Lagos State is targeting to bring the huge informal market into the tax net- Ashade

Akinyemi Ashade, Lagos State Commissioner for Finance, who doubles as Commissioner for Economic Planning and Budget, shares the vision of the state government on a wide range of issues in this interview with Anthony Osae-Brown, Editor, BusinessDay, Joshua Bassey, and Caleb Ojewale

What would the state like to achieve with its 2017 budget?

What the government has indicated during its presentation to the House of Assembly and also when the appropriation law was signed is that we will continue to focus on the security of Lagos. So, you must have a secure environment to be able to thrive and to feel safe to invest. We also would like to continue playing in areas that will allow us to create wealth and employment. Because if you look at the masses of our people, Lagos has about 23 million people, and out of this, the working age of 15 – 64 is about 15.5 million based on a 2015/2016 report by the state government. The structure of Lagos’ population is quite different from the rest of the country, so what do we do with 15.5 million? It can be turned in a way that would provide demographic dividends but before losing that we must continue to focus on employment, health, infrastructure, to continue catering for the kind of population in the state. If we don’t do that, we may as well lose the benefits, and if we lose the benefits, when these people grow old the government will still be responsible for them, and we cannot run away from providing for their needs then.

Vocational training

It is better for us to continue focus on vocational training which is very important that. Lagos is seen as a construction site, but if you go out there to those construction sites in Lekki and other areas, the people you will see there doing construction work are either Beninese, Ghanaian, Togolese, so where are our people?

Are we really giving them the right kind of vocational training or skill set they need in our technical colleges to be able to provide those skills and create jobs? These are areas we consider important and we are giving the requisite attention.

Infrastructure development

Beyond that is also infrastructure development in the area of constructing roads, resolving traffic gridlocks, and ensuring that we have reduced travel time. These are the areas we are focusing on this year.

Tourism

Tourism has also been identified as a critical sector to focus on this year. This is because with the location of Lagos, we have a comparative advantage to other states in terms of tourism, having the seaports, airports, it is a coastal state. With the beaches and towns that have historical heritages, we can latch on and attract tourists to our state. Tourism can also create employment, so these are areas we are looking at.

Light up Lagos

We also want to improve on the modest achievements this administration has made in with respect to light up Lagos. It is beyond the fact that when a place is lit up, it improves security, but it is also part of a vision to create a 24-hour economy where people can work longer hours and we can probably see shifts; seeing a visible night economy and engaging the masses of our people. At the centre of all our initiatives is to create more employment for our people and position Lagos as a choice destination in terms of investment and tourism.

What are the financial benefits of turning Lagos into a 24-hour city?

Recently, I read a study, which said about $1 billion, was the value of tourism investments in Nigeria, in the area of foreign direct investment (FDI). We believe strongly that part of that, maybe 80 percent, will probably be related to Lagos. Our intention is to be able to say, from the one billion dollars, multiply it by two in the next four years, which is why this year we are allocating N20 billion to tourism alone, which is quite huge.

We have seen tourism not just only because of the FDI it will provide but also the ability to create jobs; which is important. When we look at the 15.5 million people that are within the working age, some are underemployed while most of them are unemployed and we really need to take care of that.

How is the state taking advantage of being the capital of Nigeria’s entertainment industry?

About six art theatres will be built across the state one each in; Epe, Badagry, Alimisho, Ikeja, Ikorodu, and Lagos mainland. Each will have seating capacity of about 500. It is going to be a hub for theatre performances, rehearsals, screen movies, and you can do a lot of things with the ambience and ample parking spaces. This will ensure our people have a place they can go to, express themselves and that could be our contribution this year in that area.

Also looking at the One Lagos fiesta (now in its second year), having eight days of entertainment towards the end of the year. We saw a lot of artistes coming together, people that appeal to both the old and new generation, it provided a platform for them to reach the audience and people were very happy about it. What we are doing is little interventions in one way or the other in that sector. We have realised that entertainment is a sector that some of our young people are happy to be in. Some just want to dance, play music, and you can’t stop that because that is the generation that we have.

How many people have benefited so far from the State’s employment trust fund?

What has happened is that we have taken time to build structures for the scheme to run seamlessly. In December we did a pilot scheme where some funds were distributed based on certain criteria, so we have started disbursing. We as a government will contribute N6.25 billion into that fund every year.

That fund is very important because it is one which can even benefit people in the entertainment industry earlier discussed. It is also a fund that can benefit people who are creative, those with entrepreneurial spirit, and others who may be in need of it.

The state government issued a bond where it sought N60 billion, but got N47 billion, when next are you coming to the market?

In April, one of the series of our bond will mature and that is about N57.5 billion. So our intention is that since we have 100 billion in the budget for 2017, we believe that as we are redeeming the N57.5 billion, we should be coming into the market to replace it.

As the N57.5 billion is maturing, we will want people that are interested in investing in Lagos to see another investment channel in the N100 billion we are providing.

The state’s IGR has been increasing over the years, what will you attribute this to?

The revenue to GDP ratio of Lagos state even as we say it is rising, is about two percent. The condition for joining the West African single currency that is still being discussed hopes countries achieve 10 to 15 percent revenue to GDP ratio. Two percent is way off. What that tells us is good news on one hand and on the other hand, not too good news.

The good news is that we have headroom to grow revenue in Lagos; the not so good news is that we are not doing as well as we expect. We can say every year it keeps increasing; N312 billion in 2016 compared to N268 billion in 2015, but if you look at it in ratio terms, we can still do more.

Where we are looking at it is that, if we want to be successful we then need to do more of focus on data analytics. There is quite a lot of information we have in government, for instance someone renders a service where withholding tax is deducted but comes the following year to file returns lower than what we know he has made. So, under declaration of income is something we are battling with. We have a very huge informal market not captured in the tax net and we are also looking at that. If we continue to bring more people into the tax net, focus on reforming the consumption taxes that we have in Lagos, which also has the ability to generate more than is currently generating, block leakages, provide people with opportunities to pay easily, then we are optimistic that we can even move from two percent to five percent.

What processes are you putting in place to make revenue collection easier?

These are part of the challenges we met on ground, and we are here to solve problems.

What we have resolved to do is reduce drastically, the time it takes to transact with the government and even make it more convenient for people to make payments. What we have done is to introduce a single billing system where people should be able to have a bill annually to know what payments are to be done. With this, people can even plan their cash flow and decide to spread payments. We are also making it possible for people to pay through POS, and we have deployed these to some of our MDAs. For those who choose to walk into banks, we’ve made this easy as well by providing incentives for banks to attend to people.

The most important is that our people should have options. It does not necessarily have to entail bringing cash to Alausa. Rather, people should be able to do it from the comfort of their homes.

On the technology front, we are also ensuring that the technology solutions that support some of the ambitions and goals in government are being put in place and these can really be expensive but we know that if we continue to drive hard our goals will be achieved.

The blue line rail, what are the challenges and what are the new delivery dates? Any plans for privatisation?

What we met on ground was not holistic in terms of delivery dates. What I mean by that is, when you have different aspects of the rail, the civil work is there, the signalisation, power to run, even the rolling stock (and buying them). The situation we met on ground did not have a holistic approach towards ensuring that we delivered it. What we are doing is to look at all the processes again; we are talking to some consultants on the ability to get the process on course. You will see that we are still constructing civil works and we should be able to deliver that as planned. We are also looking at power and being able to run the whole facility in a seamless manner. I think that was lacking in the past and our own approach is to bring all these things together. We know at one time in the future that there will have to be a concession to run it.

What I can say is that this year we’ve made provision in the budget to raise some of the civil works to finish them and we already have a rolling stock of about four coaches but they cannot roll because other ancillary infrastructure are yet to be completed.

The contract we met on ground was not all encompassing to make the rolling stock work. What we are now trying to do with our partners and consultants is to come up with solution towards ensuring that all aspects of the project come together and we are able to get this facility running for the benefit of all Lagos residents.

Why is Lagos state putting so much money in the project instead of putting it up as an investment package for private investors to buy into?

That is what we will do eventually. But you know for investors, they want a project to be de-risked but the process of de-risking it would entail us building the infrastructure; rail line and everything, even providing power while they will come to maybe provide their rolling stock and other ancillary facilities.

We then value all our investments so far and put it in that vehicle to ensure that we can recoup our investment and also open up that channel for Lagos to use. It is going to solve a lot of problems along that axis in terms of transportation and if we also look at numbers, it is estimated to move more than 500,000 passengers every day.

What is the actual coverage of this rail line?

In the first phase, the rail line we are working on will start from Mile 2 and end at Marina. That rail will also extend to Okokomaiko and we have a large area there which will serve as a yard. Hopefully, once we deliver that we can still move further to Badagry and that will be done under Public Private Partnership agreement.

Is there an estimate on what will be required to complete the first phase of this rail line?

I won’t be able to give you an estimate because that part of it, the costing is still being done. But in this year’s budget, I know we have about N13 billion provided for advancing the 10 lane road towards Okoko. We also believe that there are additional funds that will be spent paying additional liabilities and the old contractors helping us there. We have a consultant working on those numbers and that is Transport for London. They are working on it because it is holistic.

As it is, isn’t there still a timeframe for the phase one to be completed?

What I can say is that we are committed to deliver that between 12 and 18 months.

The Lekki-Epe expressway, there has been a lot of work going on in that axis in recent times but what are your long term plans for that road, any plans to concession it out again?

It is still technically under the management of Lekki Concession Company. But the difference is that Lekki Concession Company is 100 percent owned by Lagos state. We have however realised that there is a need to reposition the company and make it more attractive to investors. What we intend to do is eventually have an infrastructure bond that will be used to further develop the route to get where we want it to and also take Lagos out of the liabilities by brining in the investors. By the time we are done with the restructuring and we make it attractive, we intend to approach the capital market again.

We don’t want a situation where government is taking more than 25 percent, so that the people can own at least 75 percent of the company.

About other plans for the road, as your question states, if you look at the freedom road that is the 3rd roundabout about, the road which enters through Lekki phase one up to the link bridge what we are doing at that round about is just finishing touches so that we can channel some traffic through that route.

In the Ajah axis we also believe there should be another road called the coastal road and we are planning to start work on that this year. A lot of people have relocated to that area and there is need to expand the capacity of the road by building a new one; the coastal road.

We don’t seem to be hearing the state government talk about the proposed Lekki international airport, what has happened to that plan?

There is even a second airport coming up along that axis apart from the one that you know so there will be two airports in that axis. Considering the facilities coming up in that axis; Lekki Free Trade Zone, Deep-sea port, Dangote refinery, we don’t want a situation where when they start coming on stream, people will still have to come into Lagos, they should be able to have access to outside Lagos and all the things being done by providing inner roads in Epe is to provide opportunity for traffic to be able to move and get outside the state.

It will also ensure people don’t have to move to central Lagos; they can also move somewhere else. We want people to move in different directions, rejuvenating the state’s economy and help in managing the traffic situation.

Are there any developments on the fourth mainland bridge?

We have given it out to a group of investors and we have signed a memorandum of understanding (MOU). As a sign of commitment, what the governor has committed to do this year is that; from Ajah up to the Lagoon, do a road that will show the state’s commitment and we then leave the investors to do the rest; bridges, interchanges.

There is another project, which is of importance to Lagos, the Adiong waterworks phase 2, what is happening there?

The challenge with Adiong phase 2 will probably be in two folds. If you go there today, I think we have reached about 75 percent, but it is also not holistic. When I say it not holistic, I mean by the time the contractor finishes construction, the water will just be there. But there is also the issue of reticulation which entails getting the water where it needs to be in order for Lagos residents to benefit. For this we are also considering some investors who will come in to take up this aspect of the project.

The second fold is the challenge with foreign exchange. There are certain components of the project that are also FX related. So, as we have challenges with devaluation definitely the costs to Lagos have also gone up, so those are the two challenges we are facing.

There has been so much talk about diversification in recent times and agriculture has been a major part of the focus. This year, how much funding is being committed towards agriculture by the Lagos state government?

We are committing a little over N4 billion directly. When I say directly, it means government’s direct funding but indirectly we have our various facilities across the state. We have various farmers working on the lands we have acquired in different states across the federation and we are supporting them. We have land we are giving out and input we are providing to farmers. Agric should actually be called agric business. It is for private investors to also see as a business and be able to invest in. Whatever we are doing such as Lake rice, implementing the Agric YES scheme is just to ensure that people take to agric and we are just facilitating that.

The over N4 billion we are committing this year is just to continue to push those boundaries. What we expect is that young farmers and other people interested will see agric for what it is; a business, and ensure that is done.

Also, our partnership with Kebbi state is something we want to initiate with other southwestern states so that we all work together towards better integration of the southwest region.

The 2.5 metric tonne mill at Imota is being upgraded to 42.5 metric tonne capacity. How far has work gone in completing this upgrade and what is left?

At the first Executive council meeting that was held this year, the governor gave a directive that all the contracting and everything else needed to complete the upgrading is done in the first quarter of this year. This was the governor’s directive and he is committed to it.

What is the state government doing in terms of initiatives to help industrial parks thrive?

We share in their pain because we also have to go via IPP to be able to power some of the infrastructure at the state secretariat. The plan we have for Lagos is for the state to be able to generate about 3,000 megawatt of power in the next four years. To achieve this, we are going by embedded power. Presently, there is a technical committee set up under the leadership of the honourable commissioner for energy and mineral resources, Olawale Oluwo and their report will soon be ready.

We know it involves a lot of investment from Lagos and other private sectors; we will even be willing to give guarantees as it were. Our vision is very clear because we know we need power to run this economy in Lagos.

It is also important because Lagos has just entered into the league of oil producing states in Nigeria. The Aje wealth in Badagry is richer in gas than oil itself. It has been estimated that we have about 600 billion cubic feet of gas there. You can imagine if we can tap that, it will also enhance energy security in the state. These things are going into the plan of the embedded power generation and the report will soon be presented.

We believe by the time our 3,000 megawatt plan is achieved even the industrial hubs will be happy with the solution the state government has been able to provide.