BusinessDay

Lagos is hurting investor confidence

The current situation in Nigeria’s largest economy, Lagos, bears a striking resemblance to the early years of America’s organised crime scene. In the late 1920s, the five crime families of New York — the Bonano, Colombo, Gambino, Genovese, and Luchese, before the rise of the drug racketeering trade, decided to divide the monopoly of local labour industries they had, acting in tune with union leaders and political representatives who were their puppets.

Organised crime in New York has traditionally had a stranglehold on the waste disposal industry. Manhattan garbage was Gambino. Brooklyn was Genovese. In both boroughs, mobsters, who collected fees from the union, would order union workers to go on pay strikes, and then force politicians to yield to the workers’ demands and raise their wages. When that happened, the mob would then collect more fees from the union. Taxpayers would end up paying way too much for garbage removal, and most of the extra money actually went to the mob.

Times have changed, and these days a waste disposer can work without being a member of a union. But back in the day the mafia was ready to kill anyone who worked in their sector without being a member of their union. In so many ways, this bears striking resemblance with the Lagos state government’s penchant of mob rule. One of their major foot soldiers, the Lagos state chapter of the National Union of Road Transport Workers has consistently been the go to tool for maximum resource extraction, thus creating a mutually beneficial relationship that allows the state government to shirk its responsibility of providing jobs for its brimming population.

But that is not where the comparison ends.

New York inadvertently empowered these mobs to the point that they became kingmakers in their own right. The Lagos state government has more directly empowered crime bosses in the NURTW to create an alternate economy for themselves and determine the outcome of elections in the state.

It is important to point out Lagos’s position as Nigeria’s most populous and richest state as a result of its status as the country’s former capital (it was capital for 87 years), and as a result, Lagos remains the first choice for businesses because of its ports and labour. The city’s cardinal sin rests largely on its inability to provide basic amenities for the nearly 22 million people it claims to tax. Near daily fights break out in different parts of the state, with untold consequences for the economic health of the state.

When violence breaks out between groups fighting turf wars, lives are not just affected. Businesses suffer. When businesses suffer, capital investment and FDI vote with their feet

The violence between rival factions of the NURTW in Obalende last Thursday is yet another day at the office for many Lagosians, but it is another thing holding its economy to ransom. Lagos Island houses nearly all the headquarters of major corporations in the country, as well as the state’s division of military installations. When violence breaks out between groups fighting turf wars, lives are not just affected. Businesses suffer. When businesses suffer, capital investment and FDI vote with their feet by seeking saner climes where the cost of doing business is not so high as to threaten lives and property. The Third Mainland Bridge is the most important of three bridges connecting the mainland with the island. Imagine for one second that the bridge is totally shut for half a day. The impact on businesses would be profound. The ENDSARS protests last year which converted the Lekki Toll Gate as it’s spiritual headquarters made the Lekki Concession Company (in charge of the toll gate) lose a ton of money. The Punch recently noted that the Lekki-Ikoyi Link Bridge was expected to generate about ₦10 million daily, or nothing less than ₦300 million monthly, while the Admiralty Circle Plaza along the Lekki-Epe Expressway was expected to generate nothing less than ₦16.6m a day, which grosses about ₦500 million monthly. Just before the Lekki Toll Gate Massacre, the state government said it lost about ₦234 million in terms of revenue.

With the continuing violence that breaks out in important central business districts in the city, the government’s pitches for capital investment and economic opportunities will not just take a hit, for all intents and purposes, it speaks to a paradox of a curious symbiotic relationship that works just fine for the government. However, not the people it might look to convince to stay, or come in and take the places of those who got tired of waiting for the silencing of the guns.

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