…Targets local financing to hedge FX risk
…In talks with MOFI to free dead assets in Lagos
Babajide Sanwo-Olu, the governor of Lagos state, is at the Africa Investment Forum (AIF) in Morocco seeking over $1 billion from private investors to fund key capital projects from a film city to the fourth mainland bridge.
Sanwo-Olu highlighted about six projects for which Lagos, Africa’s most populous city, is seeking private capital.
The projects include a $400-500 million film city in Epe with studios that will rival Hollywood, a fourth mainland bridge that will help decongest the sprawling city of 20 million people as well as the second phase of a so-called red line rail project which connects Lagos to neighboring South Western state, Ogun.
The second phase of the blue line rail which will connect Mile 2 to Okokomaiko in Lagos and the Lekki deep sea port were also among the projects pitched to investors. The Lekki Deep Sea Port, which is already operational but still partly under construction, is a multi-purpose, deep sea port in the Lagos Free Zone and is not only the largest seaport in Nigeria but one of the biggest in West Africa.
The Lagos state governor also pitched for funding for an ambitious new airport in the outskirts of Lagos in Epe that will serve not only the state but the entire West African region.
Sanwo-Olu, who was at the AfriCaribbean trade and investment forum in Guyana late last month, signed a $1.35 billion infrastructure facility and food security deal on behalf of Lagos with the African Export-Import Bank (Afreximbank).
He said the feedback from investors at the AIF has been pleasing and a number of bilateral sessions will be held that could possibly lead to signing deals.
“We welcome investment in new areas of transport infrastructure, especially on the rail lines we are building to commute millions daily. The numbers are real, and it will speak to returns on investment. Additionally, we invite investment in our waterways, where significant backbone infrastructure has been delivered,” Sanwo-Olu added.
To manage risks associated with foreign exchange, Lagos will seek financing in local currency, according to Sanwo-Olu.
“The investments will be priced in dollars initially but we are ultimately seeking investments in naira,” he said.
“Such a strategy will deepen our own local currency and also help us de-risk foreign currency risks. So, if you want me to put some numbers to it, it could be a billion dollars or a trillion naira,” Sanwo-Olu said.
The governor also said talks were ongoing with the Ministry of Finance Incorporated to see how “dead” public assets in Lagos could be revived to unlock more revenues for the state.
“There are a lot of assets that are also in Lagos, which we want to determine the real ownership and what percentage everybody owns. The aim is to free up dead assets that are locked down in several sectors and transform them into viable and investable assets,” Sanwo-Olu said.
He expressed confidence that the state government is working on finalising this plan in the shortest possible time, adding that Lagosians should begin to see some progress being made in the next couple of months.
Nigeria has as much as N180 trillion trapped in dead assets mostly in real estate, according to PwC’s estimates.
Unlocking that capital could be a game changer for a cash-strapped government whose debt service cost is forecast by KPMG, a consulting firm, to gulp 100 percent of its revenues this year, up from 96 percent in 2022.
Over 70 entities have been captured in a national asset register that aims to identify Nigeria’s vast and mostly idle assets, according to the Ministry of Finance Incorporated (MOFI), whose work it is to build the critical database that will help unlock badly needed cash for the government.