IN one of the most brilliant speeches ever delivered on an international platform, Lagos State Governor Akinwunmi Ambode outlined a social economic projection of Africa, complete with a ‘how to achieve design’ while graphically stating the inevitable – it is time for Africa.
Ambode, speaking at the third annual London School of Economics (LSE) Africa Summit on April 23, said Africa’s biggest economies have enjoyed improved social and economic performance for more than a decade, but are now facing significant headwinds following the adverse shock in commodity prices in the process growth has slowed, coming in at 3.5 per cent in 2015, down from 4.6 per cent in 2014, the weakest pace since 2009.
Yet he chose not to delve in the past but see into an Africa with an economic future rating amongst the first world countries. He noted heavily that Africa’s strength and potential lies in its rapidly growing population “judging by the Transformational urban swell by 2050, two in three Africans will be urban, by 2050 Africa would account for almost 24 per cent of the world’s population.
This transformation and growth in Africa will mean a more equal partner and more intense and deeper trade and commerce with the rest of the world. A prosperous Africa would end the great press of migrants trying to enter Europe. In the 1960s, there were roughly 300 million Africans, and 400 million Europeans, and the world was not that well connected. By 2050, there will 2.4 billion Africans, and only 700 million Europeans.
Yet a bursting population wasn’t the only criteria for the continents economic and technological independence. Abode warned that for there to be real transformation, nations and states must design their own path, with clear plans for growth and development, directed at achieving the Sustainable Development Goals (SDGs).
In what was deemed by all gathered to be a rousing and inspiring moment in his speech Ambode cited the tough but imperative task ahead if Africa were to in the nearest future become a self-reliant economic giant as China is today. He noted that when Goldman Sachs predicted that China would become the world’s biggest economy by 2048, the idea was ridiculed. But today 30 years off, China will be the world’s largest economy by 2018.
Using his hard work and record time achievements in Lagos as a case study for Africa’s development and self sustainable goals, Ambode drew outlines and examples from the state’s tax system as one many potential areas that African states and nations could begin from – “our tax collection is very poor – with tax-to-GDP estimated at 8%, the second lowest in Africa and the fourth lowest in the world …excluding government revenue from oil & gas, our tax receipts were only 3 per cent. Even in Lagos where we have consistently achieved success in IGR collection, there is still significant scope for growth.
If properly implemented to Sub-Saharan African economies average of 18%, Nigeria could potentially raise its tax revenue to $103.3 billion, the equivalent of Morocco’s GDP in 2014.
A higher tax revenue would reduce government borrowing and generate more funds to devote to areas where government spending is more productive than the marginal rate of private sector spending encourage financial institutions to offer funds at lower interest rates, thereby boosting the real economy. He also added that if we ask for tax revenue, we in the government will have to deliver something. We need to imbibe fiscal discipline in delivering the public services that our citizens so rightly deserve. This calls for a greater autonomy of state and local governments, which in turn promotes accountability. If we look at Canada for example, its decentralism has played a great part in its growth and success, allowing for maximum provincial authority in the fields of healthcare, education, taxation and social benefits. In terms of specific sectors, the first step lies in harnessing Nigeria’s potential in the non-oil sectors, focusing particularly on Agriculture, Manufacturing, Solid Minerals, and Service sectors which in aggregate represent 90% of GDP.
He noted sadly yet was keenly optimistic that though the massive fall in oil prices has sharply reduced Nigeria’s growth rate, export earnings, foreign direct investment, and government revenues. Nigerians have been provided with the opportunity to now deliver real growth. The high price of oil created a distorted economic structure, where it was more valuable to capture value from the oil stream than create value. The governor noted bitterly that the returns to oil went to a few, with a tiny trickle down system to keep the social peace. He went on to reiterate positively that the drop in oil prices has revealed that the one dimensional model of Nigeria’s political economy has outlived its shelf life. “We are forced by the slump to change the architecture of our political economy. That is the challenge before us.”
He sees the low oil prices as a tipping point for positive change, noting that, “this downturn is an avenue for us, the leaders and citizens of the country, to address the sources of vulnerability in order to achieve inclusive growth and sustainable development”. Stating that “the tone of enhance governance with focus on transparency and accountability has been established under the leadership of President Muhammadu Buhari.”
Attentions were aroused and concentration keened as the governor piqued audience interest when he went on to highlight the wonderful achievements and futuristic project plans of the APC-led government of Lagos State.
“As a state, Lagos has increased its efforts by targeting infrastructure spending towards improving the condition of inner roads- almost 150 due to be completed within one year of my assuming office. We are now in discussions with private and institutional investors who have shown interest in game changing projects such as the Badagry deep sea port, the 4th Mainland Bridge, development of new cities around the Lekki Free Trade Zone, where Dangote Refinery is located and scheduled to come on stream in 2018.
“Also recognising that power and security challenges enhance business success. We have invested significantly in security, funding and equipping the police with the Securities Trust Fund initiative. Our Light Up Lagos’ initiative has also seen us connecting 67 communities of the state to the national grid and major roads fully lit. Whilst we are steady heading in the right direction we clearly still have huge infrastructural gap. Lagos – City Of Opportunities The Lagos delivery model is based on strategic imperatives built on four pillars: Infrastructure Development, Economic Development, Social Development and Sustainable Development. These pillars are underlined by enhanced Governance structures. However, despite Lagos’ challenges, let’s be clear on one thing: Lagos is now the commercial centre of Africa. Despite not being an oil producing state, we are one of the few states that are self-sustaining with our Internally Generated Revenue growing by 84% to $1.4 billion in 2014 compared to 2010. Our strength lies in our demographics. The population is nearing 22 million of which a large proportion fall within the ages of 18-40- a ready labor force! We pride ourselves as the 5th largest economy in Africa with our GDP estimated at $131 billion in 2014 compared to Johannesburg’s GDP of $83 billion. This makes a strong case for Lagos not just as a promising market, but as an emerging global centre, with Africa’s lead in financial services, ICT, hospitality, and other high value-added sectors. We are committed to the vision of making Lagos State Africa’s Model Megalopolis and Global Economic and Financial Hub that is safe, secure, functional and productive. This is evident in the recent establishment of Lagos Global a one-stop shop for investors.”
Rounding up his speech, Governor Ambode left his delighted audience with strong enjoining challenge – “So where will all this end up? A recent PwC report has projected that in 2050, Nigeria would be the world’s 9th largest economy. Everyone in this room has a role to play in this journey and I am counting on your support to help us make it a reality.”
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