Lagos’ Rising Debt Profile Amid Increase In Tax Worrisome—Funso Doherty

Article abstract

• Funso Doherty in an open letter to the Lagos State Governor mentioned expressed fear that the state is racking up extra money owed at the same time as its Internally Generated Income is rising.
• He mentioned the State’s debt, which is the very best by any state in Nigeria has not had an influence on the dwelling situations of the residents of Lagos.
• He urged the federal government to transition from what he described as an extractive mannequin of governance.

The Governorship candidate of the ADC within the March 18 gubernatorial election in Lagos State, Funso Doherty, has expressed fear over the rising debt profile of the State.

Doherty shared his issues in an open letter to Governor Babajide Sanwo-Olu towards the backdrop of the State’s graduation of implementation of its N1 trillion bond issuance programme, by providing the primary tranche of N100 billion in fixed-rate debt.

In accordance with him, the state of affairs turns into extra worrisome as a result of the State Authorities is borrowing extra at the same time as its tax income will increase. He identified that underneath the APC, Lagos State’s excellent debt rose from roughly N235 billion in 2011 to N1.2 trillion in 2021.

Whereas noting that this got here as the very best quantity owed by any state in Nigeria, he mentioned Lagos debt was nearly 4 occasions the quantity owed by the subsequent highest state (Kaduna) and greater than the entire owed by the subsequent 4 states mixed (Kaduna, Rivers, Ogun, and Cross River) in 2021.

Borrowing amid improve in income

Doherty within the letter dated Might 19, 2023, and addressed to the State Governor mentioned:

• “Lagos continues to borrow considerably regardless of speedy development in Tax Revenues Assessed by conventional measures that evaluate the prevailing degree of money owed and repayments owed by the State with the Measurement of the State’s economic system and the State Authorities’s annual revenue.
• “Lagos State’s general debt degree is, for now, nonetheless thought-about sustainable. Nevertheless, this debt is rising steadily, and nearly half of it (measured at official charges) is international foreign money borrowing, which carries extra dangers.
• “Lagos State’s internally generated income (1GR), additionally the very best within the Federation, has risen from roughly N15bn in 1999 to roughly N570bn in 2021. The principal supply of this IGR is the burden of taxes and levies borne by its residents and companies which are productive, incomes revenue, and paying their taxes.”

Noting that the All Progressives Congress authorities incessantly seeks to take credit score for considerably rising the IGR of the state, he mentioned that past this, the larger duty of the Authorities is to display the advantages that residents have derived from this ever-increasing tax burden borne by them.

Ineffective expenditure

In accordance with Doherty, LASG’s expenditure and debt are substantial and rising, however lack effectiveness. He famous that efficient governance is measured not by how a lot in taxes and costs have been levied and picked up from the folks, or by how a lot Authorities spends, however by how a lot the folks’s training, healthcare, transportation, housing, safety, employment and different parts of lifestyle have improved, because of the expenditures and actions of their Authorities over time.

• “That is the place, in my opinion, Lagos falls brief. Over the previous 24 years, LASG has massively deployed present and future societal wealth and elevated its borrowing with out substantial general development in human improvement indices and dwelling requirements of the folks.
• “Lagos has persistently remained close to the underside of the size on independently compiled “high quality of life” rankings of main cities of the world. For instance, Lagos is in 171 place out of 172 cities ranked within the 2022 World Liveability Index rankings of the Economist Intelligence Unit (EIU) which assesses cities on measures like infrastructure, training, well being, tradition and atmosphere, stability and many others.,” he mentioned.

Recommendation for the federal government

Doherty mentioned the Authorities of Lagos State should transition from its present, extractive mannequin of governance. In accordance with him,

• “this implies dealing decisively with its self-serving hegemony which some name “godfatherism”, the actions of corrupt components in public workplace and the civil service, pervasive conflicts of curiosity, and dominant vested pursuits, all of which have created a large gulf, during the last quarter-century, between Authorities’s use of the folks’s assets and what the folks of Lagos really want.
• “If we fail to do that, it’s sure that our assets will proceed to be misdirected, diverted and misused, our future will likely be mortgaged by ever-expanding Authorities borrowing, our improvement over the subsequent technology will stay tragically stunted and poverty will likely be widespread,” he mentioned.

Doherty had earlier in one other open letter challenged the State’s Workplace of Public-Non-public Partnerships over its current Public-Non-public Partnership (PPP) cope with OANDO Plc. The Workplace in its response to the letter clarified among the points raised by Doherty.

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