Nigeria Lagos Second State Development Policy Credit

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This Second Lagos State Development Policy Operation Program (SLSDPO) supports the implementation of a reform program in Lagos State through a new series of two programmatic operations. Lagos State contains the city of Lagos, a mega-city of an estimated 16-21 million inhabitants that has suffered for decades from large-scale poverty, rampant crime, environmental degradation, and insufficient public services. Over the last decade, however, Lagos State has achieved what many would not have believed possible, sustaining rapid growth, improving infrastructure and services, reducing crime significantly, and bringing millions out of poverty. The World Bank has supported Lagos State with a number of different instruments during this time. Since 2011, this cooperation has deepened to include budget support in the form of development policy operations. The SLSDPO supports the Lagos State Government in its quest to further increase value-for-money in budgetary spending, improve the business climate, maintain fiscal sustainability, and properly monitor, and manage financial risks. As such, it represents a start of a new series of programmatic development policy lending s. The First Lagos State Development Policy Operation (FLSDPO) was approved in 2011, and was planned as part of an anticipated programmatic series of three DPOs. It supported reforms under four pillars: fiscal sustainability, budget planning, budget execution, and the investment climate. Given the unanticipated gap in time between the FLSDPO and this operation, some of the anticipated prior actions for the second DPO planned under FLSDPO are no longer relevant. A number of them were already completed in 2011-2012. For this reason, the present operation should be viewed as the first operation of a separate series of two operations that is continuing the directions of reforms supported by the FLSDPO. The new series consist of the SLSDPO and the third Lagos State DPO. Nigerian States must play a major role in ensuring the country's successful future development. Nigeria is a large and ethnically diverse country, with over 400 ethno-linguistic groups divided into thirty six States and a Federal Capital Territory. The Nigerian Constitution of 1999 grants States a high degree of autonomy and financial independence from the Federal Government. States receive most of their (primarily oil) revenues as 'statutory transfers' according to a sharing rule that has exhibited a high degree of stability in recent decades, and can only be changed by the National Assembly. States control over half of consolidated budgetary revenues in the country, and state-level initiatives are extremely important for the country's development.