!Special!Assistant!to!the!Governor!on! ! Monitoring!and!Evaluation.!Significant!technical! ! assistance!has!been!offered!by!the!World!Bank! 2.!Formal! and!DFID.!However,!there!is!inadequate!capacity! project! to!undertake!M&E!effectively.! appraisal! Sound!project!appraisal! The!official!planning!process!provides!for! D! technical!appraisal!of!projects.!However!in! practice!there!are!cases!of!technical!lapses!in! appraisal!as!well!as!political!interference.!! Proportionality!of! All!projects!are!officially!subjected!to!technical! D! appraisal! appraisal!by!professionals!in!the!Ministry!of! Works!and!Environment!plus!independent! consultants!in!cases!of!huge!projects.!However! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1128! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity there!are!unsubstantiated!reports!of!political! influence!and!collusion!that!undermine!the! independence!of!the!professionals.! Effective!coordination!and! DonorYfunded!projects!are!well!coordinated! C! scrutiny!of!donorYfunded! from!MEPB!by!its!Development!Partners! projects! Department.!! Capacity!in!central! Although!there!are!skilled!professionals!in!line! D! agencies!and!line! ministries,!there!are!human!capital!challenges!in! ministries!! the!planning!process!and!project! implementation.!However!the!State!is!receiving! significant!capacity!building!assistance!from!the! World!Bank!and!DFID.!! ! Independent!reality!and! There!are!officially!documented!project! D! 3.!IndepenY quality!checks!of! planning,!implementation,!and!M&E!processes! dent!review!of! subjective,!selfYseeking! to!check!subjective,!selfYseeking!bias.!However,! appraisal! bias!in!the!evaluation.! given!the!fact!that!corruption!is!still!rife!in! Nigeria,!such!selfYseeking!bias!still!finds!its!way! into!the!system!unnoticed.! ! Fixed!budget!calendar! The!MTEF!budget!calendar!has!been!broadly! C! ! with!sufficient!time!for! adhered!to.!The!calendar,!which!was!part!of!the! ! MDAs!to!prepare!capital! deliverables!of!a!World!Bank!funded!MTEF! ! budgets! project,!allows!MDAs!sufficient!time!to!prepare! ! their!capital!budgets!through!MTSS.!However,! ! due!to!capacity!issues,!there!are!still!some! ! delays.! ! Comprehensive!guidance! Comprehensive!guidance!and!capital!spending! D! ! and!capital!spending! ceilings!are!the!pillars!of!the!MTEF.!MEPB!is! ! ceilings! expected!to!provide!guidance!and!to!ensure! ! that!these!ceilings!are!upheld.!However!the! ! bureaucratic!burden!that!this!process!has! ! imposed!on!the!budget!division!of!MEPB!gives! ! room!for!lapses.!The!situation!can!only!improve! ! when!the!Bureau!of!Public!Procurement!is! ! established.!! ! ! Projects!developed!before! MDAs!develop!their!individual!projects,!and!all! C! 4.!Project! submission!to!MEPB!in! projects!are!subjected!to!negotiation!with!MEPB! selection!and! budget.! during!bilateral!discussions!before!they!are! budgeting! admitted!into!the!budget.!! Integration!of!capital!and! Capital!and!current!budgets!are!incorporated.! B! current!spending! For!projects!or!programs!the!execution!of!which! extends!beyond!a!fiscal!year,!the!annual!budget! shall!recognize!the!amount!to!be!expended! within!the!year.!The!amount!required!in! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1229! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity succeeding!budget!years!shall!be!projected!in! the!annual!budget!proposals!of!such!years.! WellYstructured!budget! MDAs!include!programs!and!projects!that!are! B! preparation!to!consider! expected!to!run!into!subsequent!budget!years! the!multiyear!nature!of! as!spillover!items,!and!adequate!provisions!are! infrastructure!projects.! made!in!the!budget!proposals!of!the!subsequent! years.!! MEPB!checking!of! Officially!all!projects!should!be!subjected!to! D! projects.!Transparent! qualitative!monitoring!and!evaluation!analysis! criteria!for!selecting! by!Monitoring!and!Evaluation!Department!of! projects!with!reference!to! MEPB!and!at!the!discretion!of!the!Governor!by! policy!objectives.! PIMU!in!the!Governor’s!Office.!However!the! level!of!transparency!is!generally!low.! Legislature!has!sufficient! Although!the!MTEF!budget!calendar!provides! D! time!to!consider!projects.! sufficient!time!for!the!Legislature!to!consider! projects,!experience!shows!that!there!is!a! serious!human!capacity!gap!in!the!Legislative! arm.!No!wonder!UNDP!commissioned!a! capacityYbuilding!project!for!the!legislatures! with!respect!to!MTEF.!Accountability!and! governance!issues!have!also!affected!the! Legislature!in!adequately!considering!projects.!! Legislature!passes!budget! Yes,!except!the!delay!experienced!in!passing! B! in!timely!manner! year!2009!budget!which!was!attributable!to! some!political!problems!between!the!Executive! and!the!Legislature.! ! Ensuring!adequate! Despite!the!high!number!of!projects!being! B! financing!for!selected! executed,!MTEF!as!being!elaborated!in!Lagos! projects,!including! State!should!reduce!budget!fragmentation!and! recurrent!needs!on! incidence!of!abandoned!or!unfinished!programs.! completion.! Detailed!implementation! Yes.!The!erstwhile!large!adjustments!in!budget! C! plan!with!clear! are!being!reversed.!There!are!still!incidences!of! accountabilities! supplementary!budget.! Open!competition!for! Although!procurement!rules!are!established!by! D! procurement! law,!there!are!huge!gaps!in!adhering!to!the!rules! as!a!result!of!political!interference!and! corruption.!! Effective!procurement! Although!the!law!stipulates!litigation,!the! D! complaints!mechanism! clumsy!and!unnecessarily!lengthy!litigation! process!discourages!procurement!complainants! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1330! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity from!taking!action.!! Commitment!controls! MDAs!are!expected!to!provide!quarterly! C! information!and!data!on!project! implementation.!MEPB!uses!such!information!in! controlling!project!commitments!releases!and! monitoring.!! Predictability!of!funding! Since!2001,!when!Lagos!State!was!able!to! B! institute!fiscal!reforms,!especially!in!tax! administration,!funding!has!been!predictable!to! a!large!extent.!! Timely!implementation!in! Projects!are!generally!being!implemented!in!a! C! line!with!guidelines! timely!manner!in!line!with!stipulated!guidelines.!! Regular!progress! MDAs!and!MEPB!prepare!regular!reports.! D! reporting! However!the!quality!of!the!reports!is!hampered! by!capacity!issues!and!the!lethargic!attitude!of! civil!servants.! Active!monitoring!of! The!Monitoring!and!Evaluation!Department!of! C! progress! MEPB!and!PIMU!of!the!Governor’s!Office! undertake!regular!monitoring!activities.! Capacity!issues!are!of!great!concern.! Sound!internal!control! The!internal!control!and!internal!audit!system!in! D! and!internal!audit! place!seems!adequate,!but!human!capital!and! accountability!issues!need!to!be!better! addressed.! Formal!project!completion! This!is!done!with!official!commissioning!by!the! B! Governor!or!designated!official.! ! Constant!projects! Project!planning!and!design!are!generally! D! 6.!Adjustment! adjustment! adequate!to!prevent!adjustments!especially!in! for!changes!in! terms!of!cost!overrun.!However!contractors! project! sometimes!hide!under!the!vagaries!of!weather,! circumstances! especially!the!effects!of!heavy!rain!on!road! construction!to!delay!implementation!and! therefore!demand!for!cost!variation.!The! Government!has!tried!to!guide!against!this!as! much!as!possible!through!legal!agreements!that! bind!contractors!to!completion!obligations.! Explanation!required!for! Explanations!are!required!for!variances!from! C! variances!from!budget! budget!through!commitment!control!put!in! and!plan! place.!! Periodic!review!of!costs! Review!of!project!costs!and!benefits!are!done! D! compared!to!benefits!for! quarterly!through!reports!produced!by! major!projects! implementing!MDAs!and!monitoring!and! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1431! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity evaluation!reports!prepared!by!MEPB.!These! reviews!are!not!as!detailed!as!expected!because! of!inadequate!technical!skills.! Mechanism!to!stop! Where!MEPB!or!PIMU!discovers!severe! D! project! irregularities,!projects!are!stopped!and!penal! measures!are!recommended!for!officers! responsible!for!such!irregularities.!The!system! generally!gives!room!for!compromising!the! monitoring!team!in!discovering!irregularities.! Recommended!penal!measures!are!rarely! implemented.! 7.!Facility! Effective!handover!of! Assets!are!successfully!handed!over!to!MDAs!or! B! operation! assets! communities!responsible!for!such!projects!upon! official!commissioning!by!the!Governor!of! designated!official.! Assets!fit!for!purpose! With!the!current!selection!process,!assets!are! C! generally!fit!for!the!purpose!for!which!they!were! implemented.!! Asset!registers! The!State’s!asset!registration!process,!like!many! C! processes!of!government,!is!computerized,! making!it!effective.!However!more!needs!to!be! done.!! 8.!Ex!post! Basic!comparison!of! Although!there!are!mechanisms!to!carryYout!ex! D! assessment! project!costs,!timelines,! post!assessment,!there!is!not!much!evidence!on! (evaluation)! and!deliverables!against! the!ground!that!this!is!effectively!carried!out.! budgets!and!plans! Formal!arrangements!for! MEPB!is!trying!to!put!in!place!a!formal! D! project!evaluation!against! arrangement!through!the!Impact!Assessment! plan!and!appraisal! Unit;!however,!human!capacity!issues!have! hindered!its!effectiveness.!MEPB!is!receiving! some!assistance!from!DFID!in!this!area.!! ! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1532! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity Notes' 1. This!further!confirms!the!relative!economic!strength!of!Lagos!State!in!Nigeria!plus!the!fact! that!the!State!receives!the!least!from!Federal!Allocations!on!a!per[capital!basis.! 2. Personnel!costs!(basic,!allowances!and!consolidated),!pension!and!gratuities,!subsidies,! transfers,!and!operation!and!maintenance.! 3. Lagos!State!Government!calls!them!“Special!Purpose!Vehicles”!(SPV)—however!they!do!not! have!such!characteristics.! 4. The!existing!revenue!sharing!formula!as!revised!in!2002!allocates!56%!to!Federal! Government,!24%!to!be!shared!by!the!States!and!Federal!Capital!Territory,!and!20%!for!all! Local!Governments.!! ! 5. MTSS!was!carried!out!for!three!Pilot!Sectors!(Health,!Education,!and!Environment)!in!2008! with!the!support!of!DFID,!while!the!other!Sectors!were!covered!in!2009.!Capacity[building! seminars!and!workshops!were!organized!to!enable!the!sectors!to!use!MTSS!in!the!2010–13! MTEF!cycle.!! 6. Lagos!Ministry!of!Economic!Planning!and!Budget!forms.! ! ' ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1633! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity References' IDA!!(International!Development!Association).!2011.!“Program!Document!for!a!Credit!in!the! Amount!of!SDR!128.1!million!(US$!200!million!equivalent)!to!the!Federal!Republic!of!Nigeria!for!a! First!Lagos!State!Development!Policy!Operation.”!February!18,!2011.!IDA,!World!Bank,!Washington,! DC.' Lagos!(State!of!Lagos!Government).!2010a.!“Abridged!Annual!Budget!Brochure.”!Ministry!of! Economic!Planning!and!Budget,!State!of!Lagos!Government,!Lagos,!Nigeria.! ———.!2010b.!!“Lagos!State!Budget!Manual.”!First!Edition.!Ministry!of!Economic!Planning! and!Budget,!State!of!Lagos!Government,!Lagos,!Nigeria.! ———.! 2010c.! ”Lagos! State! MEPB,! Year! 2010! Budget! Appraisal.”! Ministry! of! Economic! Planning!and!Budget,!State!of!Lagos!Government,!Lagos,!Nigeria.! ! UN[HABITAT.! 2008.! “The! State! of! African! Cities! 2008:! A! Framework! for! Addressing! Urban! Challenges!in!Africa,”!United!Nations!Human!Settlements!Programme,!Nairobi.!! World! Bank.! 2011.! “Implementation! Status! and! Results:! Nigeria! First! Lagos! State! Development!Policy!Credit!(P117237).”!Report!ISR4859,!World!Bank,!Washington,!DC.! ! ! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 1734! 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity • Financial!assets,! • Prior!year!budget!outrun,!and! • The!implications!of!new!policy!initiatives!stressing!the!budgetary!impact!of!major!revenue! policy!changes!and!changes!to!expenditure!programs.! MEPB!has!benefited!from!technical!assistance!from!development!partners,!which!improved! the!capacity!of!the!Ministry’s!officials,!including!helping!MDA’s!use!MTSS!as!a!basis!for!their!budget.! The! fact! that! the! MEPB! is! the! custodian! of! the! MTFF—which! determines! the! available! resources! upon!which!the!MTEF!is!founded—has!also!assisted!it!in!maintaining!MEPB’s!de!facto!grip!on!the! budget!process.!! On! the! approval! and! passage! of! the! Appropriation! Bill! by! the! House! of! Assembly,! it! is! presented!to!the!Governor!for!assent.!If!the!Governor!gives!assent!within!30!thirty!days,!the!bill!is! signed!into!law!as!the!Appropriation!Act;!however!if!the!Governor’s!assent!is!not!given!within!30! days,! the! bill! returns! to! the! House! of! Assembly! and! can! be! passed! into! law! with! a! twoPthirds! majority!of!the!House!of!Assembly.!Since!1999!the!passage!of!appropriation!bills!into!appropriation! acts!has!been!smooth,!with!the!House!of!Assembly!making!minor!amendments,!usually!in!the!form! of!budgetary!increases,!and!the!bills!being!forwarded!in!a!timely!manner!for!the!Governor’s!assent.! However,!due!to!some!political!problems!in!the!State,!the!erstwhile!smooth!process!was!disrupted! during! the! 2009! budget! process! when! the! House! of! Assembly! uncharacteristically! reduced! the! budget!size!and!delayed!the!bill!passage!for!Governor’s!assent!until!the!end!of!the!first!quarter!of! 2010.!! The! following! forms,! Request! Checklist! and! Checklist! of! Admission! of! Projects! into! the! Budget,6!are!used!for!projects!included!in!the!budget.! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 20 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity LAGOS'STATE'GOVERNMENT' MINISTRY'OF'ECONOMIC'PLANNING'AND'BUDGET'EXPENDITURE'REQUEST'CHECKLIST' PROJECT/PROGRAMMES:! AGENCY:! S/N' ITEMS' YES' NO' NOT'APPLICABLE' 1! MDA’s'Political'Head’s'Endorsement' ' ' ' 2! PROJECTS'/'PROGRAMMES' ! ! ! ! –Vetted!Bill!of!Quantities!! ! ! ! ! –Quotations!from!reputable!firms! ! ! ! ! –ProPforma!Invoice!(Where!Applicable!(W/A)! ! ! ! ! –Appraisal! by! Consultant! (Ministry! of! Works! &! ! ! ! Infrastructure,! Ministry! of! Science! &! Tech.,! Ministry! of! Housing,!etc.)! ! –Adequate!Budgetary!Provision! ! ! ! ! –Justification!of!Request!(Deliverables)! ! ! ! ! –Account!Segment!Combination!of!Expenditure!(27!digits)! ! ! ! ! –Description!of!Vote!of!Charge!(voc)! ! ! ! ! –Balance!in!Budgetary!Provision! ! ! ! 3! Training,'Conferences'&'Seminars' ! ! ! ! –Input!of!Ministry!of!Establishment!and!Training!(W/A)! ! ! ! ! –Membership!Certificate!(W/A)! ! ! ! ! –Conference!Fee!(Demand!Notice)! ! ! ! 4! Refurbishment'of'Vehicles' ! ! ! ! –Quotations!from!Auto!Mechanic!! ! ! ! ! –Year!of!Purchase! ! ! ! ! –Agency’s!Appraisal!of!Quotations! ! ! ! 5! ICT'Related'Expenditures' ! ! ! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 21 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity ! –Agencies! are! to! SignPOff! from! Ministry! of! Science! &! ! ! ! Technology! 6! Purchase'of'Vehicles'(Brand'New'Vehicles'Only)' ! ! ! ! –Request!through!COS!&!HOS! ! ! ! ! –Pro!forma!Invoice!from!reputable!Vehicle!Dealers! ! ! ! 7! Brief'Description'of'the'Project/Programme' ! ! ! 8! For'Payment' ! ! ! ! –Letter!of!Award! ! ! ! ! –Prepayment!Inspection!Certificates!(W/A)! ! ! ! ! –Advance!Payment!Guarantee/Bond!(W/A)! ! ! ! ! –His!Excellency’s!Approval/EXCO!Conclusion!(W/A)' ! ! ! ! ! ! ! ! ! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 22 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity LAGOS'STATE'GOVERNMENT' MINISTRY'OF'ECONOMIC'PLANNING'AND'BUDGET' CHECKLIST'ADMISSION'OF'PROJECTS'AND'PROGRAMMES'INTO'THE'BUDGET' ! PROJECT/PROGRAMMES! AGENCY:! S/N' ITEMS' YES' NO' NOT'APPLICABLE' COMMENT' 1.' Conformity' with' Development' ! ! ! ! policy'Document' 1a' –MTEF/MTSS' ! ! ! ! 1b! –V20:20,! TPA,! MDGs,! Ehingbeti! ! ! ! ! Resolutions!etc.! 2.! Project'Feasibility'Study'Including' ! ! ! ! 2a' PProject!goals,!Input!and!Output! ! ! ! ! 2b! –Financial!Feasibility! ! ! ! ! 2c! –Cost/Benefit!Analysis! ! ! ! ! 3.! Project'Plan/Design' ! ! ! ! 4.' Vetted'Bill'of'Quantities'(BOQ)' ! ! ! ! 5.!! Site'Approval' ! ! ! ! 6.! Soil'Test' ! ! ! ! 7.! Work'Plan' ! ! ! ! 8.! Appraisal'by'Consultants:' ! ! ! ! 8a! –Ministry!of!Works!&!Infrastructure! ! ! ! ! 8b! –Ministry!of!Housing! ! ! ! ! 8c! –Ministry!of!Physical!Planning! ! ! ! ! 8d! –Ministry!of!the!Environment! ! ! ! ! 8e! –Lagos! State! Environmental! ! ! ! ! Protection!Agency!(for!Environmental! Impact!Assessment! ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 23 2011 COUNTRY CASE STUDY: LAGOS, NIGERIA ! PIM Investment ! in Infrastructure for a Modern Megacity 9.! –Baseline'Studies' ! ! ! ! 10! Identified' Milestones' and' Key' ! ! ! ! Performance'Indicators'(KPI)' 11.! Traffic' Impact' Assessment' (where' ! ! ! ! applicable)' Source:!Budget!Department,!Ministry!of!Economic!Planning!and!Budget,!The!Secretariat,!Ikeja! ! Project'Implementation' Budget!execution!(as!depicted!in!table!X.2!and!figure!X.5)!in!Lagos!State,!especially!from!the! inception!of!democratic!governance!in!1999!and!particularly!since!the!adoption!of!MTEF!in!2008,! has! been! encouragingly! impressive,! largely! due! to! articulated! project! planning! (identification! and! elaboration)! with! guided! implementation! processes.! The! State! has! embarked! on! rigorous! fiscal! adjustments,! notably! in! the! realm! of! tax! laws! and! administration,! as! aforementioned! in! page! 3,! which!have!enhanced!budgetary!allocations!for!public!investments!in!key!sectors!of!the!economy.! ! ' ' ! R O F P U B L I C I N V E S T M E N T M A N A G E M E N T! THE POWE PAGE 24