#EndSARS protests: Who bears rebuilding cost?
...Observers fear govt may resort to tax increment, more borrowing
Though the #ENDSARS Protest is over, the losses are enormous, leaving the rebuilding challenge to the government, private sector and individual casualties.
It is estimated that 71 public warehouses and 248 privately owned stores were looted in the course of the protests in 13 states and the FCT, and 205 critical national security assets, corporate facilities and private property were also attacked, burnt or vandalised.
The above leaves the country with over N1 trillion losses and urgent need for rebuilding.
Lagos State alone lost over N700 billion worth of property, considering the fact that the state was the epicenter of the protest, and regrettable mass destructions of properties and lootings by hoodlums.
Counting the losses, the state government revealed that 27 of the burnt Bus Rapid Transit (BRT) vehicles in the Oyingbo and Ojodu Berger areas of the state cost $200,000 each, while 57 of them cost $100,000 each, all totaling about N3.9 billion. These are aside stores that were looted, businesses torched and government properties destroyed.
In Aba, Abia State, facilities destroyed by the rampaging hoodlums, include, Zone 6 Police Station, Ogbor Hill, Aba, Aba Fire Service, Aba South secretariat, Aba South Primary Health Centre, Agricultural/ ADP, Aba office, Board of Internal Revenue, Aba office, Aba South Town Planning Authority, Dental Centre, Aba, Aba Magistrate Court, First Bank branch, along Ehi road, by Mosque, Aba, First Bank, Faulks road branch and Onions market, along Aba-Port Harcourt expressway.
There were also incalculable destructions in Rivers State, Akwa Ibom State, Cross River State, Kaduna State, Osun State among other states across the country. The Federal Capital Territory (FCT) was not also spared.
As Femi Gbajabiamila, speaker, House of Representatives, noted after paying solidarity visit to the Lagos State governor recently, the state would need about N1 trillion for the reconstruction and repair of the properties and infrastructure that were vandalised and destroyed by hoodlums.
But the problem, according to many concerned Lagos residents, is how the state is going to finance the rebuilding work, considering that the Covid-19 pandemic has made the realisation of the state’s new internally generated revenue targets of N42billion monthly, N500 billion annually, and the N1.6 trillion budget impossible in 2020.
Although Babajide Sanwo-Olu, governor of the state, recently signed an executive order establishing the Lagos State Rebuild Trust Fund aimed at rebuilding the state, many residents think that the trust fund is a welcome development, but that it will not offer the government all the funds needed for the rebuilding work.
“We all know that there is no money and it is impossible to meet revenue targets this year because of the pandemic. So, Lagos State government will be looking beyond the trust fund to raise money”, Denola Okunu, chairman of a Lekki community development association (CDA) said.
The CDA chairman, who is also a medical doctor, noted that the state is likely going to tax residents directly or indirectly to augment the rebuilding fund.
In the same vein, Kennedy Okwor, a public affairs analyst, observed that the affected states have been receiving a deluge of offers locally and internationally to help rebuild their states after the recent violence, but may not readily accept the offers due to the fear that the federal government may withdraw or reduce its anticipated assistance on hearing the huge donations.
“A close friend of mine in government hinted that the affected states are seeing the rebuilding fund as a second round of covid-19 palliative from the federal government, which must not be missed. No matter how much they raise within the state and from donors, the governors will still want free federal money, which will not be accounted for”, Okwor said.
Lukmon Akinfele, a tax consultant with the Lagos State government, also noted that the government would not bear the rebuilding cost alone.
“Taxes are sure source of revenue for the government. So, we expect the government to raise taxes directly or indirectly because it has not really earned enough this year and will not meet any revenue target because of the pandemic, lockdown, protests among other challenges. Businesses may witness 100 percent tax increment by January 2021 as part of revenue drive by the government to raise the rebuilding fund, which was not captured in the budget”, Akinfele said.
However, a senior official in Lagos State government, who pleaded for anonymity, noted that government was likely going to suspend any financial assistance and projects including SME funding and empowerment projects for now because revenue would be channeled towards the rebuilding fund.
While Lagosians await the trust fund, some individuals are taking up the rebuilding work in their various capacities.
Musiliu Akinsanya, chairman, Lagos State Chapter, National Union of Road Transport Workers (NURTW), has undertaken to rebuild the burnt Divisional Police Headquarter popularly known as Makinde Police Station in Oshodi, the stronghold of the transport union boss.
While many think that the plan by Akinsanya, who is popularly known as MC Oluomo, is a major image boosting initiative, after the fallout of his seemingly imposition on Lagos NURTW, the transport union boss sees it as part of his contribution to getting society back on track.
Jude Olekanwa, owner of an electronics supper store that was looted in Ikotun area of Lagos during the protest, noted that the cost of rebuilding for the private businesses would be on the owners as those who wait on the government for assistance may wait forever because the government is also looking for money to rebuild its destroyed properties too.
“I lost everything, including electronics in the showroom and newly imported products in the warehouse. It is not just the hoodlums, some staff took advantage of the protest to also loot their owners’ businesses”, Olekanwa, who is a victim, lamented.
As well, the Cross River State government is looking for over N5 billion to rebuild the state after the massive destruction and looting by hoodlums during the protests, especially the near scrapping of stores and the hotel at Tinapa Business Resort.
According to Dominic Kidzu, secretary, Cross River State Policy Advocacy Committee (CRS-PAC), it is regrettable that the state, which has been struggling with a dwindling economy with average expendable income plummeting to an all-time low, is now saddled with the additional burden of rebuilding public infrastructure with funds that should have been invested in developmental programmes.
He thinks that the state and private businesses affected by the lootings and destruction of properties will bear the cost of rebuilding as both are looking for money.
The Abia State government is hoping to engage the youths in the rebuilding work.
According to Okezie Ikpeazu, governor of the state, the youths would be engaged directly to repair or renovate property and infrastructure damaged during the protests in the state while the government provides the needed materials.
But businesses torched during the protests are pleading for assistance as the pandemic is still impacting negatively on the economy.
Of the various sectors of the economy, real estate was the most affected by the massive destruction and looting. This, according to analysts, has immediate, mid and long term impacts on the sector which is still smarting from the crippling effects of the Covid-19 pandemic.
In the immediate term, the impact is already palpable with occupants of affected residential buildings rendered homeless while destroyed commercial buildings lie in ruins and the owners sulking and counting their losses which run into billions of naira.
In both mid and long term, there will be developments in the sector most of which would have pulling down effects. Capital flight is a major development that may occur as foreign investors liquidate real estate holdings and move to safer climes or relocate to western cities and pause on investing in Nigeria’s real estate market.
“There will also be a clear reduction in lease transactions which is a proxy for in-country relocations,” Ayo Ibaru, COO/Director of Research at Northcourt Real Estate, added in their new report titled ‘Cause & Effects’ of the EndSARS Protest on real estate.
It is expected, however, that there will be a rise in local investment in commercial real estate to fill the gaps left by foreign investors. This, Ibaru noted, is a good development, explaining that “local capital tends to be more patient and it is this type of capital that is needed in nascent markets like Nigeria to create sustainable growth in the commercial real estate market.”
In the mid-term too, people are going to be more careful about where to live and so, there will be greater emphasis and demand for residences within gated estates that enjoy communal living as this offers security services and leverages the experience, expertise and network of both the estate management company as well as the residents’ group.
This was quite evident in Lagos where, except for Thomas Estate located off Lekki-Epe Expressway, most of the gated communities in the sprawling city were safe and peaceful while the protest lasted.
In both immediate and mid-term, security is going to be a major consideration in real estate development. In his reaction to the large scale destruction of public and private assets in Nigeria’s major cities, especially Lagos, Damola Akindolire, managing director, Alpha Mead Development Company, noted that security of assets was no longer guaranteed and that was going to affect investment decisions going forward.
Ibaru agrees, saying, “it is apparent that there exist opportunities for new businesses in the security field. From phys cal personal security, cyber security, natural surveillance, security lighting, alarm systems and sensors to video surveillance, electronic access control systems, identification systems, and private military services. These new and changing requirements will change what space users demand and how developers build.”
Speaking with our correspondent on the implication of the #EndSARS protest for Nigeria, Yabagi Yusuf Sani, the national chairman of the Action Democratic Party (ADP) said it was a sad chapter.
“This is because, when this administration came on board Nigerians had a lot of expectations in terms of how it will impact their lives positively but like we are all now seeing, it is like from frying pan to fire. This is what I think is responsible for the #EndSARS protest. Aside from the fact that SARS went out of their rules of engagement in terms of fighting armed robbery and other things like that, the crux of the matter is the fact that the entire country across the board became disenchanted, confused and frustrated with the administration,” he said.
The former chief executive officer of Nigeria Extractive Industry Initiative (NEITI), also noted that although “There is a government, there is no governance.”
“People had expected that the pedigree of President Muhammadu Buhari could have served as a kind of panacea to a lot of problems that we have in this country but that is not the case; as I have said, and that is why the protest gathered such a momentum across the country, particularly the southern part of the country, and of course, it was also followed by the northern part of the county; although not with the same intensity,” he said.