*Adds: City economies will overtake that of nation–states
*Lagos-Kano landmark partnership underscores cornerstone of FG’s Economic Recovery and Growth Plan
March 1, 2018
**Long before Nigeria existed as we know it today, both cities existed as important regional centres of trade and commerce. It is a given that they will continue well into the future, increasingly gaining clout and influence.
**On our part, the Federal Government will support the efforts of all State Governments to reform their economies, attract investment, and collaborate with one another. The days when the Federal Government would seek to undermine Governors and their administrations are now well behind us. The State Governors would be the first to attest to the fact that President Buhari is deeply committed to helping every State in Nigeria achieve its full economic potential.”
**With the opening up of national borders across West Africa and even the entire continent, there will be even more room for both cities to assert themselves economically; to seize rapidly emerging opportunities, to ride waves of investment and innovation to become truly globally competitive, and to show the way to the rest of Nigeria.
SPEECH DELIVERED BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, GCON, AT THE OPENING OF THE JOINT LAGOS–KANO ECONOMIC INVESTMENT SUMMIT THEMED- “STATES PARTNERSHIP AS A TOOL FOR SUSTAINABLE ECONOMIC DEVELOPMENT” IN EPE, LAGOS STATE, ON WEDNESDAY, 28TH FEBRUARY, 2018.
Any student of colonial history will confirm that perhaps the smartest economic decision made by the British was the Lagos-Kano rail, an amalgamation of the Lagos-Ibadan and the Baro-Kano rail in 1912. This sparked off the creation of other rail routes across the country, such that by 1930, there was a unified rail system in four districts. Following the Lago-Kano plot, the rail routes were to move goods and commerce from the Nigerian hinterland to the coast for export.
So the Western district tapped agricultural produce such as cocoa for export. The Northern district focused on the traffic of groundnuts and cotton, while the North-eastern with headquarters in Bauchi and Eastern district with headquarters in Enugu, developed the coal region and evacuation of oil palm and palm produce.
I have taken this quick historical digression to demonstrate that any serious planning of local and international commerce in Nigeria must take the Lagos-Kano connection seriously, especially its catalytic role for commerce across the country.
This is why their Excellencies, the Governors of Lagos and Kano State deserve our commendation for this landmark gathering. This summit for the first time, brings together two of Nigeria’s most demographically significant States and its major centers of commerce, with a combined share of 37% of our National GDP, to explore opportunities for leveraging their individual and combined economic potentials for the benefit of their citizens and the entire country. As salespeople will say, this is truly a buy-one-get-one-free opportunity for investors, policy makers and all who have a stake in the economic future of Nigeria.
It is not out of place to say that, by virtue of their commercial and demographic importance, where Lagos and Kano go, so Nigeria follows.
The clout of the two cities extends well beyond the borders of Nigeria, Lagos is arguably the most important coastal city in all of Africa, just as Kano has historically served as a major crossroads on the trans-Saharan trade route that stretches into the Mediterranean and has lasted more than a thousand years in doing so.
I think Lagos and Kano States have by this collaboration underscored a cornerstone of the Federal Government’s Economic Recovery and Growth Plan, namely the leveraging of synergies among States, and between governments and the private sector.
The strategic role of the Federal Government is, of course, the creation of an enabling environment for commerce beginning with the provision of infrastructure. For us, what this meant especially in the context of the Lagos and Kano collaboration is the refurbishing of the Narrow Gauge Lagos to Kano rail; with a concession to General Electric, which proposes to invest almost 2 billion dollars in ensuring that the rail route is effective for movement of cargo from the Apapa port to Kano. Similarly, we are investing in a Lagos-Kano Standard Gauge line, the Lagos-Ibadan portion of that is expected to be ready by the end of the year.
Similarly, this year, we have budgeted N80 billion for the development of Special Economic Zones in the six geopolitical zones of the country. Part of the plan is to develop Nigeria as the garment manufacturer to the world, using the Lagos SEZ as a garment manufacturing hub, especially because we have become cost competitive with higher costs of production due to higher wages in China. So most of the so called sunset industries in China are looking for a destination, and it is clear that Lagos is that destination. But there is a natural synergy between the textile industry in Kano, which had before now declined due to unfair competition from cheap Chinese imports. So we expect to see the resuscitation of the Kano textile industry, in response to the garment manufacturing demand in Lagos.
Power has remained a major cost factor and an inhibitor for the expansion of industrial activity in Nigeria. We have taken a multi- dimensional approach, by working on both off-grid and on-grid solutions led by the private sector. So by May this year, we will be adding 450 MW to the national grid when the Azura project in Edo goes live. This is the first fully privately financed power plant in Nigeria. And test power of about 30-50MW is now on the grid preparatory to the May start off.
At the same time, we are putting off-grid solar capacity in small clusters in key commercial centres. In collaboration with the Kano State government, we are, with a wholly owned Nigerian company, installing a solar stand-alone system to power the Sabongari market. When completed, it will provide power for 12,000 of the shops and enterprises there. At the moment, it is providing power for about 1000 shops. The assembly plant for the system itself is in Kano.
In Lagos, we are looking at possible power solutions for the printers in the Somolu printing cluster. As I said, our emphasis and intervention is on small business clusters. And in collaboration with Lagos government and private sector owner of the IPP at Marina, we are building a distribution network that will take metered power to the Sura market.
In Ariara market in Aba, we are working with a wholly Nigerian owned company to supply power to Ariara Market’s 31,000 shops through a dedicated gas fired IPP. This is already the largest SME hub in West Africa. All meters for these projects are all locally manufactured meters. Electricity bills will be 20% cheaper than what they currently pay.
We expect that, in the next few months, mobile payments will come on stream; in other words, people will be able to pay using their mobile phones. We expect that this will greatly assist the retailing of power to small businesses, amongst other businesses.
At the moment, there is a 4% charge on payment platforms for making these kinds of payment, but once we get the mobile payment system going, that charge will become more competitive.
Lagos and Kano have also proved that the Federal system we operate, which to some extent, guarantees the autonomy of States is not necessarily meant to make the States islands unto themselves, but also to strengthen our corporate and National commercial appeal.
Both States are the frontline States in the ease of doing business reforms being implemented by the Presidential Enabling Business Environment Council (PEBEC), which I have the privilege of chairing. Not only are both States key members of the Council, they have also demonstrated remarkable support and collaboration, since the reforms started.
By working together, we have achieved reforms in the processes around the issuance of construction permits, and the registration of property. On account of these reforms and others we were last year adjudged by the World Bank as one of the top 10 most improved economies in the world.
PEBEC is thankful for this enthusiasm and collaboration of Governors Akinwunmi Ambode and Abdullahi Umar Ganduje and their administrations and all of the support they have shown to the work of PEBEC. And it is that same enthusiastic collaboration that is manifesting today, in this first-of-a-kind joint Economic and Investment Summit.
This year, we are working again collaboratively to achieve reforms in the areas of enforcing contracts, registering property, and the issuance of construction permits. Success in these areas will put us firmly on the path of achieving our goal of being a top 100 economy by 2020.
Permit me to take a quick peek into the future, which, as is often said, is already here with us. One of the key drivers of economic prosperity is competition; in this case, competition among Sub-nationals or States and nations. As the world becomes flatter with technology, that will be even more the case. One great example comes to mind, of how this competition might play out. In 2017, Amazon, the American retail and technology giant, announced plans to open a second headquarters in North America. What was interesting was that instead of making the decision entirely an in-house one, as companies usually do, Amazon chose to let cities across the United States, Canada and Mexico, bid for what you might call the hosting rights for the Amazon headquarters 2, as the project later came to be known.
More than 200 cities submitted bids, and Amazon announced a shortlist of 20 cities just last month. A final announcement, of the winning city, is now pending.
Why is this important? The city that will host Amazon headquarters 2 will enjoy more than $5 billion in construction investment alone, not to talk of the tens of thousands of direct and indirect jobs that Amazon will bring to the city, and the multiplier effect on the local transportation, hospitality and entertainment industries, and the additional investment that other companies will bring because of Amazon’s presence in that city.
Now think about what this development might mean for Nigeria in the decades ahead; when companies make important decisions about citing their offices and industries primarily based on how easy a State makes it for people to do business in it. States that make it easy for investors to acquire land, register property, pay taxes, and access broadband internet will be the clear winners, while States that make these things difficult or impossible will languish as the world carries on around them.
Your Excellencies, Ladies and Gentlemen, that competitive scenario I have just outlined, is the future of the world. Indeed, there are theorists and thinkers who now argue that, going by current and projected rates of urbanization, cities, not countries, will propel the economies of the future and ultimately determine the fate of humankind.
It may sound far-fetched right now to imagine that city economies will in some way displace nation-states in global importance, but you only need to consider the fact that in many cases, cities around the world existed longer than the countries to which they belong. Lagos and Kano, as much cities as they are States, both predate the existence of Nigeria.
Long before Nigeria existed as we know it today, both cities existed as important regional centres of trade and commerce. It is a given that they will continue well into the future, increasingly gaining clout and influence.
With the opening up of national borders across West Africa and even the entire continent, there will be even more room for both cities to assert themselves economically; to seize rapidly emerging opportunities, to ride on the waves of investment and innovation to become truly globally competitive, and to show the way to the rest of Nigeria.
On our part, the Federal Government will support the efforts of all State Governments to reform their economies, attract investment, and collaborate with one another. The days when the Federal Government would seek to undermine Governors and their administrations are now well behind us. The State Governors would be the first to attest to the fact that President Buhari is deeply committed to helping every State in Nigeria achieve its full economic potential.
We are seeing unprecedented levels of National–subnational engagement, especially through the mechanism of the National Economic Council. One of the driving philosophies of that Council is fiscal transparency; as a Federal Government, we have been careful to not hold back information from the States, because we realise that development can only happen in an atmosphere of trust and collaboration.
Over the next two days there will be robust conversations around governance, infrastructure, fiscal matters, tourism, security, the knowledge economy, and other issues. I am confident that these discussions will throw up useful insights and opportunities for learning, all of which I’m sure will be documented for future relevance.
I am also confident that investors and businesses will leave this Summit with increased knowledge about the opportunities for investment in Lagos and Kano States, and with greater optimism for the future.
The Federal Government will be paying serious attention to the outcome of this Summit, to help guide and direct our engagements with the States.
Let me again commend Governors Ganduje and Ambode for this historic business and investment summit, and also commend Governor Ganduje for making the rather long journey to Lagos. I must also say that Governor Ambode deserves special mention for his farsightedness in establishing collaboration; working with Governor Atinuke Bagudu of Kebbi on the famous Lake Rice, and even leasing land from Ogun State to grow rice, which is another act of collaboration, very well done.
While thanking you for your attention, it is now my special pleasure and privilege to declare this summit formally open.
Senior Special Assistant to the President on Media and Publicity,
Office of the Vice President
1st March, 2018