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Investment: Sanwo-Olu’s Push For Lagos as Destination of First Choice

Background

For any region, whether national or subnational to attract the required investment necessary for sustainable economic development and growth, such must appreciate the importance and the need to attract Foreign Direct Investment (FDI). Illustratively, foreign direct capital is likened to a shy woman, who will never visit unless assuredly courted, with the necessary and most attractive baits thrown her, however, bearing in the flighty nature when faced with threat of any kind. Simply put, attractive investors to your clime is a risky affairs but all the same achievement when you are determined and intentional about it. This is why managers of economies must always strive at improv- ing on indices affecting the ease of doing business. However, it remains the duty of any government desiring to fast-track transformation and growth, to strive to create the right atmosphere that boosts investors’ confidence and ensures the security and safety of investments.

To ensure investor confidence in any given economic region, factors to be considered include the ease of starting a business, dealing with construction permits, power and energy, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. Therefore, in pursuit of its ambition of achieving its Sustainable Development Goals (SDGs), Governor Babajide Sanwo-olu of Lagos State, had demonstrated appreciable recognition of the need to prepare adequate grounds in terms of ease at which businesses get their tasks accomplished. This helps secure the confidence of investors, thereby attracting Foreign Direct Capital into the economy of the state.

Sanwo-Olu’s push for investors

In line with the ambition of making Lagos a 21st Century Mega City, efforts have been concentrated on building a city that is welcoming to foreign investments. A business environment that operates on advanced technologies and innovative solutions to improve its citizens’ quality of life, increase sustainability, and promote economic growth. Not only has the State Government identified 10 specific sectors as green fields in the state to be turned into brown fields, the state also provides special tax and trade incentives to potential investors. Through intentional investment in infrastructure transformation and strategic engagement with entities both corporate and individuals, as a way to promote global integration, the state has spared no opportunity to market the Lagos brand before international investors. Through direct appeals and admonitions, whether during working or courtesy visits; almost everyone who has hosted or been hosted by Sanwo-olu has been told of how ready the state is and welcoming to investors.

In a recent meeting with the United Kingdom Secretary of State for Business and Trade, Rt. Hon. Kemi Badenoch, in Lagos House, Marina, the governor re- emphasised the state’s readiness to receive Pound Sterling investors. Also speaking at a gathering of the US-Nigeria Council for Food Security, Trade and Investment, themed; “A New US-Nigeria Partnership for Economic Revival,” held at Eko Hotel and Suites, Victoria Island, Lagos in Dec. 2023, the governor disclosed that Lagos is more than ever before, open for business while vouching for his administration’s readiness to continue to offer all the necessary support that will make doing business in Lagos a rewarding experience. “We will continue to make the environment investment and business-friendly. We will continue to make Lagos a destination of choice. We understand that people have choices but they can indeed make those investment decisions in Lagos,” started the governor.

Infrastructure development

Sanwo-olu would appear to have over the years matched his verbal declaration of Lagos’ readiness for investors with pragmatic development of amenities and infrastructure. Administrative frameworks have also been modified, harmonised, and in some cases eradicated to improve the ease of doing business in the state. There are obvious signs of this when you take a cursory look at development within the state, ranging from the transportation sector, healthcare, education, internet infrastructure (ICT) to the digitisation of public service delivery. All of these noticeable transformation are geared towards promoting a conducive environment where enterprises can run seamlessly devoid of bureaucratic bottlenecks.

Recently, the state announced the computerisation of land documents processing in the state. Verification, registration, and acquisitions of land title documents can now be initiated and completed from the comfort zones of the citizens. From education and manpower development, which ensures the availability of skilled labour for mega-corporations and moderates the cost of labour; to transportation, which reduces the cost of production and ensures the free flow of human and cargo traffic, the Sanwo-olu administration is positioning the economic nerve centre of the nation for a lasting inflow of investment. Notably in the Technology, Communication and Information strata, the installation of a 30-kilometer optic fiber, is aimed at significantly enhancing internet connectivity, data transmission speeds, and overall network reliability in preparation for the arrival of foreign investors.

The ongoing transformation of the state’s transportation sector into a seamless multimodal mobility network has been rated as one of its peers in sub-Saharan Africa. The successful transformation of the sector, which is inching towards the inauguration of a second intra-city rail system, the first of its kind by any subnational in West Africa, is the right step on the path to position the state for in-flow of foreign direct investments. A few months after the inauguration of the state’s first mass transit rail system, also known as the Blue Line, the state is set to launch its second line, which runs from Agbadi, in Ogun State to Ebute Metta, on Lagos Island. The commissioned first phase of the Blue Line runs on electric coaches from Mile Two to Lagos Island, with an installed capacity that sells about 300, 000 trip tickets per day; the Redline, billed for commissioning in the coming weeks, will commence operations with 500,000 passengers daily.

Fiscal incentives

To create a conducive business environment, the Lagos State government has also put in place a wide range of fiscal incentives to attract foreign investors. Some of the main incentives are import concessions, tax exemption for exported products, and tax reductions for qualifying companies. As a step towards encouraging the production of export products; the state government has also provided a free trade zone. Reckoned as the first of its kind in any state or sub-region, the Lekki Free Trade Zone offers several incentives to its developers and occupants who are mostly foreign investors. When the governor hosted the UK envoy, Mrs. Badenoch, he said: “We are hoping that you have seen one or two things that you can take back and you can continue to assure the business community in the United Kingdom that Nigeria is ripe already and Lagos is a destination that they should consider.” This call of the governor, is of course, based on the fact that the state government has invested so much in building sustainable infrastructure in various sectors of the economy.

Benefits

Some of the benefits accruable to investors who choose to invest in the zones include; Zero corporate income tax, Free Zone income; Zero withholding tax on dividends and Zero VAT on purchases made within the free zone. All of these are meant to attract investment to the state and indirectly, to the national econo- my. Other beneficial policy benefits as formulated by the state government, are ways of enticing international investors to tax exemptions, import duty waivers, and ease of funds repatriation. Tax-related incentives also include: Zero tax on rental income during the pioneer period; Pioneer status incentive when certain requirements are met. Also in the transportation sector, the Lagos State government is willing to enter into a Public-private Partnership (PPP) arrangement in the operation of water transportation. Tax-related incentives also include: Initial capital allowance of 30% on purchase of vehicles restriction of tax charged for shipping and airline companies to activities carried out in Nigeria. The state also offers a tax holiday of between five and seven years for ship building, maintenance of vessels, manufacturing, and maintenance of aircraft, and an exemption from VAT for commercial vehicles and spare parts purchased.

First choice for tourists

In the tourism and creative arts sector, the state is committed to a 100 million dollar Film City. Located in Epe, the Film City, other than the promotion of artistic talents and job creation, is created to attract foreign direct investment. For investors in the tourism, arts, and entertainment industry, the state offers tax-related incentives, which include 25% of income derived from tourism by hotels in convertible currencies will be exempted from tax holidays between three and five years, and import duty exemption on tourism-related equipment. Provision of land for tourism development at concessional rates and availability of soft loans with long periods of moratorium. Also, the state has in place, various interfacing mechanisms that eliminate bureaucratic bottlenecks that impede the adequate flow of correspondence between the state and potential investors.

One of the vital windows to attract investors to the state, is the inauguration of the Lagos International Financial Centre Council (LIFC). In line with its strategic mandate, not only to attract global investors, but also to ignite a wave of economic growth and innovation within the state. Co-headed by the Governor and a seasoned banker and international investor, Mr. Aig Aigboje Imokhuede, LIFC is set up to help the state captivate global investors, unveil its potential as an investment destination of choice, and pave the way for a transformative era of economic prosperity. LIFC is also meant to serve as an interface mechanism between potential investors and the state government on one hand, and foreign investors and other allied agencies on the other.

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