The world Bank Board of Executive Directors announced Wednesday the approval of $200m credit to Lagos State to support a range of reforms pertaining to fiscal sustainability, budget planning, budget execution, and the investment climate in Lagos, Nigeria.
According to the bank, the operation would help sustain the state’s recent economic growth and poverty reduction while continuing to deliver social services to the city’s expanding population.
The credit from the International Development Association (IDA) supports the Third Lagos State Development Policy Operation.
It is the last of a series of two development policy operations which aim to improve public finances and the investment climate in a fiscally sustainable manner.
Lagos, the commercial hub of Nigeria is home to about 18 million people, according to the 2006 cencus figures, which is more that ten percent of Nigeria’s population of 170 million.
In the past decade, Lagos State achieved significant economic growth, improved its infrastructure and services, significantly reduced crime, and brought millions of people out of poverty.
“The operation’s focus on furthering improvements in the transparency of the budget system, effectiveness of public expenditures, and the business climate will help sustain the pace of economic growth and thus the state’s positive momentum towards income equality and the delivery of public services.
“With enhanced budget transparency and efficiency, adequate funding can be shifted to programmess to benefit the state’s booming population, especially the poorest families,” says Jariya Hoffman, World Bank Task Team Leader for this Project.
The operation will enhance the state government’s fiscal sustainability by anchoring the budget in a framework that accounts for key fiscal risks and improves revenue collection. Support for adopting a new approach to budget planning and preparation will ensure adequate allocation of budgetary resources to social services such as education and health.
Support for reforms of budget execution, including increased operationalisation of the Oracle-based Financial Management System, as well as reform of public procurement, will create greater transparency and efficiency in the use of budget resources.
In addition to budgetary improvements, the project’s support for a reduction in the cost of land transactions as well as the development and introduction of an electronic web-based system for processing of planning permits will help to improve the business climate and attract new investments.
“This operation is designed to assist Lagos State in its quest to continue its recent success in spite of the challenges brought on by rapid economic and population growth” says Marie Francoise Marie-Nelly, World Bank Country Director for Nigeria. “As an urban agglomeration that has reduced income inequality during double digit economic growth, Lagos is an example of inclusive growth in Nigeria. If the Lagos experience is sustained, there is strong potential for this type of inclusive growth to spread to other parts of Nigeria.”
The World Bank’s International Development Association established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.
