Lagos in Nigeria is a major financial centre with the fourth-highest GDP in Africa and houses one of the largest and busiest seaports on the continent.
About Lagos In Nigeria
Lagos in Nigeria, the city-state, despite smallest by land area has an estimated population of 20 million people and is the most populous city. It is regarded as the financial hub and the economic gateway into West Africa.
Famously called as Nigeria’s economic nerve centre, Lagos accounts for almost 30% of the country’s GDP and worth $136 billion as of 2018. It is said that if Lagos would be a country it will be the seventh largest in Africa, ahead of Cote D’Ivoire and Kenya.
Factors Supporting Lagos To Be The Financial Hub
Being strategically located along the Atlantic coast, Lagos wealth is supported from Nigeria’s two busiest ports – the Port of Lagos and Tin Can Island Port — and extensive air and road connections. Due to this, the city attracts expertise manpower and multinationals. The average household income in Lagos is much more higher than in other parts with a positive correlation between skills and remuneration.
While on the other hand, large population leads to a active consumer market thereby creating high demands for products and services. Also, the city serves as the scratch base for piloting regional and international brands, including South African behemoths like MTN, Shoprite and Mr Price. Industries like manufacturing, transportation, construction and wholesale and retail trade make it a diversified state creating billions in income.
Also, this permits the economy to be not dependent on oil allocations from the federal government in Abuja and run its economy on self-reliance. Abuja is the capital city of Nigeria.
On the other side, fashion trends begin in Lagos first and then across West Africa. It is also the home of Nollywood, Nigerian film industry started in early 2000s. As per a 2017 start-up report, the start-up economy is worth $2 billion while the city’s tech ecosystem is expanding with almost 400-700 start-ups making Lagos the most valuable start-up ecosystem on the continent.
In October 2019, Financial Centre for Sustainability (FC4S) Lagos Centre was launched. It is one of the 28 financial centres across the world in order to assist information exchange, share common actions and lead the development of global standards required to accelerate the expansion of green and sustainable finance.
Lagos In Nigeria Debt Profile
In January 2020, Lagos State government revealed that its debt stands at N39.69 billion which they believe is very high but still not alarming. Rabiu Olowo, Commissioner of Finance, said that the state’s debt profile is highly composed of internal debt of N29.7 billion.
Among all the states in Nigeria, Lagos has the highest foreign debt profile in Nigeria, accounting for 5.64%. The state has set N1.168 trillion for 2020 budget which is higher than 2019 state government budget.
With 2019 sustainability at 29%, below the 30% benchmark, the Lagos state government believes that it has the capacity to sustain and finance its debt profile. Olowo said “For debt utilization alone, with fiscal Responsibility Act, 100% of our debts are targeted towards capital projects”
He added that going forward into medium-term by 2021-2022, debt figure will come down to 25% and they would be able to manage their debts into the future with increasing revenue in the coming years.
Lagos In Nigeria – Tech Hub
A collaborative effort by Briter Bridges and the GSMA Ecosystem Accelerator programme identified 618 active tech hubs across Africa. Nigeria and South Africa remain the most advanced ecosystems, possessing 85 and 80 active tech hubs respectively. They offer well-established collaborations and investment networks.
Lagos is now the top innovative city with more than 40 hubs. African economies will benefit significantly from the value of these innovative tech spaces. Investors pump capital into start-ups and hence contribute to the country’s GDPs.
While Lagos district is as big as the entire country of Botswana, people in Lagos are more concentrated. Thus companies can take benefit from economies of scale in lower costs and easy distribution.
As per the latest capital importation data released by the National Bureau Statistics (NBS), Lagos is officially Nigeria’s biggest destination of capital inflow with $4.77 billion inflow (or 56% of the total $8.48 billion) as of first quarter 2019. A major portion of the inflow is from the United kingdom followed by United States.
Hurdles In Lagos Development
With an excessive population level and lack of infrastructure keeping pace with it, Lagos has almost 1.7 million Lagosians living in poverty. It is considered to be the third most stressful in the world as per a Zipjet report.
Unreliable power supply is a common problem across the country thereby denting businesses and becoming a reason to deter away new market entrants. Heavy traffic jams, poor city planning are a few other problems across Lagos.
Also, the city’s rapid urbanization measures to develop properties for the rich crushes the poor. House rents are relatively higher and infrastructure deficits are also high. Meanwhile, environmental degradation leads to constant flooding during the raining season
According to the World Bank report on ease of doing business 2018, Lagos is ranked low in terms of ease of doing business in 2018. Despite all challenges, not only Nigerians but people from neighbouring African countries also come to Lagos to make a living with so many available opportunities.
As Lagosians believe that Lagos will never slow down. They love to say, ‘Eko o ni baje’ – Lagos will never spoil. No matter who is in charge