Lagos global unveiled
The Lagos State Government formally presents LAGOS GLOBAL, a one-stop shop for investors aimed at making Lagos State the most desirable investment destination in the world, while enhancing the ease of doing business in the state. CNBC Africa’s Wole Famurewa spoke to Professor Ademola Abass, Special Adviser to the Governor for the Office of Overseas Affairs and Investment to get insight into the vision for Lagos Global.
FAMUREWA: Start by helping us appreciate the investment opportunities that Lagos provides. Lagos is the fifth largest economy in Africa, by far the most populated state in Nigeria. Where are the investment opportunities people need to be aware of in the state?
ABASS: Lagos is the commercial capital of Nigeria. It’s the 5th largest economy in Africa. The GDP is currently at $136 billion and it’s still rising. Lagos has got at least 22 million people in the state, and 5 million of those 22 Million are in the middle class range, which means they have huge purchasing power. In terms of doing business, Lagos State is the place to be on the continent. It is the fastest growing economy in Africa. If you are an investor looking into Africa, you will think first about Lagos, before you think of any other place. In terms of investment opportunities in Lagos, there are quite a few, traditional opportunities and new opportunities. Lagos is one-fifth water so it is unfortunate that we still rely heavily on land transportation. Water transportation is an area Lagos is encouraging massive investment into. If we could take a third of our commuting population through water on a daily basis, that would reduce the stress placed on our roads. We have to look at it in terms of where Lagos is and where Lagos is going to. As the economy of Lagos grows, it is becoming a magnet for people from other states in Nigeria.
Urbanization is happening in Lagos at an exponential rate. This means there is going to be more pressure on the roads. More cars are coming in, so we have to make use of an intermodal system starting with water. We also have rail. By December this year, our Blue line rail system will start working. We have other lines in the pipeline that we are working on, the Red Line, for example, is another area to invest in. Lagos also has oil reserves. It hasn’t tapped into this, for good reasons. This may not be the best time to invest, given the oil price volatility. In Nigeria, we have learnt that it is dangerous to rely on a single economy. What we are doing in Lagos State is to diversify the economy. We are going massively into the agriculture sector and encouraging a lot of investment in this area. We can talk about energy. Lagos is in need of around 4,000 megawatts for consumption, but what we produce today is around 1000 megawatts. This is an area that provides opportunities for investors to come in. We have opportunities in solar energy. We have different levels of energy systems that we are hoping to tap into. There is a huge gate of opportunity for investors to come in.
FAMUREWA: Lots of opportunities and your office hopes to be the magnet to manage those relationships with foreign investors. As you unveil the Lagos Global initiative today, what are the expectations?
ABASS: We presented Lagos Global to the public. The vast majority of Nigerians and Lagosians in particular, did not know about us. This is our opportunity to tell the world what we do. We have a huge diplomatic community in Nigeria; we want them to know what Lagos Global does. Corporate Lagos must know what Lagos Global does. This event presented an opportunity to tell the public who we are and where we are.
FAMUREWA: Was this just for information purposes? What services will Lagos Global provide to investors?
ABASS: There is a wide array of services we are going to provide. Lagos Global is branded as a One-Stop Shop for would-be investors. All the necessary interactions for investors will take place in one location. If they need to apply for land permits, or any other permit at the state level, or from the federal level – custom and exercise, or resident permits, they have to come through Lagos Global. We will be able to anchor it from one office so that investors don’t have to go around. This will reduce processing time significantly.
FAMUREWA: Bureaucracy in terms of dealing with National and State Governments is a big issue. How will this office make processes easier, quicker and more efficient?
ABASS: That is a very important question and I understand the concern around Bureaucracy. One thing we are trying to do and we’ve been doing since we started this office about nine months ago, is first and foremost to ensure we create immediate access for would be investor. If Lagos Global is all about the ease of doing business in Lagos state, we must start with easing access to the Lagos State Government itself. We create access for everyone who wants to invest in Lagos State. By doing this, we will cut down bureaucracy firstly in terms of the response time. Secondly, we work hand-in-hand with other departments. As an example, land registration in Lagos State used to have a reputation in the past that has been reconfigured completely today and Lagosians will be able to apply for land permits, from C of O down to Consent, through an online channel. I cannot speculate as to whether it would take one day or two days, but I can tell you it’s no longer a case of 30 or 40 days to get a permit. We are no longer talking about weeks or months, we are talking days. This is cutting down the bureaucracy.
FAMUREWA: What is the philosophy that underlines this initiative? Is this more commercial or is it a partnership? You mentioned the issue of lands. Is the government willing to organise some type of partnership with potential people who can develop land for real estate purposes. Land in Lagos can be expensive, but we can get investors stimulated through partnership agreements that would reduce cost.
ABASS: That is true. Land is very expensive in Lagos. It’s the Oil of Lagos and it is in limited supply. Yes, the Government is in partnership with investors in various forms. A foreign or local investor might say this, “I want to invest in Lagos State, but I need a parcel of land”. The Government may decide to contribute land as their own equity or the investor can buy the land. The question for the Government is “what is in it for us?”? Is it empowering and creating jobs for our people? That is the end game and that is the target purpose. Investors need to make profit but the bottom line is you must create jobs for our people because when that happens, the GDP of Lagos will increase. The more investment we have in Lagos, the bigger our GDP becomes and the more job opportunities we are able to create for our people. That is the underlying philosophy. Whatever vehicle we subscribe to achieve that partnership, the most important thing is that we keep our eyes on the end game, which is to create multiple jobs.
FAMUREWA: So, you want investors with ideas that could create for example, 1000 to 2000 jobs.
ABASS: Even if it’s going to create one job or two jobs, bring it on.
FAMUREWA: I know the state has received some level of interest from foreign investors recently. Help us appreciate the level of interest that we are seeing now, because many people think its all doom and gloom with respect to the Nigerian economy. What are those investors telling you?
ABASS: That brings me to the second part of the mandate of my office. We have been talking about investment so far, but do not forget, this is the Office of Overseas Affairs and Investment. The Overseas Affairs part combines having diplomatic missions, political personalities from foreign countries visiting the Lagos State Government. It is the responsibility of Lagos Global to anchor that. We are not a Foreign Affairs Ministry. I must clarity that. We don’t deal with consular relations, or anything of the sort, that is dealt with by the Federal Government. If someone is coming from overseas to Lagos State to visit the Governor of Lagos State, we anchor it. We organise it. Sometimes, when a diplomat is coming to see His Excellency, he or she is coming to prospect for investment opportunities. Thus, the two mandates become one. Somebody asked me the other day, where do we get the money to do these projects in Lagos State? What we did as a Government was to do a financial reengineering of the State because we anticipated what will come down the road and we planned for that and thankfully, it’s beginning to pay off. I think investors see that. When everybody is cutting down on their budget, we increased our budget and we are funding it using 75% of our IGR. That is significant. We are not dependent on subventions from the Federal Government or oil. An investor is happy to see that he or she is putting money in an economy that is stable.
They look around and see that we still have our IGR and that sustains the economy. In the past, Lagos was able to run itself for three years without subventions from the Federal Government. Lagos has built a phenomenal reputation of being able to stay stable economically and that can only be good news for investors. That is why they keep coming.
FAMUREWA: What about the challenges the business environment presents, the foreign exchange restrictions being one?
ABASS: There are many challenges on the ground today in Nigeria. In terms of the volatility of foreign exchange, investors naturally show concern about the fact that there is instability in that space. They are also concerned about the fact that they may have one or two issues with evacuating their profits when they invest in the country. We acknowledge that but it is important to note that all these are temporary measures. They are not measures that will last forever and I think investors know that. Nigeria is not in a peculiar situation. In any country where you are trying to make some adjustments within your system because of your financial indiscipline in the past, certain measures have to come. Investors are very smart; they know that if they come in now, eventually, things will stabilize. By the time everyone is trying to come in, they are already in. They don’t want to miss the train. They look beyond the temporary challenges and see the opportunities. They know that this is still Africa’s largest economy by far. This state has a GDP that is equal to 42 small states in Africa. This state has a GDP that dwarfs Kenya and Ghana’s GDP put together. This tells investors that there is stability in the broad financial sector even if there are foreign exchange volatilities.
FAMUREWA: Perhaps you could share your experience, because I know that prior to you starting this job, you worked in the United Nations. You have seen how things are done elsewhere in the world, and in other African countries. What are the lessons we can learn in terms of the cycles that you speak of, for those who want to invest long-term?
ABASS: Yes, I worked with the UN for some years. I have experience working with the African Union and I was consultant for the European Union at some point. What is important in all this is that, I undertook projects with some colleagues, security sector reforms with some countries in Africa, and that was when I began to see why countries like China got a strong foothold in Africa. There were challenges in countries like Liberia and Sierra Leone and a lot of traditional supporters stayed back. Countries like China came in to provide whatever support they could so by the time everything calmed down and everybody was trying to come in, China already secured a firm foothold. Where everybody saw a challenge, China saw a huge opportunity. I took that lesson from the UN and from the other organisations I have worked for, and I said that is the way to go with Lagos Global. The challenges are going to be temporary, just like with the war in Liberia, the crisis in Sierra Leone, the war in Congo, and the genocide in Rwanda. Back in 1994, Rwanda lost almost one million people. Today, they are probably the cleanest country in Africa, they are dubbed, the Geneva of Africa, due to the way they do business. Investors went there and they still go there because they saw the challenges as a platform for greater opportunities. That is the lesson we have to learn as a State, and that is what my Office is telling investors. Thankfully, they are coming in droves to invest in Lagos State.
FAMUREWA: Let’s talk about the relationship between the State Government and the Federal Government. This is the first time we are seeing the same party in power in Lagos State and on the Federal level for many years. Tell us your thought about the significance of this and how does this make your work easier.
ABASS: There is synergy between Lagos State and the Federal Government today. This is the first time in 16 years that the same party would govern the State and Federal Government. That can only be good for Lagos State and for the Federal Government too in a lot of ways. It is much easier today for us to liaise with our colleagues on the federal level, whether it’s the Ministry of Interior or Ministry of Foreign Affairs. Whatever we need to do on the federal level, we feel more comfortable to do because these two governments are produced by the same party and it’s a party that has the same vision. When there is no disparity in your vision, there is unanimity in your purpose and your outlook. We are working well with our federal colleagues and with federal institutions. This is a great thing for investors coming to the State and to Nigeria.
FAMUREWA: Let us focus on the obvious opportunities that we are seeing in Lagos. There is agriculture and I want to hear your vision for that; the opportunities that you see for investors to come into that space. Beyond that, we have the Free Trade Zone in Lagos. We already know that Dangote group has invested there. What is the potential for more investments to flow in this way?
ABASS: We are diversifying our economy. We want to expand our agricultural economy in Lagos State. We have land in Lagos, fertile land. We have land for agriculture and we have huge investment interest in that sector.
FAMUREWA: Local or Foreign:
ABASS: Mostly foreign. There is local interest of course, but more from the foreign countries. We are talking about people who want to invest in areas like rice production, in agricultural produces, in cattle rearing and so on. One of the things we are hoping to do is to have an agricultural park in Lagos where things can be manufactured and canned in a single park. That would be a good for our economy. You mentioned the Lekki Free trade Zone. Yes, Dangote is there, but it’s important to also bear in mind that Lagos does not own the Free Trade Zone. It belongs to a consortium of companies. Lekki Free Trade Zone is a fantastic showpiece but what we are trying to do in Lagos is to open up the city completely to other axis. There is land in Badagry, Epe, and Ikorodu too.
FAMUREWA: Let’s talk about that axis, because as you mentioned, there is a lot of focus on the cosmopolitan cities within the state, yet there is so much more. What more can the Government do in those areas?
ABASS: A lot. We can have agricultural parks in those places. There is no reason why we shouldn’t have an airport on the Lekki axis or in Epe. Nothing stops us from having three airports in Lagos State. London is about half of the population of Lagos state. London has five airports, Heathrow, Gatwick, City, London Luton and London Stansted. We want to take major investment to this axis. Investments in Victoria Island or Ikoyi can also be in Badagry, Ikorodu or Epe. This government campaigned as a government of inclusiveness. We are going to take the government back to the people, to all Lagosians. We will take investment to every nook and cranny of the state.
FAMUREWA: What are the assurances that you can provide? What is legislation doing to help this? Investments are long-term oriented but governments change from time to time. Why should investors be assured that if they bring their money in now, the next government will support whatever has been agreed in the past?
ABASS: That is a very important question. A lot of investors are concerned about the instability of policy in Africa. What we are trying to do in Lagos State, is to make sure that we use legislation to back up our investment. So that it doesn’t matter which government comes or leaves, the sanctity of your investment is guaranteed. That is why this government prides itself on the strong enforcement of the rule of law and I am sure Lagosians are beginning to see that in some of the things we are doing. The other day, we launched a mobile court to cut unruly activities we see on the highway. The government is getting stronger and stronger in the rule of law and we are undertaking massive reforms, justice sector reform and security sector reform. All these can only strengthen the capacity and capability of our legislation to protect, not just investors, but also to protect Lagosians. At the end of the day, the basic function of a government is to provide for the people and to secure them. That is why for us, security is extremely important for investors.
FAMUREWA: So in other words, you are telling investors that if they bring in money, regardless of the change in government, they can be assured that nothing is going to change.
ABASS: Definitely, your investment is guaranteed. We are doing a lot to support the police in Lagos State to up the activities of our security agencies. In December last year, Lagos State provided about N4.7 billion worth of support to the police. Although, the police belongs to the Federal Government, their activities impact Lagosians, so our government is supporting them. We are supporting our security agencies, and that can only be good news for investors. There’s also the “Light Up Lagos” initiative. Today, Lagos is brighter. Where there is light, dark forces will not be able to hide. So it’s not just security of person, there is also security of investment. That is guaranteed.
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