Global economies encourage high impact investment for open economies with huge business and economic potentials to grow the revenue base and opportunities for that economy.
The attraction or wooing of local and foreign investors are the key aims for economic planners in an economy. Investment drives growth, with multiplying development effects on the long and short run. Investors are overly careful in their choice of investment location for their monies, as certain business factors can decide the fate of an investment.
An unstable business environment is a red flag for potential investment. Lagos State, smallest state in Nigeria by landmass, yet the most industrialised city in Nigeria and sub-Sahara Africa. Lagos is Nigeria’s second most populated state after Kano with over 20 million inhabitants. It is the fourth biggest economy in Africa by Gross Domestic Product (GDP). Lagos has 20 Local Government Areas (LGAs) with 37 Local Council Development Areas (LCDA).
A close look at why Lagos has remained a leading investment hub in Africa over the years among major cities like Cape Town, Johannesburg, Nairobi, Cairo, Kigali, Accra, Tunis, among others, is a testament on why Nigeria is Africa’s biggest economy in terms of GDP.
Lagos boasts a human population larger than Gabon, Botswana, Gambia, Namibia and Liberia populations put together. This population figure creates a strong market for goods and services for the rest of the country and continent. Businesses with sustainable business models, innovation and technology, target a huge chunk of the market share within and outside Lagos state, for profitability.
The central billing system and electronic process involved in tax administration with little or no cases of multiple taxation is a major source of attraction for investors. Multiplicity in tax payment, especially for start-ups, is very minimal. Lagos state is a border city to African nations like Benin and Togo with high business potentials. The network with other neighbouring nations makes for trade facilitation, easy movement and influx of human resources into the city.
There are commercial activities at the land borders, airport and seaports, especially engaging in multilateral trade and exchange. Lagos seaport is one of the continents busiest and biggest with lots of importation and exportation in its shores. Calabar, Warri, Onne and Port Harcourt ports lack the ability to carry certain cargoes and are smaller in size.
The available market in Lagos makes it an attractive option for business owners. There is an array of vital infrastructures like road, train, improved security, viable business environment, housing, better health care systems, schools and others when compared to other cities in Nigeria.
Lagos boasts and houses the biggest movie and entertainment industry in Africa, where locals and foreigners can enjoy the beauty of the African culture and art. Some of the best hospitality and tourism industries can be found on the island of Lagos, with world class hotels, beaches, gardens, parks and lounges. The growth and structure of the real estate industry is another attraction for investors. Housing units for different classes of people of diverse social status are available and accessible.
Some of the continent’s best and biggest financial houses have the business operating headquarters in Lagos. This is an advantage for most business start-up and entrepreneurs to access credit facilities, grants and loans to grow their ideas. A report from Statista in 2021 ranked Lagos as the leading city for business start-up in Africa with a rating score of 4.69 ahead of Nairobi (4.28), Cape Town (4.05), Johannesburg (3.86) and Cairo (2.73).
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This is a pointer that business start-ups and entrepreneurs seeking for funding opportunities will profit from their location in Lagos than any other city in Africa.
There are certain challenges like congestion, traffic and liveability index rating but the government of Lagos state has been able to improve, manage and sustain the high influx of people and businesses over the last few decades. Lagos state has enjoyed a sustained level of political stability in governance since the advent of democracy in Nigeria in 1999.
Though there is a need for improvement in the traffic situation, infrastructure, business policies, security and quality of life in Lagos to enable it to retain this favourable business environment for the foreseeable future. The city has enjoyed and benefited from the federal government of Nigeria in terms of policies, finance and other incentives as the heart beat and mainstay of over 80 percent of the non-oil revenue for the government of Nigeria.
There is also support from sub-national bodies like the Economic Community of West African States (ECOWAS) and African Union (AU) for a city that is one of leading and brightest potentials for industrialization, economic growth and development of Africa.
