By November 5, 2018

What Makes Lagos Nigeria’s Commercial Hub?

By November 5, 2018

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According to a Weetracker report, British Prime Minister Theresa May step foot in Lagos during her debut visit to three African countries in August this year. After her meeting with President Muhammadu Buhari in Abuja, she proceeded to the hippy city to see Nigeria’s thriving business community. When French President Emmanuel Macron visited Lagos, he was found in the Fela Shrine around the state’s capital city, Ikeja. Google looked to promoting interconnectivity in Nigeria and decided to launch a free Wi-Fi station nowhere but Lagos, serving thousands of youths and entrepreneurs in terms of constant online access.

A city relentless, competitive and hardened regarding business, one of the most prolific sources of an entrepreneurial dash and daring, this is Nigeria’s bringer of startup rapture and thrill. Lagos is the city that feeds the soul of enterprise and hurries the heart fly-by-nights, all fermented with the incomparable red-hot rapid development crucible. It is the fortress of youths and the bringer of employment opportunities – the mythical city with streets believed to be paved with gold and garnished with step-thrilling terrazzo. Lagos is the lush green land that attracts droves in search of the proverbial platinum fleece, looking to behold its infrastructural silhouette and innovative textbook saga.

World-class tech and incubation hubs such as Vibranium Valley, Zone Tech Park and Nigeria’s first ever Artificial Intelligence Hub sit in the very heart of Lagos. Co-working spaces are launching and getting fully functional, joining an already abuzz sector in solving the traditional office problem for startups. An intimidating number of tech-enabled startups such as Tizeti, Flutterwave, Gokada, Parcel-it, FarmCrowdy, Thrive Agric, WiiCreate and many other top-class enterprises boast of headquarters and fully functional offices in this very city. Even with seemingly endless traffic, a population well over that of Ghana put together and series of bottlenecks in the entrepreneurship sector, Lagos is yet exalted as Nigeria’s commercial hub, beating Abuja, Port Harcourt, Kaduna, Calabar, Onitsha, Aba and Owerri to the top of the busy list. Why is this so? Is it the city’s unusual charm or its extensive 0.4th of Nigeria’s territorial landmass?

If taken as a country on its own, Lagos would be amongst the largest economies in Africa. The city has been able to diversify its economy and considerably torn down its reliance on oil allocations. Its potentials are yet huge and promising with investments in the skilled labour force, reduced bureaucratic hurdles and an inclusive development approach. Even as the smallest state in the country, Lagos accounts for more than 60 percent of industrial and commercial activities in the nation. Its financial viability is significant, with a 75 percent generation of independent revenue of federal grants derived from oil. Lagos generates the highest internal revenue of all states in Nigeria. If it were a country, its 2010 GDP of USD 80 Mn would have made it the largest economy in Africa.

Some Interesting Facts About Lagos

  • The city has the tallest building in West Africa – the NECOM house tower which is 160 meters above.
  • Lagos handles 80 percent of the country’s imports.
  • Lagos was the capital of Nigeria when the country obtained its independence from Britain in 1960 until it was replaced with Abuja in 1991.
  • Lagos was formerly called Eko before colonisation by locals.  
  • It is the smallest state in Nigeria.

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Third Mainland Bridge

Today Lagos has become the go-to hub for the headquarters of national and global companies, as well as the complex business and professional office that support them. Google and Microsoft’s Nigerian branches are situated in this area, and with a population already way above 21 million, Lagos makes a list as the seventh fastest growing city in the world and the second largest city in Africa. Lagos does not derive its title as megacity merely from its population eclipse, but as a global city with substantial and growing foreign-born population and non-stop flights to hundreds of destinations around the world.

Even in spite of various economic challenges, Lagos manages to generate revenue from a variety of sources including manufacturing, transport, construction, wholesale and retail, together accounting for a bulk of its GDP. The economic diversification of Lagos starkly contrasts with the larger Nigerian economy which is the heavy reliance on profits from the oil and gas industry. Also, there are a lot of factors that lead to Lagos being pressured as citizens migrate from economically distressed states seeking employment. Entrepreneurs looking to break into new markets are also taking flights and boarding buses to Lagos with high hopes that their efforts will pay off – all of which makes the area even hipper and more economically active.

In 2014, the government of Lagos, concerned about the sustainability of the state’s economic success in the face of population and infrastructural challenges, articulated, the Lagos State Development Plan (LSDP) for 2012-2025. The plan with all its provisions aims to transform Lagos into a model megacity that would be telling in the aspects of productivity, security, sustainability, function, and safety. The main pillars of this vision are development in the areas of its economy, infrastructure, socialness, security, and growth. As per manufacturing, it forms a substantial part of Nigeria’s economy, and its Lagos activity could be the propeller of the country’s shouldering with big leagues along with BRICs countries such as China and India.

As of 2015, the metropolitan part of Lagos accounted for more than 53 percent of manufacturing employment in Nigeria, substantially contributing to 7 percent of the national GDP constituted by manufacturing. In the same year, manufacturing was estimated to have contributed to USD 35 Bn to the national economy. Manufacturing industries scattered about in Lagos are present in the sectors of food, cement, plastics, basic metals and foam, steel and fabricate metal, electronics, furniture, automobiles, textile manufacturing, and miscellaneous assembly. Business moguls such as Aliko Dangote, Femi Otedola, Cosmos Maduka, Linda Ikeji, Mike Adenuga, Tony Elumelu, and others have a strong physical presence in Lagos, as most of their company operations are alive there. Even Chinese tech magnate and leader of the Alibaba Group, Jack Ma, has his eyes set on this city during his first-time visit to Nigeria after Kenya, Rwanda and South Africa, because of its vigorous entrepreneurial activity.

 

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Several factors have led to Lagos being focused on by industries since the late 1970s. The first piece off the board is its population assuring a ready labour pool for production and available markets for consumption. Also, the metropolitan arm of the state features relatively impressive infrastructure, coupled with its strategic location with air, land and sea connections to markets in the Central and West African region, Europe and the rest of Nigeria. This does a lot to ease and ensure the steady flow of raw materials and processed goods in and out of the state. The high import bill, augmented by the growing population, gives room for more locally-produced goods.

Should the ever increasing middle class upheave consumption, there would be more than enough room for expansion in all the sectors. In the first of 2014, capacity utilization for the Lagos industrial zone was about 53.85 percent, as well indicating growth potential even now that the stakes have gone higher. While these factors bolster local manufacturing, there are yet real challenges presented in the form of human capital needs, poor regulatory enforcement, power supply, deficits, ageing infrastructure, multiple, and low industrial productivity. But, Lagos has a golden chance to decisively deal with this manufacturing sector over the next decade to unlock the full potential of the city.

Lagos is the hub of all banking and maritime transactions, home to the country’s major sea and airport. In 2018, a report showed that the state had an internally generated revenue of about USD 3.4 Bn, state to be thrice higher than the state ranked second on the IGR scale. The figure also stood in for 39 percent of the total IGR of all states in the federation. According to Quartz Africa Weekly Brief, if Lagos were a country, the GDP of USD 90 Bn would rank it as the seventh largest economy in Africa, sending down countries such as Ivory Coast and Kenya – two of the most recognised countries as Africa’s most promising economies.

Much of what has been a laudable development of the state can be credited to its astute governance. Lagos has had leaders who didn’t see the relocation of the seat of government from Lagos to Abuja in 1991 as a loss. They saw it as an opportunity to tap into and develop the resources present within for its general economic development, while also exploring its rich history and strategic location to the fullest. Ever since civilian democratic rule incepted in Nigeria, in 1991, Lagos has witnessed remarkable transformation as much as it is now looked to by other states as a model and blueprint out of their dependency on federal allocations for survival. Akinwunmi Ambode, the current Governor of Lagos State, along with former gubernatorial heads like Fashola, regularly receive accolades for the proven ability to foster developmental strides in the areas.

If you are an international business operating in Nigeria without a branch in Lagos, you may come off as an unserious entrepreneur, as funny as it may sound. Nigeria’s most prosperous reside in the city, and it is no doubt the home of talent. Some of the best companies in Nigeria operate in Lagos, many startup events are held in the city, and the promise keeps getting more enticing.

Feature image courtesy: travelmassive.com

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