How Lagos State Spends N569 bln Generated in Pandemic Year
Nigeria’s economic powerhouse, Lagos State, saw a revenue increase in the fiscal year 2020, a period that was eclipsed by multiple pressures including the outbreak of covid-19 and #EndSARS social unrest across the country.
Total revenue inflow into Lagos State purse inched higher to N658.56 billion in the pandemic year, meanwhile total operating expenses accounted for 47% of the total sum.
The state revenue was driven by strong tax collection in the year despite the pandemic. Of the sum generated, statutory allocation accounted for 30%. However, increased spending forced Alausa to close on a deficit note in the year.
Amidst efforts to raise internal revenue capacity, the state raked in about N13 billion discovered in some of its accounts that were closed and/or dormant as well as refunds from Ministries, departments and Agencies.
In 2020, the third-largest megacity in Africa with more than 20 million people revenue was majorly from tax collections totalled N359.062 billion, representing about 3.2% year on year growth from 2019. Tax income represents about 55% of the third largest Africa megacity revenue in 2020, 100 basis points improvement from tax to revenue proportion recorded a year earlier.
Accounting for the largest chunk of the tax income, the breakdown shows that the metropolitan city did better in pay as you earn (PAYE) collections in 2020 with total income from this line printed at N292.5 billion.
This is higher than about N280 billion achieved in the fiscal year 2019, representing about a 5% jump year on year. The state earned about N17 billion from direct assessment and about 26 billion from withholding tax. Revenue from stamp duty inched to N4.074 billion, according to the state audited financial statement, up more than 236% from N1.72.
On the downside, earnings from property tax declined by 30% to N1.677 billion, from N2.385 billion in the fiscal year 2019. In the period, taxes on contracts was relatively flattish at N13.65 billion from N13.3 billion in the comparable period. The state generated N30.959 billion from levies, fees and fines in the year, up 16.4% above N26.597 billion recorded in the comparable fiscal year.
Fines accounted for two-thirds of the income line, rising to N20.716 billion in 2020, up 28% from N16.230 billion in the corresponding fiscal year. Licenses fees steady at N4.9 billion while land use charge collections dropped marginally to N5.3 billion.
Statutory allocation which accounted for about 29% of the state revenue plunged to N183.318 billion in 2020, from N229.495 billion in the fiscal year 2019. The breakdown shows that allocation from Federal Government tumbled 17% to N45.879 billion in 2020 from N55.161 billion a year earlier. However, value-added tax collection improved 23% to N131.97 billion from N107.704 billion amidst the pandemic.
Lagos received N981 million from a share of excess crude account in the year under review but there was no inflow into the state from the account in 2019. Exchange rate gain recorded lifted total inflow from statutory sources higher. In 2020, the metropolitan command centre in Nigeria recorded about N1.4 billion exchange rate gain from statutory allocation, strongly above N92 million recorded in 2019.
Due to pandemic induced pressure on the state activities, Lagos received a N1.18 billion FGN intervention fund in 2020. There was no refund from FG for road construction in the period unlike in 2019 when Abuja paid Lagos more than N63 billion for investments in federal roads.
The state recorded higher capital receipts, and income from other sources in the year under review but investment income tumbled following negative real return on fixed income market instruments.
However, interest income spiked more than double to N2.824 billion in addition to a sky-high increase in grants and other revenue items from a non-exchange transaction in the pandemic year. Lagos recorded total operating expenses of N309.823 billion in the review period, wages and salaries however accounted for a little more than 47%.
Workers on Lagos payroll were paid N146.382 billion including benefits, about a 37% increase above N107.132 billion expended in the previous year. Grants and other transfers made during the period increased to about N18 billion from N16.63 billion in the corresponding period.
Subvention made by Lagos State government to Parastatals inched higher by more than 21% to N64.739 billion as against pre-pandemic spend of N53.445 billion. The state audited report shows that the subvention of N16.073 billion was made to Lagos State Internal Revenue Service.
However, the state general administration and administrative expenses slow down to N80.846 billion in the year, from N101.347 billion. In 2019, Lagos State was debited with about N16.34 billion as bank charges.
A year after, bank charges dropped significantly to N335 million. Meanwhile, Lagos State recovered about N36 billion from excess bank charges in 2020 following reconciliations of accounts.
Consultancy fees paid to professionals moderated to N16.172 billion from N17.957 billion in the fiscal year 2019. Despite the pandemic, lockdown, Lagos paid N4.077 billion for training, lower than N5.957 billion a year earlier. Travel expenses decline to about N770 billion, from N1.082 billion spent in 2019.
The megacity recorded about N349 billion surplus, after recurrent spending in the year but before foreign exchange losses and debt charges were considered. At the peak of the pandemic in 2020, a total sum of N201.717 billion was spent on capital projects, a steep rise of 50% when compared to N134.521 billion in 2019.
Due to its net dollar position, Lagos recorded a N120 billion FX gain while #EndSARS damaged assets were valued at N5.49 billion. Nigeria’s economic hub ran a N152.517 billion deficit due to widened gap between revenue and recurrent expenditure.
Its audited statement showed that Lagos paid N16.338 billion as bank charges in 2019 and about N18 billion as consultancy fees when net tax receipts were about N350 billion. #How Lagos State Spends N569 bln Generated in Pandemic Year
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