Governor Umo Eno’s decision to embark on the construction of an 18-storey building in Lagos has sparked intense debate.
In a recent statement by Ekerete Udoh, the governor’s spokesperson, the Lagos building, dubbed “Ibom Towers,” is expected to generate substantial income for the state. The tower will house residential and commercial spaces, targeting high-income earners.
In addition to the Lagos project, the governor has also announced plans to build a three-star hotel in Abuja. These initiatives, according to the state government, are aimed at capitalising on the lucrative real estate markets in both cities.
Udoh emphasised that the projects are part of an audacious plan to transform state-owned moribund assets into profitable ventures.
“We will undertake the construction of Ibom Towers, an 18-storey commercial property on Aboyade Cole, Victoria Island, Lagos. This will serve as an income-earner for the state, in the nation’s commercial capital. We will also build a medium-density housing estate in Ewet Housing and sell the homes to high-income earners. A three-star hotel will also be built in Abuja, where our current liaison office is located,” Udoh quoted the governor as saying in his first-anniversary speech.
While the state government justifies the project as a strategic move to boost Internally Generated Revenue (IGR), a closer look at the state’s financial health raises serious questions about the wisdom of this investment.
Akwa Ibom, like many Nigerian states, is heavily reliant on federal allocations, particularly from oil revenue. According to data from the National Bureau of Statistics (NBS), the oil-rich state got ₦380.1 billion from the federal account in 2023, behind Delta (₦483.57 billion) and Rivers (₦426.84 billion).
While there is a commendable push to diversify revenue sources, the state’s investment arm, Akwa Ibom Investment Corporation (AKICORP), has a checkered financial history.
Despite managing the state’s investments, AKICORP reported losses in 2021 and 2022, with a meagre income of ₦110 million in the latter year.
A broader analysis of the state’s revenue profile reveals a troubling picture. While total investment income for 2022 was recorded at ₦308 million, this pales in comparison to the ₦28 billion generated from taxes.
Moreover, a staggering 76.7% of this tax revenue comes from Pay-As-You-Earn (PAYE), primarily from the oil and gas sector.
Given these figures, the question arises: Is investing in a high-rise building in Lagos the most effective way to boost IGR in Akwa Ibom?
Critics have argued that the state’s economic foundation is fragile, and a significant portion of its tax revenue is derived from a relatively small pool of formal sector employees. They emphasised that diversifying the economy and expanding the tax base should be the primary focus.
“PAYE is the largest driver of IGR receipts, and the government should look to improve PAYE receipts by attracting more formal jobs to the state,” Ikpeme Neto, a medical doctor and an entrepreneur from the oil-rich state, told BusinessDay.
“Taking precious state funds to invest in the Lagos real estate market with uncertain returns will not create the multiplier effect in Akwa Ibom that helping to create local jobs would,” he added.
Neto, who runs a global venture capital backed health technology business with an office in the state, urged the Akwa Ibom government to increase investment in agriculture in order to provide job opportunities. He noted that “cassava, cocoa, and oil palm are our natural strengths.”
To increase the state’s IGR, the entrepreneur also urged the government to help small businesses thrive, attract high-value work and workers to the state, and invest in knowledge, research, and development.
On the state’s moribund properties in Lagos and other locations, Neto urged partnership with the private sector.
“I think the state should look to partner with developers who can finance a business case while the state takes an equity position with minimal cash injection.
“Akwa Ibom’s current problem is not more money; it has had budget surpluses for the last 2 years at least. The state’s problem is finding ways to invest within the state to create jobs,” he said.
