The West African country raised the bond under the Lagos state fixed rate bond to complete the blue line rail system from Okokomaiko to Marina and the expansion of the Lagos Badagry Expressway into 10 lanes.
“It gives us the resources to pursue the developmental projects that we committed to in this year’s budget and projects that we have started in the previous year’s budgets that are scheduled over a medium term three year implementation plan,” Governor of Lagos state, Babatunde Raji Fashola told CNBC Africa.
In 2009, the federal government began the debt insurance program of 275 billion naira with 50 billion naira bonds which were expected to mature in February 2014.
“It also gives us the opportunity to ramp up budget performance in the final quarter, take us closer to the 89 per cent budget performance that we achieved last year and possibly take us beyond that,” he said.
According to the governor, the end of the third quarter, the state’s year to the September budget performance cumulating nine months performance of 71 per cent which was below performance at the same period last year.
Meanwhile, earlier this year, the Lagos state government commenced work on the 26 km fourth mainland bridge that will link Ikorodu to the state’s economic core, Eti-Osa. Nonetheless, as tax payment collection is still a huge issue, and the government is trying to reduce deficit spending, the project has had to wait.
“Whether it takes off or not really depends on the appetite that we see from the sector but the plans are in place, the alignment is defined and the costing indications are there,” he explained.
Out of a population of 22 million, only 3.5 million Lagosians are currently paying tax and the governor believes that the more people they get into the tax net, the more they will able to expand their budget size.
“The budget size is often driven not by capacity of utilisation anymore but by the realities of financing. You cannot borrow what you cannot pay back so as our tax base grows, so will the budget size and so will the ability of Government to finance more projects,” he added.