As political parties and their respective candidates continue with their political campaigns, stating their plans in the next four years for the people and seeking their votes ahead of the 2023 elections, Dataphyte releases its latest state governors’ performance appraisals report.
In this series, Dataphyte evaluates the performance of Babajide Sanwo-Olu, the current governor of Lagos state, using selected key socio-economic indicators in the state.
Sanwo-Olu was elected as the state’s chief executive officer in 2019, having polled 739,445 votes to defeat his closest contender, Jimi Agbaje of the Peoples Democratic Party (PDP), in the 2019 guber polls. Since then, he has managed the affairs of the state.
On April 29, 2022, he formally expressed interest in continuing the work his administration started 3 and half years ago by picking up a Nomination and Expression of Interest form for a second term in office.
As the 16 candidates for the governorship position in the state continue to outline their plans for the state and its residents, Dataphyte examines how the state has performed under the current administration and also highlights significant socio-economic indicators in the state that should inform the candidates’ manifestos and plans ahead of the governorship election in 2023.
GDP, IGR & Fiscal Sustainability
GDP
The International Monetary Fund (IMF) postulates that the growth rate of real GDP is often used as an indicator of the general health of the economy. As a result, it is one approach to evaluate both a state’s economy’s size and performance.
According to the National Bureau of Statistics (NBS) most recent GDP data, Lagos state has an estimated GDP of $74.674 billion, ranking as the state with the highest GDP in the country. It is essential to state that this data was released in 2012, and so far has been the only time that the NBS has published the subnational GDP reports.
However, in 2016, the Lagos Bureau of Statistics (LBS) said that the state has an estimated GDP of $145.141billion (N27.125 trillion). By using an average annual growth rate of 4.2%, the LBS predicted that the state’s GDP would reach N628 trillion ($157.728 billion) by 2018.
Due to the unavailability of data, the current GDP of the state, particularly the growth rate under the Sanwo-Olu administration, cannot be determined. However, the 2021 GDP data published by BudgIT in its recent state of states report puts Lagos’ GDP at N41.17 trillion, leading others as the state with the highest GDP in Nigeria.
IGR
Internally Generated Revenue (IGR) is another metric to assess how a state performing economically. This is the reason why, in many socioeconomic discussions, particularly one about how well the states in Nigeria are doing in terms of revenue, many people, especially Lagosians, would point to the IGR of Lagos state and how it is greater than the combined IGR of numerous states in Nigeria.
Without a doubt, Lagos state has the highest IGR in Nigeria, frequently exceeding the total IGR of two or three other regions combined.
Under the Sanwo-Olu administration, the state has maintained its record of generating the highest internal revenue and has recorded only positive growth so far.
The IGR data (revised) sourced from NBS shows that in 2019, Lagos state generated a total of N646.614 billion as internal revenue. The following year, the state recorded a 2.07% increase in its internal revenue despite the financial storm caused by the coronavirus (COVID-19), which had an impact on the IGR of many states in Nigeria in 2020.
At the end of 2021, the total IGR generated by the state stood at N753.465 billion, a 14.16% over its 2020 figure, still maintaining its position as the state with the highest IGR and one out of the only two states in Nigeria that generates more IGR than the amount it receives as FAAC disbursement.
Every month, the Federation Account Allocation Committee (FAAC) disburses funds among Nigeria’s three tiers of government. The disbursed funds are a collection of the government revenue generated from tax, oil sales, and other statutory sources in the previous month.
While many states in Nigeria depend heavily on FAAC disbursement for survival, it is the opposite for Lagos state, as data shows the state’s survival is not dependent on allocations from the central government.
For instance, in 2019, the total FAAC allocation Lagos received was N117.884 billion. The following year its FAAC allocation dropped to N115.933 billion. In 2021, the FAAC allocation was N135.077 billion.
The total amount Lagos state received in these three years (2019-2021) as FAAC allocation was only N368.89 billion, while it generated N2.06 trillion as internal revenue within the same period. This demonstrates that the state’s survival, unlike many others in the country, is not reliant on FAAC disbursement.
Overall, the IGR growth under the Sanwo-Olu administration has been impressive. However, the state may still need to increase its revenue to meet its infrastructural needs, as data shows that it still borrows heavily. Therefore, more innovative ways to generate revenues should be a priority for the 2023 governorship candidates in the state.
FISCAL SUSTAINABILITY
In 2021, BudgIT assessed the fiscal sustainability of Nigeria’s 36 states using four indexes which include the ability of states to meet their operating expenses, the ability to meet operating expenses and loan repayment without recourse to borrowing; fiscal power to borrow more given low debt burden vis-à-vis how much is generated in a year, and prioritisation of capital over recurrent expenditures to determine the health of states.
Lagos State ranked fourth in the fiscal performance rankings for 2021, the same spot it held in 2020. However, the 2022 ranking released by BudgIT in October reveals that the state made progress, placing third overall among the 36 states evaluated. This demonstrates an improvement in the state’s fiscal performance in the period examined. The state must, however, be mindful of its significant debt profile.
According to data from the Debt Management Office (DMO), Lagos state was the most indebted state in the nation at the end of 2021, with a total domestic debt of N658.960 billion. The total debt was N444.227 billion when the current administration assumed office in 2019. This indicates that between 2019 and 2021, Lagos’s domestic debt under Sanwo-Olu grew by 48.34%.
In foreign debt, Lagos is also the most indebted state in Nigeria, even though it reduced its foreign debt by $72.96 million in 2021. According to DMO, Lagos state foreign debt liability as of December 2021 stood at $1.334 billion, the highest among the 36 states.
Although BudgIT asserted that the state’s total debt (domestic and foreign) is within sustainable debt limits using indicators such as the debt to GDP, debt to revenue ratio, debt service to revenue ratio, and personnel cost to revenue ratio in 2021, it nevertheless cautioned that the state is extremely exposed to exchange rate volatility, particularly since its foreign debt makes up 45.56% of its total debt stock. Plans to repay these debts and cut borrowings should form key components of the manifestos of the candidates vying for the state’s highest office.
Unemployment rate
When he was elected governor in 2019, Sanwo-Olu declared that one of his administration’s top priorities would be fostering the state’s economic growth.
“We will develop specific and concrete plans to establish the types of businesses and investments in Lagos that will provide sustainable growth and job opportunities for the 21st century,” Sanwo-Olu, the governor-elect as he was then, said.
Recently, the Lagos state governor said that his administration, in the last three years, had spent over N10 billion in grants to strengthen the Lagos State Employment Trust Fund (LSEFT’s) activities geared towards creating job opportunities in the state.
Despite the promise to prioritise job creation and the funds the state had committed to boosting employment in the state, data from the National Bureau of Statistics (NBS) shows that the unemployment rate in the state has increased under the Sanwo-Olu-led government.
Before Sanwo-Olu came into office, the state’s unemployment rate was 14.5%, and it ranked as the 5th state with the lowest unemployment rate in 2018. But according to the NBS’s Q4 2020 labour force statistics, Lagos’ unemployment rate is now 26.9%, although now ranking as the 3rd state in Nigeria with the lowest unemployment rate. Given that there haven’t been any new unemployment statistics published since the first quarter of 2021, there are worries that the state’s unemployment rate may even be higher. Nevertheless, the 2020 data shows a 12.4% increase in the state’s unemployment between 2018 and 2020.
The governorship candidates should take into account this increase in the unemployment rate. Whoever emerges as the winner will need to develop workable measures to lower the state’s unemployment rate.
Poverty rate
In Nigeria today, poverty is pervasive and has been rising annually in recent years. Thus, it has become a major campaign point for politicians seeking elective offices at the state and federal levels.
In 2019, Sanwo-Olu said that the essence of government in any country or state is to eradicate poverty. He promised that his administration would focus on poverty eradication and provide an avenue to assist businesses to thrive in Lagos state.
As part of the effort to achieve this, the state government conceived several initiatives to empower the residents. According to the government, an estimated 48,000 households have been rescued from poverty in the state since the implementation state’s various poverty initiative programmes.
While no subnational poverty headcount data has been published to assess the impact of the various poverty alleviation initiatives conceived and implemented by the government since assuming office in 2019, the most recent poverty headcount data by the NBS places Lagos state’s poverty rate at 4.50%, making it the state in Nigeria with the lowest poverty rate out of the 35 states that were assessed in 2019.
However, given that the most recent subnational poverty headcount data is from 2019, this may not accurately reflect the state’s situation right now. The number of people in the state who live in poverty may have increased (even though the state may still maintain its position of having the lowest poverty rate) due to the notable rise in the national poverty rate.
According to data from the Poverty World Clock, 69.98 million Nigerians now live in poverty, up from 65.83 million in 2019. With this increase and another 7 million Nigerians, the World Bank has predicted, might be pushed into poverty at the end of 2022, Lagos state may experience a corresponding increase, especially as its 2020 unemployment rate showed an increase. For the candidates in the 2023 governorship election in the state, clear and innovative policies for reducing poverty in the state should be a critical part of their plan.
Number of Out-of-School Children
Lagos has 254,654 out-of-school children, making it the 17th most out-of-school-children in Nigeria, according to the 2018 data provided by the NBS. A breakdown of the figure showed that there were more boys (170,279) than girls (84,375) who were out of school in Lagos. Since then, no data on the number of out-of-school children at the subnational level has been released by the NBS. However, in January this year, Hon Wahab Alawiye-King, the Executive Chairman of Lagos State Universal Basic Education Board (LASUBEB), disclosed that the state has over 2 million out-of-school children.
As part of the Sanwo-Olu led-government to tackle the problem — the high number of out-of-school children — the government introduced the EKOEXCEL, a transformational intervention launched in 2019 to provide quality education to both the rich and the poor in the state and upskill teachers leveraging technology. The Executive Chairman of the LASUBEB claimed that the intervention has yielded tremendous results since its commencement, with many out-of-school children now enrolled.
While no new data has been published to assess the programme’s impact and give accurate data on the current number of out-of-school children in the state, the current data reveals that the state has a high number of out-of-school children, which needs to be addressed.
Moreover, a new report released by the United Nations Educational, Scientific and Cultural Organization (UNESCO) this year stated that the number of out-of-school children in Nigeria has risen to 20 million from the initial 10 million. With this high jump, Lagos may also record an increase. Thus, policies and programmes to improve access to education in the state should be a priority for candidates and an issue of interest for the electorates. The policies should also include the quality of learning, school infrastructure, and teachers’ welfare.
Ease of Doing Business Ranking
The business climate of a state has a big role in drawing both domestic and foreign investors there. As pointed out in a report, investors are overly careful in their choice of investment location for their monies.
Although Lagos state remains a top investment destination in Nigeria, the most recent subnational data on the ease of doing business ranked the state 20th out of the 36 states and Federal Capital Territory (FCT). The state had an overall score of 5.28 out of a total index score of 10, which was assessed on four thematic areas — Infrastructure and Security, Transparency and Access to Information, Regulatory Environment, and Workforce Readiness.
By this ranking, Lagos state is not among the top states with the ease of doing business and may not be a preferred place for investors, but for its huge available market and other factors, the state has remained an attractive option for business owners, despite the low ranking.
While the Sanwo-Olu administration has repeatedly assured the business community in the state of his administration’s commitment to improving the business environment and making it more attractive to investors, the governorship candidates will need to pay attention to the four thematic areas the 36 states and FCT were assessed on the ease of doing business, with a plan to improving them to maximise the business opportunities in the state fully.
Under-5 Mortality Rate & Access to Health
With respect to health, Lagos state fares relatively well especially compared to other states. According to the data from NBS, the under-five mortality rate in the state is estimated at 59 deaths per 1,000 live births and ranks 5th out of 36 states, and FCT with the lowest under-five mortality rate. Although the under-five mortality rate in Lagos is a little lower than the average 62 deaths per 1,000 live births in Lower-Middle-Income Countries in Sub-Saharan Africa, it is still much higher than the United Nations Sustainable Development Goals (SDGs) target of 20 per 1,000 live births. Therefore, commitment to reducing mortality rates, improving access to healthcare in the state, and meeting the SDGs target should be a significant plans of the candidates seeking to manage the affairs of the state for the next four years.
A second point on health performance in the state has to do with health insurance coverage. To achieve universal health coverage and boost access to affordable and quality healthcare services in Lagos, the government launched its mandatory Health Insurance Scheme (HIS) for the state’s residents. According to Dr. Emmanuella Zamba, the General Manager of the Lagos State Health Management Agency (LASHMA), the scheme currently has 623,183 persons enrolled, up from the 5,000 it was about 3 years ago. She also noted that the number of primary and secondary healthcare providers (public and private) has equally increased from 40 to 250. This represents a 12,364% in the number of persons now covered by the state’s HIS and a 525% increase in the number of healthcare providers.
Though commendable, if the figures are anything to go, particularly the number of persons covered in the HIS, it means that only 4.05% of the state’s estimated 15.4 million population is covered in the state HIS. More effort will be needed in this regard. As such, the governorship candidates should factor it into their manifestos as they tour the state to seek the support of the electorates in the upcoming governorship election.