2007年-世界发展银行全球_Nigeria_-_Lagos_State___States_Finances_Review_and_Agenda_for_Action_66页_7mb

Summary of Lagos State Fiscal Performance and Reform Agenda

Core Content

This document presents a comprehensive review of Lagos State's fiscal performance from 1998 to 2005, with a focus on public finance management (PFM) and the challenges facing the state in terms of resource allocation and governance. It outlines the key areas for reform and an agenda for action to improve fiscal sustainability and service delivery in the short and medium term.

Main Objectives

• Review Lagos State's fiscal performance over the past seven years.
• Highlight the main fiscal risks affecting the medium-term outlook.
• Assist the Lagos State Government (LASG) in developing an agenda for deepening reforms in PFM and service delivery.

Key Information

Fiscal Federalism in Nigeria

• Nigeria has 36 states, a Federal Capital Territory (FCT), and 774 Local Government Areas (LGAs).
• The 1999 Constitution increased the responsibility of states in providing economic and social services and infrastructure, both directly and jointly with LGAs.
• The Federal Government retains responsibility for national functions such as security, foreign affairs, and macroeconomic management.

Taxation and Revenue Distribution

• The Federation Account collects mineral revenues (mainly from oil and gas) and VAT, which are then shared among the three tiers of government.
• The Constitution specifies the distribution of tax responsibilities, with federal government handling major taxes like income tax, custom and excise duties, and VAT, while states collect personal income tax and some local taxes.
• Revenue-sharing formulas are determined by the Revenue Mobilization and Fiscal Allocation Commission and approved by the National Assembly.

Lagos State Fiscal Performance (1998–2005)

• Lagos State experienced a real-term revenue increase of 63% between 1999 and 2005, driven by both transfers from the Federation Accounts and internally generated revenue (IGR).
• IGR increased by 23% in real terms during the same period, attributed to revenue administration reforms.
• The state introduced the Electronic Banking System (EBS-RCM) in 2000 to improve revenue collection and monitoring, and in 2005, it proposed the creation of a new Board of Internal Revenue (BIR) with more external representation.

Revenue Collection and Costs

• The cost of revenue collection as a percentage of total revenue is high, with 10% paid to consultants.
• The BIR has considerable operational autonomy and is responsible for managing revenue collection and monitoring.

Expenditure Performance

• Actual expenditure expanded by 63% between 1998 and 2000, but execution performance for the capital budget was low.
• Less than two-thirds of the approved budget was spent, due to limited absorptive capacity, weak budgeting, and inconsistencies in financial information recording.

Fiscal Risks and Dependencies

• Lagos State remains highly dependent on federation account transfers, which are vulnerable to oil price fluctuations.
• The state's fiscal performance is affected by the lack of accurate and transparent budget data, particularly in terms of classification and recording.

Development Challenges

• Lagos faces significant investment and maintenance needs, especially in infrastructure and social services.
• It is estimated that a well-managed waste management system would require US$100 million annually, while water supply and road network upgrades would cost billions.
• The state has a population of about 15 million, with a projected increase to 17 million by 2015, leading to high urban density and poor living conditions.

Main Recommendations

Short Term: 2007–2008

• Improve Financial Information: Clean and strengthen financial data, especially in the context of the existing modern computer-based system. Ensure accurate and transparent reporting of revenues and expenditures to support informed policy decisions.
• Analyze Public Expenditure: Conduct comprehensive analyses of both current and capital expenditures, including outturns and incidence in selected programs and projects. Address deviations between budget and actual spending.
• Enhance Revenue Administration: Clarify the roles of different players in revenue administration, including LASG, LGAs, and tax consultants. Address the issue of high administrative costs.
• Implement the Medium Term Expenditure Framework (MTEF): Use MTEF to ensure proper budget coverage, formalize policy priorities, and support performance monitoring. This reform should align with public service reform efforts.

Medium Term: 2009–2010

• Institutional Review of State Agencies: Conduct a thorough review of the structure and functioning of public sector agencies and the Lagos Metropolitan Management to better understand public finance dynamics and service delivery.
• Fiscal Sustainability Analysis: Carry out a comprehensive fiscal sustainability analysis for the consolidated government sector, including the state, LGAs, and state parastatals. This will inform poverty reduction policies and public service delivery arrangements.

Conclusion

The report emphasizes the need for Lagos State to consolidate its fiscal reforms, improve transparency and accountability, and ensure that public resources are used efficiently to meet development challenges. It highlights the importance of strengthening the PFM system, enhancing institutional capacity, and aligning fiscal policies with the broader goals of economic empowerment and development.