Nigerian economy: Why Lagos works

In a country that is a byword for poor governance, Lagos is thriving — attracting investment and private enterprise. So what can the rest of Nigeria learn from it?
© Getty Images. A bustling market on Lagos Island
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David Pilling in Lagos MARCH 25, 2018
Just to the east of Lagos, in the rapidly expanding new city of Lekki, a huge industrial project is taking shape. The Dangote oil refinery, with a capacity of 650,000 barrels a day, will cost at least $12bn to complete and be the biggest refinery of its type in the world.

As well as producing enough petrol and kerosene to meet the entire demand of Nigeria’s 180m people, there will be some left over for export, according to Aliko Dangote, chairman and chief executive of the company behind the project. A separate fertiliser plant will start producing 3m tonnes a year of urea in the next few months, enough to meet the current needs of Nigeria’s farmers, while a petrochemicals factory will make a combined 1.3m t/y of polyethylene and polypropylene.

The scale and audacity of a project that will suck up a third of Nigeria’s daily oil production and tilt the country’s import-export balance has invited naysayers. Some doubt whether even Mr Dangote can pull off a feat that has long eluded Nigerian governments. Yet Mr Dangote, whose company dominates Nigeria’s — and much of Africa’s — cement industry, has a formidable record of delivering at scale.

If all goes to plan, when the refinery enters production in the first quarter of 2020, it will address many of the structural problems that have cursed Nigeria since it discovered huge quantities of oil 50 years ago. Because the country exports crude and imports refined products that are subsidised by the state, a plethora of dealers and middlemen has sprung up to make easy fortunes out of the arbitrage opportunities.


Aliko Dangote is the chairman and CEO of a company that is building a $12bn oil refinery © Bloomberg
Mr Dangote says his refinery will save Nigeria billions of dollars in foreign exchange and remove the pickings that have benefited generations of entrepreneurs diverted from production to speculation — something that is likely to make him enemies. “Nigeria has been trying to make refineries work for a very, very long time,” he says. “I’m a great believer in Nigeria because the opportunities here are enormous. But we need to have consistency in government policies.”

That it has taken a Lagos-based businessman — and not an Abuja-based politician — to tackle so fundamental an issue says much about what is wrong with Africa’s biggest economy. Yet it could also hint at what is going right. Mr Dangote is a symbol of what private enterprise can achieve if it is provided with the right incentives. Though a northerner by birth, he also represents a real Nigerian success story: Lagos.

Since the federal government moved to Abuja in 1991, Nigeria’s former capital and commercial hub of roughly 20m people has taken off. Starting in 1999, with the election of Bola Tinubu, a former Mobil Oil executive, Lagos has had three administrations that have harnessed the private sector to turn the city into the most productive and dynamic part of Nigeria’s economy. It was by offering Mr Dangote tax incentives in the Lekki free trade zone that the state persuaded him to build his refinery in Lagos.

Lagos state output in 2017 was $136bn, according to official estimates, more than a third of Nigeria’s gross domestic product. The city is the centre of most of the country’s manufacturing and home to a pan-African banking industry as well as a thriving music, fashion and film scene that reverberates around the continent. More recently, it has become a tech hub to rival Nairobi’s so-called Silicon Savannah.

https://www.ft.com/content/ff0595e4-26de-11e8-b27e-cc62a39d57a0

PERFECT...!
CC: FARON CC: SEUN

MiddleDimension:
Nigerian economy: Why Lagos works

In a country that is a byword for poor governance, Lagos is thriving — attracting investment and private enterprise. So what can the rest of Nigeria learn from it?
© Getty Images. A bustling market on Lagos Island
Share on Twitter (opens new window)
Share on Facebook (opens new window)
Share on LinkedIn (opens new window)
Share on Whatsapp (opens new window)
Save
Save to myFT
David Pilling in Lagos MARCH 25, 2018
Just to the east of Lagos, in the rapidly expanding new city of Lekki, a huge industrial project is taking shape. The Dangote oil refinery, with a capacity of 650,000 barrels a day, will cost at least $12bn to complete and be the biggest refinery of its type in the world.

As well as producing enough petrol and kerosene to meet the entire demand of Nigeria’s 180m people, there will be some left over for export, according to Aliko Dangote, chairman and chief executive of the company behind the project. A separate fertiliser plant will start producing 3m tonnes a year of urea in the next few months, enough to meet the current needs of Nigeria’s farmers, while a petrochemicals factory will make a combined 1.3m t/y of polyethylene and polypropylene.

The scale and audacity of a project that will suck up a third of Nigeria’s daily oil production and tilt the country’s import-export balance has invited naysayers. Some doubt whether even Mr Dangote can pull off a feat that has long eluded Nigerian governments. Yet Mr Dangote, whose company dominates Nigeria’s — and much of Africa’s — cement industry, has a formidable record of delivering at scale.

If all goes to plan, when the refinery enters production in the first quarter of 2020, it will address many of the structural problems that have cursed Nigeria since it discovered huge quantities of oil 50 years ago. Because the country exports crude and imports refined products that are subsidised by the state, a plethora of dealers and middlemen has sprung up to make easy fortunes out of the arbitrage opportunities.


Aliko Dangote is the chairman and CEO of a company that is building a $12bn oil refinery © Bloomberg
Mr Dangote says his refinery will save Nigeria billions of dollars in foreign exchange and remove the pickings that have benefited generations of entrepreneurs diverted from production to speculation — something that is likely to make him enemies. “Nigeria has been trying to make refineries work for a very, very long time,” he says. “I’m a great believer in Nigeria because the opportunities here are enormous. But we need to have consistency in government policies.”

That it has taken a Lagos-based businessman — and not an Abuja-based politician — to tackle so fundamental an issue says much about what is wrong with Africa’s biggest economy. Yet it could also hint at what is going right. Mr Dangote is a symbol of what private enterprise can achieve if it is provided with the right incentives. Though a northerner by birth, he also represents a real Nigerian success story: Lagos.

Since the federal government moved to Abuja in 1991, Nigeria’s former capital and commercial hub of roughly 20m people has taken off. Starting in 1999, with the election of Bola Tinubu, a former Mobil Oil executive, Lagos has had three administrations that have harnessed the private sector to turn the city into the most productive and dynamic part of Nigeria’s economy. It was by offering Mr Dangote tax incentives in the Lekki free trade zone that the state persuaded him to build his refinery in Lagos.

Lagos state output in 2017 was $136bn, according to official estimates, more than a third of Nigeria’s gross domestic product. The city is the centre of most of the country’s manufacturing and home to a pan-African banking industry as well as a thriving music, fashion and film scene that reverberates around the continent. More recently, it has become a tech hub to rival Nairobi’s so-called Silicon Savannah.

https://www.ft.com/content/ff0595e4-26de-11e8-b27e-cc62a39d57a0

lagos works cos its a port

mikolo80:
lagos works cos its a port

there arr other ports also

name them

MiddleDimension:


there arr other ports also

Why am I not surprised that there are already people trying to discount this factual, insightful Financial Times article - which they clearly haven't even bothered to read - by throwing up the same old tired excuses that are easily disproved with just a little research (which they can't be bothered to do)? Anything to protect that fragile sense of tribal pride, even when there are useful economic lessons to be drawn if only one were humble enough to pay attention ...

In any case, the following continues the article where the OP left off:

The Lagos economy is significantly bigger than that of the whole of Kenya, east Africa’s most dynamic country, with a nominal per capita income of more than $5,000, more than double the Nigerian average. The population, just 1.4m in 1970, has nearly doubled from 11m a decade ago as thousands of people arrive each day to seek a better life.

“In the past 18 years, Lagos has transformed,” says Lamido Sanusi, a former central bank governor. “In terms of roads, in terms of infrastructure, in terms of governance, in terms of a general investment environment, in terms of security, the government has given people a greater opportunity to thrive.”

Mr Sanusi, who is now the Emir of Kano, a city in the less prosperous north, says Lagos has provided a template for the whole of Nigeria. “That is what we need at the national level.”

Tayo Oviosu is chief executive of Paga, an electronic banking service and one of dozens of start-ups that have taken root in the city. Many are concentrated in the Yaba district of Lagos, where the state government installed a fast broadband network to help start-ups. He traces Lagos’s dynamism back to the turn of the century when the federal government, under President Olusegun Obasanjo, was refusing to pay Lagos its full allocation of oil revenue. “That forced Lagos to look within,” says Mr Oviosu. “It had to focus on raising its own revenue and doing its own thing.”

The relative success of Lagos, a city as dynamic as many of the booming cities of Asia, has mostly been lost in the less uplifting story of Nigeria. The potential economic powerhouse of the continent, the country has all the ingredients for success. A huge population gives it the scale other African economies lack. It is a coastal trading hub and the world’s sixth-biggest oil exporter.

Yet time and again, it has fallen short. Even in the boom years, when oil revenues were pouring in, the state failed to provide the basic building blocks of development. Largely on the back of high oil prices, the economy grew rapidly for the first 15 years of this century, which coincided with the re-establishment of civilian rule from 1999. But successive administrations, either through incompetence or corruption, have missed the opportunity. Few ordinary Nigerians felt the impact of fast growth.

State education has been starved of funds. The health system is a shambles and the elite, including most recently President Muhammadu Buhari, seek top-level treatment abroad.

Critics of President Muhammadu Buhari say he is the latest in a line of politicians who have failed to grapple with his country's problems.

Physical infrastructure is just as poor. Generation capacity of about 7,000MW brings sporadic power to a fraction of the population, leaving at least half of Nigerians without electricity supply. Businesses need their own generator to secure a reliable supply. The oil industry has sucked oxygen from the economy and pushed the naira to uncompetitive levels. At 3.5 per cent of GDP, the tax base is pitifully low and most of the country’s 36 states, with the exception of Lagos, depend almost entirely on federal oil revenue.

The security situation is not much better. Though Mr Buhari has prioritised the defeat of Boko Haram, the militant Islamists who had taken territory in the north-east, they are far from defeated. Mr Buhari has also had to contend with attacks on oil installations in the oil-rich Delta region, a secessionist movement in the south-east and violent clashes across the country between herdsman and settled farmers.

As if this were not bad enough, Nigeria is recovering from its deepest recession in 25 years, a result of a fall in oil prices from 2014. Anaemic growth returned last year, but output is still below 2014 levels, according to Yemi Kale, head of the National Bureau of Statistics.

Kingsley Moghalu, an academic and former deputy governor of the central bank, regards Mr Buhari as the latest in a long line of politicians who have failed to grapple with the country’s structural problems or unleash its potential. “He seized every opportunity to miss an opportunity,” he says.

Against this backdrop, the relative success of Lagos, which pulled out of recession earlier than the rest of Nigeria, looks all the more remarkable. Akinwunmi Ambode, governor since 2015, has doubled down on infrastructure projects and made bold promises to transform the city. This year, he signed into law a pledge to bring uninterrupted power to the whole state, something inconceivable almost anywhere else in the country. The idea is to use the state’s balance sheet to provide guarantees to private electricity generators so that they can build mini-power plants around the city.

“They are literally going to yank themselves off the National Grid,” says Bunmi Akinyemiju, chief executive of Venture Garden Group, a Lagos-based venture capital company. The city, he says, already runs self-contained grids powered by gas, solar and even waste material. “I really believe that, in the next five years, Lagos will have 24/7 power,” he says. The past three governors, he says, have “focused on creating the enabling environment for Lagos to be the mega city it can be.”

mikolo80:
name them

calabar, ph and warri

MiddleDimension:


calabar, ph and warri

commercial or oil and gas

mikolo80:
name them

Calabar port, PH port, Onne port, and Warri port. All in the SS.

ODVanguard:


Calabar port, PH port, Onne port, and Warri port. All in the SS.

they are not deep sea ports
only for evacuating oil

mikolo80:
they are not deep sea ports
only for evacuating oil

Na wah for this your ignorance. Earlier you feigned ignorance of the existence of other ports besides the Lagos ones, asking the other poster to 'name them', as if those 4 ports in the SS region are non-existent or do not qualify to be considered as ports. You and your ilk are fond of regurgitating this stvpid lie about SS ports being used 'only for evacuating oil', when a simple google search would have spared you from making such blatantly inaccurate and unfounded statement. Forumites here have even attested to shipping their goods directly to the SS ports on several occasions.

mikolo80:
they are not deep sea ports
only for evacuating oil

LMAO.

Omofunaab2:



LMAO.

whats funny

ODVanguard:


Na wah for this your ignorance. Earlier you feigned ignorance of the existence of other ports besides the Lagos ones, asking the other poster to 'name them', as if those 4 ports in the SS region are non-existent or do not qualify to be considered as ports. You and your ilk are fond of regurgitating this stvpid lie about SS ports being used 'only for evacuating oil', when a simple google search would have spared you from making such blatantly inaccurate and unfounded statement. Forumites here have even attested to shipping their goods directly to the SS ports on several occasions.

really
ok
so now you have insulted me
has it increased the tonnage shipped through those ports
shety your grammar don beleful you
ok now
continue your movement

ODVanguard:


Calabar port, PH port, Onne port, and Warri port. All in the SS.

dem for de north north na ?

mikolo80:
really
ok
so now you have insulted me
has it increased the tonnage shipped through those ports
shety your grammar don beleful you
ok now
continue your movement

Next time don't just jam-talk out of ignorance about what you know next to nothing about just coz your fellow Igbos have been parroting it up and down.

ODVanguard:


Next time don't just jam-talk out of ignorance about what you know next to nothing about just coz your fellow Igbos have been parroting it up and down.

so if i don't talk
how will i be corrected
will i not remain in the ignorance
better than you that think you know it all
the day google will fail you is coming
now see who is mis yarning
simple goole would've revealed i am not an ipob
be careful what you vomit from your gutter

mikolo80:
dem for de north north na ?

Now that he has educated your dumbass, will you shut the fuvk up and stop regurgitating that lie that other seaports aren't functional now?

mikolo80:
so if i don't talk
how will i be corrected
will i not remain in the ignorance

These are the "things" graduating from schools in this country.

1. Ignorance is not a place, it is a condition.
2. What do you mean by "the ignorance".

mikolo80:
they are not deep sea ports
only for evacuating oil

Do you know oil tankers are generally bigger than container ships? If those ports in the SS can handle tankers............

I must be frank. The Yorubas are very accommodating.

TheCabal:


These are the "things" graduating from schools in this country.

1. Ignorance is not a place, it is a condition.
2. What do you mean by "the ignorance".

these are the 'things' graduating...you go school at all
you pass english waec so?

Qiiiii:


Now that he has educated your dumbass, would you shut the fuvk up and stop regurgitating that lie that other seaports aren't functional now?

coman shut it for me
nonentity like you

TheCabal:


These are the "things" graduating from schools in this country.

1. Ignorance is not a place, it is a condition.
2. What do you mean by "the ignorance".

Look, do not bother yourself with these people. They know what is wrong and what is right. They just don’t care for that. Their aim is simply to pull others down regardless... so, let’s just focus on progressing regardless...

mikolo80:
coman shut it for me
nonentity like you

There is no greater nonentity than the one who keeps arguing after hearing the truth

Plus, you're even potor sef. You're a nonentity by default

Let's say you don't like Google searches ok fine. You can visit NPA website read about ports depth, tonnage moved and type of freight moved. You can also visit Nigerian Bureau of Statistics website. Lastly most colleges have scholarly database to do research on in case your in school or live near university.

mikolo80:
so if i don't talk
how will i be corrected
will i not remain in the ignorance
better than you that think you know it all

Qiiiii:


There is no greater nonentity than the one who keeps arguing after hearing the truth

Plus, you're even potor sef. You're a nonentity by default

Ouch!

Blue3k:
Let's say you don't like Google searches ok fine. You can visit NPA website read about ports depth, tonnage moved and type of freight moved. You can also visit Nigerian Bureau of Statistics website. Lastly most colleges have scholarly database to do research on in case your in school or live near university.

just wanted to hear him defend his point
and got what i was looking for
now i do not need to debate him
just insults from now on since that is the only language he speaks

Qiiiii:


There is no greater nonentity than the one who keeps arguing after hearing the truth

Plus, you're even potor sef. You're a nonentity by default

nonenity like you