Lagos, Nigeria’s commercial capital is selling an NGN85.14 billion bond to fund infrastructural projects across the state.
The state has started various capital projects as well as ongoing projects inherited from the last administration.
According to Akinyemi Ashade, the state commissioner for finance, the bond consists of 46.37 billion naira 7-year debt at a 16.75% rate and 38.77 billion naira via a 10-year paper with 17.25% interest.
He added that “We value the reputation we have earned as the most responsible issuer in the Nigerian capital markets and thank everyone who has worked with us to deliver a successful outcome”.
Last year, the state raised NGN60 billion via another bond issue. Akinwunmi Ambode, the state governor at the bond presentation to investors had said the state plans to use the proceed to modernise the state transportation infrastructure via road, water and rail.
The latest borrowing is part of Lagos’ NGN500 billion borrowing programme launched last year.
Lagos remains Nigeria’s most economically viable state with over 55% of the value added tax, VAT, generated from the state. However, the state has major infrastructure deficit across the various socio-economic value chain.
In its last revenue update, the state disclosed that it released USD1.02 billion, which is approximately NGN312.820 billion for the full year 2016.
The said amount was realised from internally generated revenue,IGR, a summary of all taxes, levies and income received within the state.
The state saw significant improvement on a year on year basis. Total revenue for 2015 calendar year was NGN247.946 billion. However, the year saw 80% achievement in revenue target and 69% of total revenue for the year.
This means Lagos state realised NGN65 billion increment in IGR revenue year on year representing 26% year on year growth.
The state’s Commissioner for Finance, Mr. Akinyemi Ashade, disclosed that its revenue achieved for 2016 was 75% of the government’s projection for the year. This means the state missed its own estimate for the full year 2016 by 25% year on year.
However, the report shows that Lagos is generating its total revenue from its IGR, a positive news that sets the state apart from other states in Nigeria who rely on monthly federal allocation for over 90% of their revenue source.
Ashade disclosed that the state realised about 72% of its revenue from its IGR. This means about NGN87 billion were realised from non-IGR sources such as federal allocations, investment property etc. The result shows that improvement has been recorded in blocking leakages of tax revenues since the tax net was not really widened when compared to the year 2015.
It was expected in a recessive year that the state will have a significant drop in revenue as with other states in Nigeria. The case of Lagos is expected to be the norm as the present government has been focused on blocking leakages and cutting waste. However, a widening of the tax net is expected to bring about a higher spike.