The two neighbouring South-West states of Lagos and Ogun took 72 percent of all the manufacturing investments made in Nigeria in 2018 and 2019, leaving the remaining 34 states scrambling for 28 percent, according to data from the Manufacturers Association of Nigeria (MAN).
Lagos, Nigeria’s bustling commercial hub, is attractive to investors due to its proximity to a booming market of over 20 million people and presence of infrastructure such as seaports, analysts say.
Olusegun Osidipe, director of research and statistics at MAN, told BusinessDay in 2019 that it was easier to check who owned a piece of land on the system in Lagos.“You know how much to pay on Land Use Charge in Lagos,” he had said.
Ogun State, just next-door to Lagos, is leveraging its proximity to the commercial nerve-centre by making the cost of doing business easier.
“There are a few landmarks in Ogun State. Manufacturers and other investors have more room for expansion,” Ambrose Oruche, acting director-general of MAN, told BusinessDay on the phone in August.
Investors in the manufacturing sector have taken a preference for Lagos and Ogun State as other states prove less attractive due to their lack of competitiveness.
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In 2018, Lagos and Ogun States collectively controlled N473.99 billion (85.76 percent) of N552.64 billion invested in the economy.
In 2019, both states recorded N285.88 billion worth of investments (57.62 percent) out of the total N496.11 billion manufacturing investments in the country.
On the average, the two states had 71.69 percent of all the investments in the two years.
Part of the challenge is that many of the other states in the country are insecure and lack infrastructure that can attract investors, according to Ike Ibeabuchi, managing director, MD Services Limited, a manufacturing and services outfit.“Again is proximity to the market and cost of doing business,” he said.
Industry experts say the central location of Lagos and Ogun— which provides access to West African markets — available landmass and the promise of a larger market have endeared these states to investors. In addition, investors see both states as being business-friendly in policies and environment.
Ogun State annually holds its Investors Forum, which was established in 2012, where it gathers captains of industry from around the country, with a view to intimating them with opportunities in the state. Lagos State government is also engaging investors from time to time.
The $13 billion Dangote Refinery is ongoing in Lagos, in addition to investments by Dangote Sugar, Honeywell, PZ Cussons, Guinness, among others.
Ogun has investors such as Fidson Healthcare, May & Baker, Pure Chemicals, Eagle Packaging, Nycil Limited, among others. Companies such as Dufil, Flour Mills, among others, are located in both states.
According to Oruche, manufacturers are more attracted to locations that will make business easy to run. He said availability of infrastructure, security, ease of doing business, port availability and market proximity attract investors.
“Lagos and Ogun states provide access to markets driven by population. In addition, Lagos promises high security which many investors appreciate. Ogun State is also ranked high in the ease of doing business with its business-friendly policies and environment,” Oruche said.
“Another important factor is the availability of the ports in Lagos which makes it easier to receive goods, especially when the market is proximate. Long-distance between ports and market or consumers will affect competitiveness, quality and quantity of the goods,” he further said.
Layo Bakare-Okeowo, CEO of FAE Limited, told BusinessDay that there are some crucial factors necessary for businesses to thrive which will interest investors.“Lagos and Ogun States have close proximity with other towns and regions which extend market reach. In addition to this, due to the import and export activities, the availability and accessibility of the port are critical,” Bakare-Okeowo said.