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We attended a briefing at the Business Council for International Understanding last week at the IMF/World Bank spring meetings in Washington DC. Nigeria was the focus and Lagos stood out as the poster child. The briefing was well attended by Lagos State government officials including the governor.
Last year GDP for Lagos State stood at US$92.9bn (data drawn from the state’s own statistics). The population is currently estimated at 24.8 million with a rapidly growing middle class, pointing towards a huge consumption market. The keynote speaker, Governor Ambode, gave useful insights into investment opportunities within Nigeria’s commercial hub.
Based on data from the UN, as quoted by the governor, Lagos receives 80 visiting individuals per hour. As such, he disclosed that transportation features on the priority list of his administration’s agenda. There are ongoing conversations geared towards developing integrated multi-modal transport systems (roads and waterways).
Power supply shortages remain a key issue not just for Lagos but the country in general. However, to encourage business activities generally as well as manufacturing within the state, a few energy projects have been initiated. The governor discussed Island Power, a US$16m power project expected to generate 9.7MW.
Investment opportunities within the tourism sector also cropped up and delegates seemed enthusiastic. Lagos State is culturally rich and has not fully capitalized on converting this positive into tourist attractions. Rather than a replica of Disney World, the authorities and/or the private sector could develop a tourist center that captures the state’s cultural characteristics.
Lagos is one of the country’s largest markets for agro-products, and we learned during the briefing from a senior Uber executive that the company is currently developing an app for tomato transportation into Lagos. Tomato distribution across the country is challenging: it is often said that half of the locally produced tomatoes rot before getting to end-users.
The Lekki free trade zone was also covered at the briefing. Incentives are available to increase investors’ appetite. These include zero-tax on rental income during the pioneer period; zero-duty on the purchase of power generation equipment; and one-stop approval for all permits, operation licenses, and incorporation papers.
Lagos State has consistently achieved the highest internally generated revenue/total revenue ratio over the past few years. Based on the most recent CBN data, in 2015 the ratio stood at 69%, compared with 53% and 50% for Enugu and Ogun respectively.
The Lagos State government is to be applauded for its efforts to attract investment into the country. However, for Nigeria to achieve inclusive growth, all other state governments need to identify their comparative advantage, develop it, and create favorable conditions for local and offshore investors.