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Why Lagos, The Anchorage Of African Economy, Is Investment Destination Of Choice, By Fashola In UK
…Once thought to be ungovernable, Lagos has a new story to tell says Lord Malloch Brown

Oct 5, 2012 - Lagos State Governor, Mr Babatunde Fashola (SAN) on Friday told a gathering of capital investment experts and corporate leaders in the United Kingdom that Lagos beckons as a strategic investment destination within the new African emerging markets frontier,

The Governor who spoke at the Royal African Society Business Breakfast in London invited the investors to engage his administration in a partnership that provides enormous return on investment while the government provides the infrastructure that secures the future of Lagos in this present decade.

With an introductory remark earlier by the Chairman of the Royal African Society and former Minister for Africa , Asia and the United Nations ,Lord Mark Malloch-Brown who recalled that Lagos was a city once thought ungovernable which however with the significant changes in the past few years now has a new story to tell with opportunities abounding, Governor Fashola highlighted in his address how the administration has turned the state's adversities into opportunities for prosperity through a comprehensive infrastructure renewal programme which still offers great capacity for participation by discerning investors.

He asserted that Lagos has a people with unlimited capacity for entrepreneurship which will provide tonic for many foreign investors to move capital in human and financial resources to the State.

Governor Fashola's speech focused on four areas requested by his hosts which included how the State finances the expectations of citizens, the infrastructural challenges of the State, the level of autonomy that states enjoy in the Nigerian federation and the existence of initiatives for public private partnership and foreign investors.

He informed that the problem of sanitation and management of tons of solid waste generated daily by millions of inhabitants which gave the state an unsavory reputation has become a story of opportunity.

He added that the opportunities have evolved jobs for over 7,000 refuse managers and street sweepers for whom sanitation employment is now an extra job in addition to whatever they already have.

The initiative, according to the Governor, has yielded dividends in more ways than one. "This has translated to prosperity for a new class of refuse truck compactors owners, who through the State Government guarantees, have accessed loans to buy and own trucks and employ drivers who haul our solid waste to the landfill sites".

"Of course, because of our size and the success of our waste management initiatives, we now consult for some Nigerian cities and a few African countries that still have the problem that we once had", the Governor stated.

This and several other programmes of the administration has had a more profound impact in terms of the willingness of the citizens to fulfill their own part of the social contract.

"But one of the biggest changes is the increasing willingness of citizens to pay personal income taxes. The word on the streets is that they can see what Government is doing and how much more it can do when they fulfill their part of the social contract.

"This perhaps has been a major signpost of our democratic experience in Lagos. It has validated the age long theories of representational democracy, and legitimacy as the basis of taxation…

"So taxes have accounted for about 70% of our annual revenues for budgetary expenditures that annually stand at N450 billion, approximately $2,813 billion," Governor Fashola explained.

Speaking on the infrastructural challenges of the State, the Governor said the state does not have enough money to deal with the challenges that it faces as it is the destination for rapid migration "not only from the other 35 states but from many parts of near and far flung African countries".

"Our population is growing faster than the infrastructure could support it. Many new babies were coming who needed hospitals to be born in, schools to attend and there were many adults who were buying cars and needed roads to be built for them to drive on, not to talk of the new businesses that required water supply, power supply, security, waste water treatment and other support by way of public infrastructure".

He explained that from the first full budget in 2008, the administration decided to spend its limited resources in the reduction of the infrastructural deficit by re-ordering its budget priority to commit 60 percent to capital expenditure and 40 percent to recurrent expenditure. This has continued through 2009, 61.39 percent; 2010, 57.43 percent, 2011, 56.44percent and 2012 52.48percent.

Governor Fashola said the result of the scrupulous budget implementation is evident in the massive construction of roads, drainages, schools, hospitals, jetties, bridges, an intra city rail and housing estates, the jobs, the relief, the prosperity and the hope which is the evidential basis for the story of change which everyone hears about Lagos.

However the capacity to do more suffers a constraining limitation engendered by the nation's current constitutional provisions as Governor Fashola explained that Lagos contributes the largest in GDP than any of the 35 other states while revenues from port charges, VAT and other commercial ventures hosted in the state is not shared with the commensurate derivation principles that apply to oil producing states.

He said life would certainly be easier and probably better, if Lagos as a former national capital and now a commercial capital is granted a special status and funding like has been done in other countries like America, Brazil and Germany to mention a few.

"Regrettably, the constitutional limitation partly, and the partisan implementation of its provisions have not promoted the longer term national benefit of the prosperity of Lagos in the minds of some of our national political leaders. I must emphasize that it is some, not all of them: because, not only is Lagos a first or second home to many of them, it is home to all ethnic nationalities in Nigeria and parts of West Africa".

Governor Fashola stated that on public private partnerships, the support that is lacking at home through national government institutions have been forthcoming from the private sector locally and offered from abroad through investments and partnerships that are helping to address infrastructure challenges in a way that is beneficial to the state and the investing partners.

According to the Governor, because the government honours its commitment to its partners, her credibility enabled her raise bonds locally from the capital market and finance its capital budgetary commitments through public private partnerships aided by strategic legislative intervention made in collaboration with the State parliament that have produced a PPP law, a Lagos Court of Arbitration Law, a Security Trust Fund Law, a Public Procurement law and similar business support legislations.

Against the backdrop of the achievements and fiscal discipline which resulted to the widely acclaimed positive changes attested to by no less a personality than the British Prime Minister, David Cameron during his visit to Lagos as well as the regulatory framework already put in place to support investments, Governor Fashola gave an insight to the task ahead, urging the investors to take the opportunities to come on board.

"We have moved from ambition to achievements. We have recorded progress which some consider extra-ordinary. It is the people, not the successes that are extra ordinary. Therefore, there remains in my view a lot more extra-ordinary successes, to be delivered by the extraordinary people of Lagos."

"In the area of water supply, there is still a gap of 45percent and there is immense opportunity for private partnership working with the Lagos Water Sector Regulatory Commission while in waste water and sewage management, the same opportunity exists to bridge a deficit of about 85percent".

"There are still several toll roads to build, ferry terminals to manage, ferry routes for operation by concession as there exists a new Lagos Airport to build and manage. Only two large size malls of about 20,000 square meters exist in Lagos for over 20 million people, while Johannesburg has over 70 (Seventy) malls for about 4 million people. We are currently constructing 1 (one) intra-city rail service out of 7 (seven) on the master plan", the Governor explained.

He added that the appetite for competitively priced housing is huge, and can become monumental if backed with mortgage payment opportunities.

The well received Business Breakfast presentation was followed by a robust question and answer session. lt had in attendance several notable corporate stalwarts including the Chairman of PZ Cussons, Mr Richard Harvey, the Chief Executive Officer of Stanbic IBTC-Standard Bank, Mr Christopher Newson, members of the Royal African Society and some members of the Lagos State Executive Council including the Commissioner for Finance, Mr Tokunbo Abiru, his Housing and Energy and Mineral Resources counterparts, Mr Bosun Jeje and Mr Taofik Tijani as well as the Special Adviser on Taxation, Mr Bola Sodipo.


 

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