Reforms to Promote Investment in Southwest Nigeria

Sunday, January 23, 2022 / 06:57 AM / by Olufemi Awoyemi, mni / Header Image Credit: DAWN

 

Being the text of a discussion by Olufemi AWOYEMI, mni; Founder/Chairman of Proshare at the Southwest Nigeria Investment Promotion Agencies Conference (IPA-1) 2022 of the DAWN Commission held on the 19th January 2022.

 

The absence of regional political autonomy under the existing federal structure has mainstreamed the need for strategic collaboration, coordination, and cooperation to achieve economic autonomy across the six geopolitical zones. The realities of culture, commerce, and community make it a necessary and natural thought process that should otherwise occupy the thoughts of the leadership and people of Southwest Nigeria.

 

To the region's credit, many collaborative investment initiatives have been launched since the dissolution of the regional government with considerable success and many more initiatives are still underway. However, the large infrastructure gaps in the region might deprive it of the opportunity to upgrade its economic structure through participation in products value chains.

 

Thus, the associated supply chain threats and the disjointed input-output matrix of the region underscores the need to rethink, reimagine, and re-strategize the infrastructure and technological investment promotion models of the Southwest region.

 

Regional Approach to the Development of Southwest Region 

Fundamental to any economic bloc is the presence of critical infrastructure to drive trade, power businesses, connect workers, create opportunities, and protect communities from avoidable natural disasters. The entire nation-Nigeria is faced with unprecedented infrastructure challenges that have made it difficult to be competitive and productive in the scale of things.

 

The World Bank (2012) report revealed that there is a positive correlation between infrastructure investments (per capita) and the level of a nation's development (proxied by GDP per capita).

 

In Rwanda, for instance, the World Bank estimated that infrastructure investment must grow by 8.4% of GDP from 2019-24 to meet the government's project 6.5% annual real GDP growth. A similar conclusion was drawn for Nigeria and other African states. To narrow the argument further, infrastructure investment needs to grow by a near-similar proportion in the Southwest region to boost the cumulative GDP of the region. The Southwest region is currently in need of a huge infrastructure to drive its economic autonomy.

 

Meanwhile, an infrastructure corridor may facilitate mobility but if there are no goods and services to trade and market, the infrastructure remains a redundant facility. Thus, while it is imperative to overcome the geographic and institutional obstacles that impede both infrastructure and trade expansion, the region needs to also collaborate closely in trade and investment to leverage economies of scale. The focus on and around trade, investments, and industry within the region needs to specifically be guided by three anchors: trade facilitation, trade agreements, and ease of doing business.

 

For instance, Oyo State with its huge agricultural outputs can feed the manufacturing hubs in Ogun State while Lagos State serves as the export terminal and market for the produce. This is a very good prism with which a fit-for-purpose conversation around sub-national productivity and competitiveness can be approached.

 

In terms of infrastructure funding, there have been advocacies for member States to create a joint investment project in the form of a Sub-regional Wealth Fund (SWF) through a PPP model where existing investment companies such as Odu'a Investment Company Limited interface with the Fund which may be private-sector managed.

 

Better still, the region may consider leveraging the existing infrastructure companies such as INFRACO or multilateral corporations to bridge the infrastructure gaps. 

 

Other Infrastructure Heads for Integration 

As health and education play a significant role in any economic bloc by empowering citizens and bolstering productivity, there is the need to rethink investing in human capital to adapt to the changing economic opportunities and economic shocks.

 

A joint world-class and purpose-built educational institution featuring colleges of technical vocations and engineering, sports academy, business school, and other specific areas of business interests of the region can be considered. However, with the failure of public institutions by most standards, this can be privately operated with a high operating standard. The region could have a scholarship programme on a quota system for indigent students from member states.

 

The region can also collaborate to build a world-class tertiary health institution with equity interest by the six states but privately operated to avoid excessive bureaucracy and political interests.

 

Trans-border security investment, manufacturing and technological integration, regulatory alignment, and joint industrial parks are also viable investment options for the region.

 

The accelerating pace of progress and systemic interactions among converging digital, physical, and biological technologies raises fundamental, long-term challenges for economies at all levels of development. The Southwest region needs to create a Smart Financial Centre where technological innovation is pervasive and diffusive but also safely adopted. The target should be to further stimulate the growth of the vibrant FinTech and startups in the region.

 

However, while some regulatory differences are appropriate, duplication in regulatory requirements may be a barrier to a consistent, efficient, high quality, and sustainable business environment in the region. Regulatory alignment in terms of convergence of rules governing trade and other economic activities across the six Southwest States would also prove useful to the region. 

 

 

Mountain to Lower for Investment in Southwest Region 

Development efforts are being pursued in isolation by the member states of the Southwest region. Between 2013 and Q1 2020, foreign investors considered four of the six states in the Southwest region unattractive for investment. Yet, Lagos and Ogun States received about 97 percent of the Foreign Direct Investment (FDI) that flows into Nigeria within the period.

 

Similarly, some existing bilateral public investment projects such as the Ladoke Akintola University of Technology (LAUTECH) failed under joint management by two states but had regained its strength under single state management.

 

There is also a lack of budgetary allocation among member states for the Southwest agenda. Ideally, the annual budgetary provision of member states should promote a viable Southwest region.

 

These instances underscore some legacy issues and State egoism in joint investment projects where states within the region compete rather than collaborate for development. Competition in itself isn't bad, but the competitions in most instances are unhealthy competitions that stifle growth.

 

The Southwest region needs collaboration and not competition. The region needs to strengthen its investment and development drive through close collaboration rather than competition leveraging investment promotion agencies of member states.

 

During the First Republic, the region had a collaborative plan and strategy. Chief Obafemi Awolowo's robust agro-industrial strategy synchronized the productive strengths of the six states to build a network of infrastructure into the different rural agricultural farms and plantations, research institutions, schools, hospitals, and the industrial areas where factories processed the produce. We can adapt such a model to the present-day reality of the region.

 

With a huge and ready market in the region, the missing link is collaboration at the leadership and private sector levels to harness the developmental potentials of the region.

 

The establishment of the Development Agenda for Western Nigeria (DAWN) Commission to design and implement the regional integration agenda and the 45 years existence of Odu'a Investment Company Limited with substantial investment in different sectors should have spurred more investments in the region than it is now.

 

Hence, it is time for DAWN, Odu'a Investment Company, Investment Promotion Agencies, and private sector players in the Southwest region to be deliberate and aggressive in creating the much-needed economic bloc for investment by first attracting infrastructure investment funding to bridge the infrastructure gaps limiting trade and commerce.

 

Click Here to Read More News on the Economy

 

 

 

Related News - State and Local Govts

1.      A Call for a Collective Change of Mindset in Managing States Affairs: Lessons for Sub-Nationals

2.     Lagos-Ogun Partnership for Economic Development - Thoughts on What Is Possible

3.     Governor Seyi Makinde Receives Draft of Oyo State Development Plan 2021-2040

4.     Nigerian States' Ratings Challenged by Own Revenue Generation

5.     1H 2021 IGR Data: IGR Rising Yet Grossly Inadequate

6.     Improved IGR in H1 2021

7.     N849.12bn Generated as IGR in 1H 2021

8.     2021 State of States Report: Fiscal Options for Building Back Better

9.     Challenging Data on States' Finances

10.  Fiscal Sustainability and the Resilience of the Nigerian State

11.   Borrowing Straitjacket for Most States

12.  GSIPDC Board Intends to Put Necessary Strategies in Place to Actualize Notable Projects

13.  Very Heavy Debt Burdens for Most States

14.  Book of States 2020: Vast Resources, Low Industrial Development

15.  2020 IGR Report: Urgent Need to Bolster States' IGR

16.  Improving IGR: A Call for Action

17.  NIPC Publishes Book of States 2020

18.  N1.31trn Generated as IGR in 2020 - NBS

19.  Actual Expenditure of All 36 States Grew by 2.73% to N5.26trn in 2019 Fiscal Year

20. Ogun State Debt Figures - Understanding the Facts, Fiction and Black Spots

21.  Ehingbeti Economic Summit 2021: The Lagos of Our Dream

22. 8th Ehingbetti Summit: Lagos as An Accelerator; A Smart City's Destiny 

 

 

Related News - Nigerian Economic Management

1.      Need to Rethink, Reimagine and Restrategize the Federal Government Budget - A Governance Insight - Yemi Osinbajo - Proshare, Jan 20, 2022

2.     Finding a Way Out of Nigeria's High Debt Costs - Ayo Teriba

3.     Nigeria Should Grow its Non-Tax Revenue and Issue Interest-Free Debt in 2022 - Ayo Teriba

4.     CBN to Sustain Interventions in the Nigerian Economy in 2022 - Godwin Emefiele

5.     Nigeria's Rising Debt Profile: Issues and Implications for Sustainable Economic Development

6.     Insights on VAT Collection and Distribution in Nigeria - Ayo Teriba

7.      Bola Ahmed Tinubu on Sovereign Economics - Apr 10, 2019 

8.     Bola Tinubu Colloquium and Productive National Discourse -  The  Guardian - Mar 29, 2019

9.     The Bola Tinubu - Bukola Saraki Exchange for The Records - Aug 20, 2018

10.  Seven Drivers of Urgent Need to Fix the Economy - Bola Tinubu - Sept 25, 2017

11.   A New Nigeria or A Better One: The Fitting Tools of a Great Repair - TheNews - Sept 24, 2017

12.  Kachikwu: Competence Based Performance; not Magic is required - Bola Tinubu - Mar 27, 2016

13.  The Story of a Visionless Caper: How Political Shenanigans Led to a Bond Default -  Apr 04, 2019 

14.  Igboro ti Daru: Governance, Leadership, Ethics - How To Build A Thriving Nigerian Economy   - Olufemi Awoyemi, Proshare, June 29, 2019

15.  Beyond Politics - A Government Within A Government Has Always Existed - Olufemi Awoyemi, Proshare, August 08, 2018

16.  Ogun Standard Education: A Way Forward - Olufemi AWOYEMI  - Proshare, May 23, 2017

17.   Leadership, Change and Corporate Transformation - The Nigerian Experience  - Olufemi Awoyemi, Proshare, November 07, 2017

18.  Where Nigeria got it Wrong    - Olufemi Awoyemi, Proshare, December 01, 2014

19.  Nigeria's Economy After Oil: How Should We Prepare? - Bode Agusto, Proshare, April 24, 2020

20. Nigeria - How to Win - Bode Agusto, Proshare, April 16, 2018

21.  Economic and Institutional Restructuring for the Next Nigeria - Soludo - Chukwuma Soludo, Proshare, October 01, 2019

22. Nigeria: Where is the New Economy?  - Chukwuma Soludo, Proshare, August 20, 2012

23. Full Transcript of Professor Charles Soludo's lecture at the APC ...  - Chukwuma Soludo, Proshare, September 05, 2016

24. Reconstructing Nigeria for Prosperity (1)  - Chukwuma Soludo, Proshare, September 03, 2012

25.  Reconstructing Nigeria for Prosperity (2)  - Chukwuma Soludo, Proshare, September 17, 2012

26. Reconstructing Nigeria for Prosperity (3) - Proshare Nigeria  - Chukwuma Soludo, Proshare, October 02, 2012

27.  The Hard Facts to Rescue the Nigerian Economy ... - Apr 5, 2017 - Chukwuma Soludo, Proshare, April 05, 2017

28. PDF -Soludo on Buharinomics: Lecture Paper - Proshare  - November 19, 2015

29. The Quadrilemma of Buharinomics - Temitope Oshikoya   - June 03, 2015

30. Nextonomics puts cost of Buhari's Economic Blueprint at N60Trillion... - Proshare - May 31, 2015

31.  Building on Our Shared Destiny, Together - Buhari's Oct 1, 2020 Address

 

Related Posts - Budgets and Plans

1.      Top 10 Changes to Finance Act 2021

2.     A More Aggressive Revenue Target for FY 2022

3.     FGN Budget - An Expansionary Stance in 2022

4.     Public Presentation of 2022 FGN Budget Proposal - Breakdown and Highlights

5.     Highlights of Nigeria's 2022 Budget of Economic Growth and Sustainability

6.     President Buhari Signs N17.13trn 2022 Budget, Raises Concerns Over Changes Made

7.     FG Releases National Development Plan 2021-2025

8.     House of Reps Pass 2022 Budget

9.     Top 21 Changes to Nigeria's Finance Bill 2021 Effective Year 2022

10.  President Submits Finance Bill, 2021 to the National Assembly for Consideration and Passage

 

 

 

READ MORE: