Nigeria’s commercial capital Lagos has in the past five years consolidated its position as a regional financial hub for West Africa, according to a new report by JLL a global real estate services and investment management firm.
“Many international companies are increasingly using a hub and spoke approach to growth in Africa, selecting a small number of key investment locations, in key geographies and building a hub presence,” said JLL which has offices in Johannesburg, Lagos, Casablanca and Cairo.
“Lagos and Nairobi show they are consolidating their positions as regional banking hubs.”
Accelerating urbanisation, a growing middle class and investments in infrastructure are laying the foundations for the development of Lagos as a key African hub.
International corporations are increasingly congregating hubs like Lagos to secure access to a strong workforce, and to tap into a growing consumer population, according to JLL.
Lagos with a population of 21 million people, accounts for up to one fifth of Nigeria’s economic output.
The city ranked fifth in Africa for inflow of Foreign Direct Investment in 2014, according to data from fDi intelligence and the Financial Times.
Passengers going through the International airport in Lagos increased by 5.55 percent in 2013 to 7.26 million people, according to data from the National Bureau of Statistics (NBS).
“We look at Sub-Saharan Africa as 3 clusters – West Africa where we have our Nigeria hub, East Africa where our main hub is Nairobi and the southern cluster, where we have Johannesburg as our regional SSA hub,” said Varun Agarwal, Regional Portfolio Manager – Africa at Standard Chartered Bank (SCB).
In financial services, overseas banks and other financial services companies are actively expanding operations or launching new ventures in Nigeria.
This is being driven by increasing levels of high-quality office stock, improving economic governance and real estate transparency, according to JLL.
Findings from JLL’s 2014 Transparency Survey reveal that Lagos has made strong progress in real estate transparency, and demonstrated significant improvement in transparency scores since 2012; to secure a position in the Global Top 10 improvers.
“The work of the Lagos State Real Estate Transaction Department illustrates a process of better regulation in the sector,” JLL said.
Lagos has also benefitted from Nigeria’s overall macro – economic stability and rapid economic growth of the past decade.
In 2014, following the country’s revision of its Gross Domestic Product (GDP) measures, Nigeria emerged the largest economy in Africa with about $510 billion in GDP and $3000 in GDP per capita.
Growth has averaged 8.2 percent per annum in the past decade while consumer price inflation fell into single digits.
Nigeria’s total debt was only equivalent to 14 percent of GDP in 2014, according to data from the Debt Management Office (DMO).
The FG ran a current account surplus equivalent to 2.2 percent of economic output and budget deficit of 1.3 percent of GDP in 2014, according to IMF estimates.
PATRICK ATUANYA
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