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More than just an economic hub

Article - December 10, 2012
Nigeria's commercial capital is set to convert it into a leading emerging economy
Lagos is widely accepted as the economic hub of not just Nigeria but of West Africa. Its population of some 18 million people includes Lagos State, as the area is a series of islands and waterways connected by bridges, roads and ferries.

However, Lagos’ chief task right now is not just to strengthen its hub status, but to also help convert the emerging economies known as BRICS (Brazil, Russia, India, China and South Africa) into BRINCS – with the addition, of course, of Nigeria. In fact the theme of the sixth Lagos Economic Summit 2012 was “From BRICS to BRINCS: Lagos Holds the Key”.

It is widely thought that Nigeria could be among the world’s 20 leading economies by 2025 – but the summit stressed that the key factor behind this achievement will be Lagos and its economic importance to Nigeria.

Lagos State Governor Babatunde Fashola stated that the summit was focused on four key sectors – power, agriculture, transportation and housing (PATH) – and that “the path that will lead Nigeria to BRINCS is embedded in the state”. To stress the point, he added that the summit was intended to increase investment inflow to Lagos to help the country achieve “our ‘path’ to economic greatness.”

Mr Fashola recalled that Lagos is home to 2,000 industrial complexes, 10,000 commercial ventures and 22 industrial estates, and it contributes 30 per cent of the nation’s GDP.  

The Governor added that Lagos accounts for 60 per cent of Nigeria’s industrial and commercial activities, 70 per cent of national maritime cargo freight, over 80 per cent of international air traffic, and more than 50 per cent of Nigeria’s energy consumption.

Ben Akabueze, Lagos State Commissioner for Economic Planning as well as Chairman of the Lagos Economic Summit Group, noted that Lagos State consumes some 45 per cent of the country’s petroleum products, adding “40 per cent of bank branches are in Lagos because of the high level of business activities here, and over 40 per cent of the telecoms subscriber base is in Lagos.”

More data underlining Lagos’ importance to the Nigerian economy included the fact that Lagos’ two big electricity distribution companies, Eko and Ikeja, account for 50 per cent of transmission power of the 40,000-employee Power Holding Company of Nigeria (PHCN) – a former public company that was privatised this autumn.

“All these point to Lagos as the economic nerve centre of the country,” Mr Akabueze added. “So if Nigeria is being rated as one of the major players in the emerging markets, then you will agree with us that Lagos holds the key.”

Economic analyst Opeyemi Agbaje pointed out that “Lagos is not an oil producing state, but because of its financial strength it dominates in many other sectors.”

During the 2012 summit, Trade Minister Olusegun Aganga explained that for Nigeria to be among the major emerging economies, the partnership between the federal government and Lagos State is critical in light of Lagos’ dominance of the country’s economy.

Former US Energy Secretary and Governor of New Mexico, Bill Richardson, acknowledged Lagos’ economic importanceand emphasised that Nigerians must have good access to electricity, because that remains a “catalyst for national development”.

A clear sign of Lagos’ economic dominance came on 23 November when Lagos State issued an 80 billion naira (£314 million) bond maturing in 2019 at 14.5 per cent to fund infrastructure projects. It is the biggest sub-national bond ever issued in Nigeria, and is just the first tranche of a 167.5 billion-naira debt programme.

The bond will benefit such ongoing projects as the Lagos-Badagry highway, the Blue-line rail corridor, ferry terminals and the construction of health institutions, among others. Analysts point out that Lagos has an economy bigger than some African countries, but it has serious infrastructure problems connected to inter-state traffic.