Lagos State Commissioner for Finance, Ayo Gbeleyi, in this interview with Deputy Editor Olayinka Oyegbile and Ibrahim Apekhade Yusuf, speaks on concerted efforts by successive governments and particularly the Governor Raji Fashola-led administrations vision to turnaround the fortunes of the state through different life-transforming projects in the face of paucity of funds, vis--vis challenges of managing arguably one of the fastest growing economies in the sub-region. Excerpts:What does it take to husband an economy like Lagos which is Nigerias biggest, after the federal government'Well, essentially, you need the right competences, capabilities and character to be in that position. Its a quite challenging job, not tough beyond what we can do and do properly. So, clearly, we have a team that is able and competent to lead a public finance management effort of the Lagos State government.What prepared you for this'Ive had a very extensive career in the area of accounting, banking, project finance, public private partnership (PPP) structure before coming into this role. So, I believe the combined capability, network and expertise in those fields have made me well prepared for this job. So, I didnt find myself in this job by chance. Its something that I was well prepared for. So, we thank God that one has been able to contribute his own modest quota within this space of time, one that has been privileged and opportune to serve the state.You came from the private sector and we have always been hearing that to work in the private sector is a different kettle of fish to work with the government. What has it been like'Well, one thing that we must all understand is, first and foremost, if were all looking for a better society, then we must all be willing to contribute our quota to make that society what we actually crave it to be. The world over, especially in advanced economies, you see that the bureaucracy there is quite strong. Public service there actually works far better than what is obtainable in the private sector. The whole idea is that as regulators we must always be ahead of the players in the market. Where the players, that is, the private sector is ahead of the regulator, which is the public sector, then you have a problem. In the US, in Europe, even in Asia, you find out that they always have a very strong bureaucracy so that you can keep the players in check. Its like a referee not knowing the rules of the game better than the players, so how can you then officiate' So, essentially, as a referee, as a government leading the people, we must also be at our best, we must be in the forefront of ideas and vision to take the society forward. For me, private sector in our typical environment in the emerging markets and the frontiers economy like ours, the private sector tends to be ahead of the public sector. But having said that, that is actually a reversal of our historic antecedence. If you recall, in post independence, and up until the mid-70s, you heard about the Super Perm Sec. Anybody that finished from the university with a first class degree at that time, the first port of call would be the public service because they must shape the society, they must lead in developing policies that would better the lot of the citizens, improve the living standards of the citizens.But what we have found post mid-1975, most especially after the civil service exodus retirement of the (Gen. Murtala) Muhammed regime, the kind of confidence that people used to repose in bureaucracy is no longer there. But that has begun to return to a place like Lagos.So, to answer your question, yes, its been a bit challenging, crossing from the private sector to the public service. But you must prepare your mind that you need to assist in also shaping up the public service. So that when you come in, you will also be a model. You can mentor some people, new cadre of officers, with new orientation and attitude to deliver exceptional public service. And that is the only way we can all change the society for good. We can continue to afford people who will come into the public service as a modicum of last resort. It must be a conscious thing; you must have passion to serve the people to be in the civil service. And that is what one has tried to achieve by saying, let me also bring to bear the experience we have garnered over the years close to three decades in the private sector, in various positions, in various capacities, in various industries.I have been privileged to work in manufacturing, working for companies like Nestle Plc, working for Nigerian Bottling Company, the authorised bottlers of Coca Cola, Marina International Bank, Lead Merchant Bank, Guardian Express Bank, and then, more recently, I was with Econet that transformed to Vodacom Nigeria, Vmobile, Celtel, and of course, the company is now Airtel.Now coming into government, my first shot at it was actually in a pioneering role. I was more or less headhunted to come and head the Public Private Partnership Office. And as you very well know, that is an emerging phenomenon in Nigeria. So, it became a major policy thrust of the Lagos State government and they needed someone who has the ability to set up the office and lead a very professional team that would deliver. So that is what ab initio brought me into government. And of course, over time, I was privileged to serve in the cabinet in the second term of His Excellency, from 2011. Though prior to that, right about December 2009, I was already admitted into cabinet as a non-ranking cabinet member and given the privilege to sit at every Executive Council meeting. But I became a ranking cabinet member in July 2012 in the capacity of a Special Adviser to the Governor on Public Private Partnership, and then in August 2013, I was appointed into the position of Commissioner for Finance, and still, of course, superintending over the Public Private Partnership Office. I now play more or less a dual role in the state government.Now how would you describe the growth trajectory of the state in the last 16 years of our nascent democracy and what would be the next step'Clearly, the best for our state is yet to come. Our better days still lie ahead of us. But its been a phenomenal growth since the advent of democracy in 1999, with the coming on board of the administration of the Governor Emeritus, Asiwaju Bola Ahmed Tinubu, through 2007. As we refer to him, the dreamer, the visioner, who created the blueprint for the rapid change that were seeing in Lagos. And of course, in 2007 May, came the advent of the Babatunde Raji Fashola (SAN) administration, who has continued his exceptional passion and commitment to that foundation that was built. Clearly, the vision of the administration is on focus, the vision is actually to make Lagos Africas model mega city, that is a productive, functional, safe and secure on the continent. And in doing that, were benchmarking ourselves with Cairo (Egypt), and Johannesburg (South Africa). If you see a lot of the initiatives were taking, were also benchmarking ourselves with the best practices, and then world class standards. And thats where we are. And a lot of things have been achieved by the last two administrations that we cannot afford to take for granted. We have, for example, been able to liberate ourselves from dependence on the federal statutory allocation, the one you call, federal transfers. Were the only state in Nigeria today that generates about 70 per cent of its total revenue from the internally generated revenue (IGR), it is from the contribution of taxpayers, who repose confidence in our administration. Before the advent of democracy, you will recall the amount of revenue that was being generated monthly from IGR was barely N600million. With the Asiwaju administration, it was taken up to about N7billion by the May of 2007 through various initiatives, transparency and accountability. Through reposed confidence by the taxpayers, we saw more voluntary taxes. There are various tax reforms, in terms of setting up independent and an empowered Lagos State Internal Revenue Service, automation of our operation. We were the first government to launch a major electronic resource planning tool called the DRD, which we started way back and that has contributed in no small measure to some of the achievements of the two administrations. The current administration has also taken a giant stride, in terms of a quantum leap in revenue generation and today, were topping about N21billion monthly, in terms of IGR from taxpayers in the state and we still believe that there is much room to deepen our tax such that we can take it to the next level. So, today, even where youve a situation where statutory allocation is not coming to states, were the only state in Nigeria that can confidently hold our own and be able to meet our obligations as and when due.Also, if you look at the area of infrastructure, its been epochal, in terms of what we have seenlife-changing. Weve implemented projects that impacted positively on the citizens. The first light rail in this country is being constructed by this government. Its a 27-kilometre all the way to National Theatre to Okokomaiko, the first track of 7.2 kilometres is complete and were moving inward Marina from the National Theatre, and the trains would also be here pretty soon. And then, we would see that delightful service. Lagos would become like all other cities of the world like Johannesburg, London, New York. And thats actually from a master plan that has seven corridors in total. When you look at intermodal transportation at large, were doing a lot in terms of waterways, optimising water resources for transportation of goods and persons. We have built three world class ferry terminals at Ipakodo in Ikorodu, the second in Badore and the third one at Osborne, Ikoyi. And these are strategically located at areas you can call transportation hubs. If you look at Osborne, if you alight from there, you can either go to Ikoyi, you also have that option of getting onto the ferry; getting into Badore to get to Lekki corridor or coming into Osborne, the Mile 2 ferry terminal has been rehabilitated. And that is something that is commendable. In the area of healthcare delivery, for the first time in the history of the state, and indeed even in Nigeria, up until the advent of the Babatunde Raji Fashola (SAN) administration, there were three dedicated mother-child care centres in Lagos State, including the Lagos Island Maternity, the Massey Hospital and then the Ayinke House in Ikeja. But it is gratifying to say that today, this government has built additional 10 of such hospitals in the state, and were now trying to ensure that we put those hospitals almost at an arms length reach of mothers and children. And how best can you take care of that huge part of our population, than ensuring that they have easy access to mother and child care centres. The primary healthcare centres are supporting the local government areas. We have also developed that. Today, we have 56 flagship primary health care centres running 24 hours service. So, that is there. Our 24 general hospitals are also working optimally and were improving on their capability as we get along. LASUTH is there, the tertiary institution is doing well. Only last week, we opened an annex of LASUTH in Gbagada. That is the Cardiac and Renal Centre, the first of its kind in the West African sub-region. It has got about 24 dialysis machines installed for renal patients; its got two state-of -the art theatres. In total, its got about 67 bedding facilities, including the intensive care units and one thing that we have also done lately in that regard, we brought the capabilities from all over the world for people that would operate and manage the centres. So, it is not just in the hands of government alone. Youre going to get there world class services, services that are comparable anywhere in the world, whether in the US, UK, or in South Africa. Even listening to patients testimony the other day, an old man said what he has seen here is comparable to what he has seen in the hospital in the UK. And that is what this government is doing in offering governance in a very uncommon manner.When you think about sanitation and environmental management in the city today, before the advent of the civilian administration, it used to be on our highways that youre going to see bins littering our roads, youre going to see dirt bags littering our roads uncollected, I mean Lagos was full of dirt. This has since changed and it has come to stay, were not losing momentum. Look at Oshodi, the regeneration that happened in Oshodi is mind-blowing. I was born and bred in Oshodi; Im an indigene of Oshodi so I can tell you the story of Oshodi w when it was chaotic or what it used to be. But today, you can see a modern Oshodi that people now go in there to even take photographs. It has become more of even a tourist destination. If you look at the Heritage Park in Oshodi, nobody believed that such an iconic social amenity can be located there. Look at Lekki-Ikoyi bridge, its iconic, you know first of its kind, a cable steel bridge in West Africa about nine metres. That has become the new face of Lagos. If you look at the PPP transaction for the expansion of Lekki-Epe Express road, again, that has rapidly assisted in coping with the growth that were seeing in that corridor, which is the fastest growing real estate corridor in the region. If you look at what we have done with intervention in power provision despite the challenges were facing with the energy sector in Nigeria, in the last five years, we have delivered about a total of five independent power plants combined delivery of 47 megawatts of power to the citizens in various locations by government. I can go on and go. I mean, its just exciting when one is talking about Lagos and what we have managed to achieve within the short space of time.You have actually painted a very rosy picture of how things work in Lagos. But of course, you may not have done all of this without incurring some cost. The news out there is that the state is in dire financial straits as a result of the numerous projects it has embarked upon thus far, such that it may take decades to pay back money to donor agencies.Well, I must tell you that when you talk about fiscal responsibility and prudency, that is something we pride ourselves so much in Lagos State. Consistently, we have always met all of our obligations as and when due. If you go by all international benchmarks and parameters, whether it is the World Bank parameters in the debt sustainability or fiscal sustainability or the federal Debt Management Office (DMO), weve always exceeded on that. Today, we have three rating agencies that independently rate the affairs of the state including our bond issuance programme: the first being Fitch Rating agency, which is an international rating agency, Global Credit Rating (GCR) agency and also Augusto & Co. In the last three years, all of these agencies have improved on our ratings across their parameters. With Fitch, for example, we have an issuer default rating of positive-minus stable. And then on our national long-term foreign and local currency, we got an A+ there, and that is also positive. So, its difficult for anyone to say that Lagos State is in dire straits, in terms of funding. That is not right at all. We have maintained our debt level at very sustainable level. And what people forget is, if you think about the largest economy in the world, which is the United States of America, theyre also the biggest debtor in the world. That is not to say that people should engage in reckless or unbridled borrowing. The more you borrow essentially to finance productive activities. And thats what we have done in Lagos State. All of our borrowings have been channelled into major infrastructural projects that are capital intensive, and may take a number of years for them to be completed. Theyre not projects to be completed in one year. Take for instance, the Adiyan I waterworks, the largest water plant that was built in Lagos was built in 1991 and that is Adiyan II. It discharges 70million gallons of water per day of potable water supply to the city. And today, weve started the second phase of that project, which is another 70million of gallons per day; that is one of the major projects that our state has financed with money from donors. Many of the roads that have been built have been financed with part of this borrowing. Part of Lekki-Ikoyi bridge project funding came from some of our borrowings. The shoreline project, which weve embarked upon, 7.2 kilometres shoreline protection, in Kuramo Waters in Victoria island, all the way to Okun-Afa, which is the Alfa Beach area,7.2 kilometre, have all largely been funded from a combination of IGR and borrowing. But one thing we must know, especially in public finance management, even in project finance, or in banking generally, is that there is what we refer to as time value of money. What we can buy today for N10, would probably cost N11 tomorrow or cost N12.50kobo a year after. Imagine what has happened to the currency now, where weve seen devaluation of close to 40 per cent. Now, it has turned out to be very prudent in our part too be very visionary, to have embarked on the modest level of borrowing that we have injected into enabling us to deliver aggressively on infrastructure. Today, some of these infrastructure, naturally, it means the cost would have spiked up by 40 per cent of the import-content dependency of each of them. So, were well-off today because weve seen it ahead, we built the infrastructure at very affordable rate for the citizens, borrowing at a very reasonable rate. Today, the last bond we issued in November of 2013, 87.5 billion bonds, the coupon which was 13.5 per cent, was even more competitive than the sovereign bond that is even issued by the federal government, yet were a sub-sovereign. How else can you have an affirmation of investors in the market, both local and foreign that have reposed confidence in the government' Most of our bonds that we have issued often times are exceedingly oversubscribed. That tells you about investors appetite for our bond. And if we have been reckless in borrowing, before you even get the investors, the rating agencies would not give us positive affirmation, we will not be investment great points, we would have been categorised as junk and then discernible investors would not be running after our bonds as it were. So, I must tell you that our borrowings are very sustainable. Today, if you look at our total debt service to total revenue, its a figure at about 22 per cent. The benchmark that is prescribed even by the federal DMO is at about 30 per cent, the World Bank prescription is 40 per cent but ours is at about 22. So that tells you how sustainable our debt profile is. And if you now link our debt to GDP ratio, that is total GDP of the state, its very much below one per cent and when you look at international benchmark that goes to as high as three per cent. So, were not near all those fallacies that are being peddled out there. Today, we still remain an investors delight.Lagos prides itself as spending 60 per cent on capital and 40 per cent on recurrent expenditure, whereas other states and the federal have had a recurrent decimal of spending far less on capital but more on recurrent. Whats the secret'Well, in terms of policy direction, what we set out to do is to ensure that at least 60 per cent of our budget is allocated to capital projects and then recurrent expenditure we target 40 per cent. Yes, in the early years of the Babatunde Raji Fasholas administration, weve been very close to our target of 60-40. But of late, the pattern of cycle of infrastructure is such that when youre building up, youre spending so much on capital. But as they (infrastructure) become operational, you will see a bit of reversal. Some of the cost will now begin to be redirected into maintenance. I give you an example, look at Lekki-Ikoyi Bridge, we started construction in about 2009 and then we finished it in about 2013, okay. Now from mid 2013 till date, youll be spending more on maintenance because that is built. And that is replica of all other infrastructural projects in the state, so in recent times, our expenditure pattern has tapered to about 47- 53 per cent. Also, remember that on account of wages, weve also had to deal with certain wages adjustments that were forced on the state from the federal level, which weve had to implement. So, that is also impacting on our capital-recurrent expenditure ratio. But we still hold a very steady and decent ratio which is 53-47 per cent as it were.Maintaining the current tempo, where do you see Lagos in your vision in the next 10 or 15 years'In the next 10 or 15 years, we should have achieved our vision of making Lagos, Africas model mega city. That is if you check around the parameters of city liveability index, Lagos will rank as say a Joburg and Cairo, in terms of education, healthcare delivery system, infrastructure, culture, social and recreational facilities. We must be a city of choice in terms of when people are deciding where to locate their businesses, places where they also want to live. Across the continent of Africa, we see ourselves as the first choice 10-15 years from now.The post Lagos is financially stable appeared first on The Nation.]]>
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