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Lagos megacity – Seeing in 3D

January 6, 2009

What do Lagos States’ two megacity projects – the expansion of the Orile-Iganmu-Badagry expressway and the $2 billion two-rail line – and the relocation of a manufacturing plant from Aba to Agbara have to do with economic development? More than meets the eye. These seemingly unrelated events have a lot in common according to the recent World Bank development report “Reshaping Economic Geography”, higher densities, shorter distances and fewer divisions (ie, economic borders) have contributed to the economic transformation of megacities in the world eg, Tokyo, New York, Chongqing, Mumbai etc. In other words, there are three dimensions to development: density, distance and division.

According to the United Nations, Lagos state will become by 2020 one of nine megacities in the world. But the pains of this growth: slums, traffic jams, and heaps of refuse which are felt and smelt daily, mask the gains of urbanisation. Nonetheless, the plans by Lagos State to provide a two-rail line that will make 16 million trips commuting over six million passengers daily suggests Governor Babatunde Fashola and his team are seeing in 3-D. Two places in Lagos: Badagry and Ikeja are linked by road to Agbara Estate, an industrial estate in Ogun State, where Unilever, in line with its February 2000 five-year strategic plan, has just established a 3.5 billion naira detergent factory. The thought of traffic, people and goods, teeming along Orile-Iganmu-Badagry is mind boggling.

As the investor forum kicks-off, it’s obvious that the governor and his advisers have hatched a vision that sees Lagos as a city with a portfolio of assets, they understand what it each of these does best and are engaging the private-sector in realising the city’s inherent potency. Fostering development along these dimensions can be cumbersome, sometimes complicated or straight forward and devoid of instant rewards: policies have to be thought through and implemented, infrastructure, gulping billion of dollars, spanning beyond a government’s tenure, have to be put in place, institutions have to be built etc. Economic development doesn’t just happen. Where there’s no deliberate and disciplined effort at development there’s no economic growth. For the World Bank: “The reality is that the interaction between leading and lagging places is the key to economic development.”

Besides, urbanisation and economic growth are mutually reinforcing. Lagos, situated by the coast of West Africa is naturally endowed for urbanisation; she’s a natural lodestone for people and producers.  Migration of skilled, semi-skilled and unskilled workers to urban areas generates demand for food, schools, roads, sanitation, the exchange of ideas eg, entrepreneurial opportunities, financial services, telecommunication etc. MTN’s offer of seamless roaming in Nigeria, Ghana, Benin and Cameroun is a clear and present example. Needless to say, several Nigerian banks and law firms will be angling to provide their services to both the State government and private investors in raising the funds.

Coupled with migration, agglomeration of producers ie, locating in areas densely populated by other producers eg, manufacturing companies, provides economies of scale (reduction in the average cost of production as output increases) as well as proximity to suppliers, consumers and competitors. Little wonder why Unilever is centrally locating its operations in Agbara. A key component of Unilever’s strategy was to reduce and relocate its manufacturing sites, establish regional hubs and expand, via exporting, into the ECOWAS region; there were benefits to be gained by aligning the businesses of other associate Unilever companies in West Africa.

Yet, economic density and shorter distances at a local level are incomplete without national and international integration. For instance, thinner borders will be a boon for the plans, frozen at the moment, to turn Lagos into West Africa’s financial hub. But then, is it all about Lagos State? As the urbanisation and economic growth of Lagos radiates beyond its borders, it will reach a threshold and spill-over into cities like Ibadan, Oyo State – Ogun State is already a beneficiary. Disparities in resources and living standards within the country and better economic benefits between landlocked and coastal countries can be tackled however unbalanced the economic growth, which need not be exclusive, even if concentrated in a few places. Therefore, “… regional institutions that thin borders, regional infrastructure that connects countries, and such incentives as preferential access to world markets, perhaps conditioned on ensuring that all countries strengthen regional cooperation” are needed policy instruments.

The West African region, inhibited by thick borders inherited from the 19th century scramble for Africa, is mentioned as one of the places were integration is hardest. Divided, distant and without economic density these countries are found among the “bottom billion”, a term coined by Paul Collier, a professor of economics at Oxford University. For Prof Collier, poor countries are caught in one or more traps: “The Conflict Trap,” “The Natural Resource Trap,” “Landlocked with Bad Neighbours” or “Bad Governance in a Small Country.” Nigeria, thank goodness, is ostensibly free of three of these traps. Alas, some of its neighbours are not. Nigeria, as the largest economy in the region, can spur West Africa’s economic makeover from and through Lagos State.

Governor Fashola must be commended for focusing attention on the oft mentioned, but hardly exploited, natural gifts that Nigeria is blessed with: human and geographic resources – other than our crude oil. His daring to see in 3-D can and should be emulated.

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