It is an honour to be invited to address this auspicious gathering, and eminent group as you host your annual alumni conference. Specifically, I thank the LBS Alumni President, Mr Wole Oshin, whom I have known for almost 35 years, for giving me the opportunity to address a selection of your almost 6,000 strong members. It is indeed a great thing to be able to celebrate your alumni as therein lies the importance of building key business relationships that will last many years.
My address on the subject ‘Positioning Nigeria for Global Competiveness’ could not have been better timed.
Recent economic challenges
We are all well aware that we have faced very turbulent times in the last year occasioned by:
- Fall in the price of oil, thereby reducing by half the revenue available for distribution to the three tiers of government.
- Security concerns in the North Eastern part of the country – although now being contained by our revitalised military.
- The impact of Ebola crisis in our region.
- Weakening Consumer demand which suggest that we will not quickly return to high single digit growth, let alone the double figures that we would desire – and which should be possible.
- This current downturn just adds to the existing problems of inadequate power supply, poor infrastructure, more than half of our population living in poverty and significant levels of unemployment. The effects of the crisis are being felt at all levels of society but as is often the case that it is the poorest who are particularly vulnerable.
- Those who live on the edge of the economic precipice have no savings to draw on when they are suddenly out of work and they struggle most when inflation raises the price of the essentials.
Despite these challenges the vision for our Nation remains clear.
- The intent is to position Nigeria to become one of the top 20 economies in the world by 2020
- Key objectives of the vision 2020 remain the same:
- Stimulate economic growth and launch the country onto a path of sustained and rapid socio-economic development, and
- Achieve a GDP of not less than $900 billion and a per capita income of not less than $4000/annum by the year 2020
- For Nigeria to be ranked in the top 20 in the world by year 2020, there needs to be a radical and aggressive focus on the task at hand. Whilst this focus is driven at the center, if Nigeria is to be competitive, it becomes imperative that States such as Lagos be at the forefront of driving the agenda. It is against this background that my address will be focused on Lagos.
Lagos as we know is the commercial hub of Nigeria. Many say LAGOS, is a mini country in itself. You know the statistic more than me.
- The GDP of the formal economy of Lagos is estimated to be $136.6 billion, contributing 25% to the GDP of Nigeria as at August 2015.
- This GDP puts Lagos as arguably the fourth largest economy in Africa.
- The GDP has an estimated growth rate of 10% and it is expected that by 2025 the GDP will be $355billion.
- At present, 18 of Fortune 500 global companies have a presence in Lagos State.
- The population of Lagos is 21 million as at January 2015, making it Africa’s largest city and the 3rd largest city in the world.
The Lagos State Mission and Vision
Aligned with Nigeria’s vision to be ranked amongst the top 20 nations of the world by year 2020. Lagos State also has its own clear direction and focus:
Our vision is to be “Africa’s Model Megacity and Global Economic and Financial Hub that is Safe, Secure, Functional and Productive”
And our Mission is: “Making Lagos Work for All”
- I took over as Governor of Lagos State just over 6 months ago. Together with my recently inaugurated EXCO, I am particularly focused on doing whatever I can to ease the problems that we are currently experiencing and return to the levels of growth that we have enjoyed in recent years.
- To be globally competitive, become ‘Africa’s model mega city’, and “Make Lagos work for all” is an uphill task which requires dogged determination and boldness to tackle and address all barriers that is holding us back.
Before I break these down, let me first of all explain ‘competiveness’ in this context:
What then is competiveness?
A country or nation is said to be competitive to the extent that firms operating there are able to compete successfully in the global economy while supporting high and rising wages and living standards for the average citizen.
The critical question to ask then is “Is Lagos globally competitive?” and if not; what are the barriers to it being globally competitive?
The key vectors and enablers to be measured in this regard include:
- Strength of imports and exports
- Strength of currency
- Cost of doing business
- Average wages/per capita income
- Ease of doing business, and
- Foreign Direct Investment
- Let me briefly speak on a few of these key indices.
- Engagement with Private Sector Leaders: Since assuming office, I have been engaging with key leaders within the private sector in Lagos and listening to what they have to say about the issues they are confronted with. There is clearly a consensus from stakeholders that span from retail and consumer to banking to manufacturing and beyond.
- I hear loud and clear that for Nigeria to be more competitive we must address the following:
- High cost of doing business: We often think we are a low cost economy because wages are low but the truth is that businesses here face very high costs. The most obvious high input cost is power where manufacturers and other businesses have to pay twice the rate per kilowatt hour than the National grid should provide in order to have power. There are other high costs relating to infrastructure which means logistics are incredibly difficult for business. Even our wage costs are deceptive because we have low productivity.
- Foreign Direct Investment: We don’t live in a world of our own. We are in competition with other countries in Africa for foreign investment.
Foreign investors have a choice and if we don’t measure up the investment and jobs will simply go elsewhere. Similarly our companies struggle to export with a high cost base – and if the Naira is strong this makes exports still less competitive.
- Ease of doing business: We must immediately address issues relating to ease of doing business. Nigeria is currently ranked 124 out of 140 countries on the Global Competiveness Index 2105/16 (Word Economic Forum Index). The World Bank now ranks us at 169th in its index! This is simply not good enough for a country of our level of ambition and expectation. In some crucial areas we are even worse – on registration of property we rank a miserable 147th out of 189. Lagos is currently ranked 137 out of 140 on the Global Livability index.
- I want to use this opportunity to assure you that plans are at an advanced stage to revolutionize the current position through an ambitious investment in a new digital land administration system. We need bold moves like that to make a difference. It will pay for itself and very quickly too.
- Security is an issue that we must address. The international perception of the country is tarnished by both terrorist activities and violent crime, and other crimes undertaken by social miscreants. Government has a non-negotiable duty to protect its people and we must not tolerate unacceptable behavior.
- I must admit that dealing with this matter is what keeps me awake at night. Security risks put off many investors completely and impose enormous extra costs for businesses that choose to operate here. Let me again seize this opportunity to thank the private sector for driving the Security Trust Fund. I would touch on this later.
Who are our competitors?
- To compete globally we must think globally. Lagos, as I mentioned earlier is in many ways the nation’s gateway to global business and competiveness.
- We must see our competitors not just as other African nations but be prepared to be measured against a peer group of the world’s megacities.
How do we then start the hard task of nation building and positioning our nation for global competitiveness?
Imagine a builder who wants to build a house. Surely he must start with a solid foundation and then erect solid pillars to hold up the house before putting a roof on top.
We are lucky in Lagos that my predecessors have laid the solid foundation. Our strategic imperatives are built on The Four Pillars:
- Infrastructural development
- Economic Development
- Social Development and
- Sustainable Development
The Four Pillars must be seen through the lens of the vision. It is the outcomes that matter to people not the pillars themselves nor the government that creates or leads them.
The citizens must be able to feel and experience the change and development. We want a Lagos where the average citizen can confidently declare “Lagos is a place where my family and I can live long, happy, secure and successful lives”
I will now speak to each strategic pillar and the priority focus areas of development we must address:
- Ease of Doing Business
- Within the framework set by the Federal Government’s economic policy, we must improve the business environment so that the economy can grow not only in Lagos but also across the country.
- We must listen to what business leaders are saying about our economic policies including our attempts to protect our indigenous producers and our currency. Some are saying the negative side effects of these policies are worse than the ills they were meant to cure.
- We have the biggest population and the largest economy in Africa. Others can only compete with us because we don’t fully punch our weight.
- We must look for quick wins to improve the lives of our citizens while at the same time invest in the long term.
Economic Growth & Job Creation
The key areas of the economy I am targeting for economic development:
- Job creation is the overall objective to reduce poverty
- Agriculture, Tourism, Manufacturing, Services, Construction, Consumer Goods and Financial Services
- Private sector is key to growth as Government can’t create jobs alone. LASG will be a facilitator. Facilitating a better business environment.
- Fostering enterprise and helping people into work at the bottom of the pyramid, through my new Wealth Creation initiative and Employment Trust Fund.
- This is where the new Ministry of Employment and Wealth Creation comes into play. The Ministry will utilise the Employment Trust Fund to work with people to enable them to start (train to fund and run) their own business, and work with small and medium sized enterprises to help them expand.
- At the smaller end of economic activity; it’s important to harness the innovation and creativity of Lagosians and boost entrepreneurship
- On resumption of office I immediately created the Office of Overseas Affairs and Investment. Their role is critical in acting as a one stop shop for investors interested in Lagos. Through this office we are able to alleviate some of the difficulty in doing business by cutting bureaucracy and red tape.
- Our youth: Our youth is our future; they are the most critical factor in laying the foundation of building our nation. Our demographics are seen as favourable as we have an increasing proportion of the population at working age and a smaller dependent population. We must invest in our youth – their education, their health and security so they are ready for the opportunities on offer.
- Bearing in mind the financial challenges the nation suffers with dwindling resources, we must accelerate infrastructure development in our nation. We in Lagos are taking action in the short term to improve the road and transportation network and reduce traffic congestion.
- We must find the funds to start new projects and also make better use of what we have and deal with the culture that has left us with so many poorly maintained and under-performing infrastructure assets. The benefits of repair and maintenance can reap benefits more quickly than we can build new transport systems.
- We are privileged to have my predecessor in office at the center in charge of Works, Power and Housing. This effectively means we have a synergy between Lagos and the Federal Government to accelerate and actualize our current plans for infrastructural development.
- Building infrastructure to improve the quality of life is a top priority in Lagos but if I was to be asked what the two key priority focus areas that need urgent attention; I would have to say:
- Traffic and Security
- Traffic: Dealing with the terrible traffic problems that afflict so many Lagosians on a day to day basis is my key area of focus in relation to infrastructure
- Our problems with traffic have to be improved. It is harmful to the quality of life of too many people in our city. But I am under no illusions how difficult the problem is
- I want to see results quickly
- Lagos will continue to grow and as we are more successful, the population will of course grow more quickly, generating more demand for traffic
- We are looking at the potential of rail and water –based systems, repair the roads and work with the private sector to deliver projects. We are putting in place the finances we need to enable us make our plans a reality.
- We are talking to experts and consulting the public on what we can do differently and rethink transport in a creative way suitable for a 21st century mega city.
- There will be a Traffic Summit in Lagos next week to address the issues by combining the perspective of international best practice and local knowledge and experience. That summit will be a step on the way to a new strategy that will make all our lives better.
- However I will not neglect other key forms of infrastructure: power, communications, and water, housing, schools and real estate to support the growth of our economy.
- Security: Our vision is a Lagos that is safe and secure for all
A safe and secure state will increase FDI and contribute to positive indicators transforming Lagos into a mega city-state.
- The Security Trust Fund has been utilised for the acquisition of state apparatus to bolster security in the state
- There are immense challenges ahead in transforming the health system in Lagos State. The vision is of a health system that works for everyone, comprising an appropriate balance between preventative, health promotion and curative services that are affordable and accessible to all.
- We have commenced activities to create a ‘Health Park’ to promote medical tourism in Lagos
- We need to raise educational standards, especially in the public education sector
- We are in the process of recruiting 1300 qualified teachers for the state’s primary schools
- We will continue with the steps initiated to improve the quality of education. This includes ensuring good discipline and accountability in schools, including that teachers are in class, on time and teaching, and that learners are in class and learning.
- Excellence in Governance and Civil Service Reforms: This is arguably what underpins all other strategic imperatives. In recognizing this, we carried out a reform of the Civil Service aimed at positioning our service for optimal and efficient performance in the new age of technology.
- Transparency and accountability in the management of the state’s finances.
- Abolition of multiple account systems, Efficiency and cost effectiveness.
- Rebranding Lagos and fighting Corruption. We must also applaud and support the President’s drive to end corruption which has a corrosive effect on business at all levels. It’s a critical weakness that makes it hard for everyone to do business in Nigeria.
In Summary: I am very optimistic about the future
- Transformation through civility. The transformation which Lagos requires can only be achieved through strong political will. I am committed to see the transformation the people of Lagos deserve and I believe very strongly that this can be achieved through civility.
- Every Lagosian deserves respect, especially from the authorities. Government officials, whether an overenthusiastic LASTMA official or a clerk in the Land Registry must be encouraged to be of proper conduct. The most difficult thing to grasp is the behavioral changes which are what I am trying to instill.
- Lagos requires strong leadership and determined discipline in the areas of expenditure and finance. As a State, we can proudly say that the efforts initiated 16 years ago, have meant that we have very strong IGR profile.
- We are in a much stronger position than any other State in Nigeria and we are in control of our own destiny. However, we still have substantial needs. Since I came into office just over six months ago, I have managed to restructure the long term loan obligations of the State resulting in monthly savings of N3billion. This extra fund would prove useful as we determine the 2016 budget.
- All hands on deck to make Lagos work: I remember standing before some of you just before the governorship elections, canvassing for your votes. I am grateful that I came across well for a majority of you to have cast your votes in my favour. As I conclude today, I now appeal to all of you, to give me and the people of Lagos the support, to make Lagos and by extension Nigeria competitive.
- We all have a part to play in a better future for Lagos. Government cannot do it alone. With your 6000 strong Alumni network joining hands with the Government we would be firmly on the path of becoming the global mega city-state we aspire.
- Nigeria as a whole needs all hands on deck to move the nation forward. We all have a “social obligation” to transform our country into the dream status we aspire, but it requires aggressive innovation and creativity from us all.
We want to make Lagos work; and by so doing set Nigerian on a path of global competitiveness.
Thank you all for listening.
Itesi waju eko; lo je wa logun!
Governor of Lagos State
19th November 2015