The governor of Lagos State was dismayed to learn about the opening of a new hospital in Accra, the capital of Ghana, last year. The name was familiar to her: Investors first came to her city – Africa’s largest – but looked elsewhere when it couldn’t offer the tax exemptions and visa-free entry they wanted.
“It was a tough time for us because of all the things they were asking for at the time. . .[were]deliverables that were only at the federal level, ”Babajide Sanwo-Olu said in an interview with the Financial Times. “Ghana said, we have this, we have this, we can give this. So there was a national conversation versus a subnational conversation.
As Nigeria returns from its second recession in less than five years and facing a second deadly wave of coronavirus, Mr. Sanwo-Olu wants greater autonomy for the country’s commercial capital to enable it to better compete for investment with an African state with a healthy economy. smaller than the megalopolis.
On paper, Lagos, home to telecommunications group MTN, the country’s largest bank and with a population of 22 million, looks more attractive to investors. Lagos State’s gross domestic product of $ 84 billion compares to Ghana’s $ 67 billion, Rwanda’s $ 10.4 billion and Kenya’s $ 95.5 billion. “We sell the numbers,” Mr. Sanwo-Olu said. “We are selling the fact that our market has a huge population.”
But in the first three quarters of 2020, according to the latest available data, foreign direct investment in Nigeria has followed Ghana, whose economy and population are around seven times smaller. Nigeria ranks 131st on the World Bank’s Ease of Doing Business list, compared to Rwanda at 38, Kenya at 56, and Ghana at 118.
Unlike the government of its much smaller neighbor, Abuja focuses less on individual projects across Nigeria’s vast land mass. As a result, Lagos is hampered by Nigeria’s centralized power structure, Mr. Sanwo-Olu said. “We have to have real federalism,” including a state police force, he said.
Governance in Nigeria is highly centralized, with the federal government effectively controlling everything from taxation to natural resources and the electricity sector. States have limited authority over their governance and policymakers have advocated restructuring that would transfer more power.
Since independence in 1960 and even after the return to democracy in 1999, the Nigerian federal government has acquired ever greater powers, according to Nkasi Wodu, a Nigerian lawyer. This is in part due to the country’s dependence on oil, which is controlled by the national government and which provides the majority of federal and state revenues – with oil revenues allocated by Abuja to the states.
“The result was the creation of a gargantuan political entity with a concentration of power in the center and in underdeveloped states,” Mr. Wodu wrote for the Council on Foreign Relations last month.
Mr. Sanwo-Olu and other state governors have long complained about a lack of autonomy, and he argues that he has tried to improve the business environment where he can.
Lagos has reduced costs and waiting times for building permits and built a stronger contract dispute resolution system, he said. But the city cannot grant tax holidays to businesses or even issue its own driver’s licenses, and the police are controlled centrally, he complained, adding: “We would certainly have done a lot of things faster. , faster, better. ”
Nigeria’s centralized police system has come under scrutiny. Last fall anti-manifestations of police brutality swept the country under the #EndSars banner – a reference to the infamous Federal Special Anti-Theft Squad – resulting in a violent crackdown on protesters in Lagos.
Leaders of the National Assembly said last year they would consider an amended constitution that would give more autonomy to Nigeria’s 36 states. Progress has been slow – a series of bills received second reading in 2020 – but the proposed changes should be ready for consideration this summer.
However, the responsibility for much of the dysfunctions in Lagos, such as traffic jam in its ports, are the responsibility of both state and federal governments, while public transport issues are the responsibility of state authorities, said Cheta Nwanze, partner at consultancy SBM Intel.
“Greater autonomy is a necessary discussion,” he said. “But to blame that for the many problems in the state is very broad, because even with the powers [the governor] a, there is not much to show.
Some measures taken by the state government have discouraged investment, Nwanze said, such as new fees and licenses for ridesharing companies.
But Mr Sanwo-Olu said his administration was trying to bolster Lagos’ start-up scene, which in recent years has become Africa’s best-funded, attracting hundreds of millions of dollars in venture capital annually. The deals include the $ 200 million acquisition by Silicon Valley giant Stripe of local payment firm Paystack in October, and nearly $ 400 million into three fintech start-ups in a single week in 2019.
There are a few big projects under construction in Lagos, including billionaire Aliko Dangote’s mega oil refinery and a deep seaport nearby. It all started before the 2015 recession, when Nigeria’s crude-driven economy was profiting from soaring oil prices.
Babatunde Fashola, now Federal Minister of Public Works and Infrastructure, was then Governor of Lagos. Lagos could still win, he said: “Because Lagos has the people, it has the market, it has the elite nucleus who travel abroad and live in the best houses, the best hotels. , fly first and business class, buy the best labels and throw the best parties and drink the best wine.
Mr. Sanwo-Olu said he would “continue to sell the city”. “We’re selling the fact that it’s a market with a huge population” of customers, he said.