How Ogun emerged as Nigeria’s industrial destination

Ogun State is today Nigeria’s industrial destination. A three-year data dealing with the direction of manufacturing and agro processing investments show that Ogun is elbowing Lagos in new investments.

Data from the Manufacturers Association of Nigeria (MAN), analysed by BusinessDay, show Ogun has over 70 percent share of manufacturing investments in the country between 2014 and 2017.

In 2014, manufacturers invested N691.77 billion, out of which N514.87 billion went to Ogun State,  representing 74.42 percent of the total .

Apapa and Ikeja in Lagos contributed N15 billion and N85 billion respectively to the investments, representing a combined 15 percent of the total.

Out of the N180.12 billion invested in the manufacturing and agro-allied industries in Nigeria in the first six months of 2015, N128.3 billion went to Ogun, representing 71.23 percent. Ikeja and Apapa industrial zones got N15.74 billion and N6.98 billion, representing 8.7 percent and 3.9 percent share of the total respectively.

Similarly, manufacturing investments worth N309.33 billion were made in H2 of 2015, out of which N302.26 billion went to Ogun,  representing 97.7 percent of the total. Apapa and Ikeja shared the remaining less than three percent with other industrial zones across the country.

In the first half of 2016, total investments estimated at N54.55 billion were made by manufacturers in the country, out of which N37.51 billion moved to Ogun within the period. This means that 69 percent of all investments within H1 of 2016 were channelled to Ogun State. Apapa and Ikeja shared the remaining 31 percent with other industrial zones such as Edo/Delta, Imo/Abia, Oyo/Ondo/Osun/Ekiti, Kano/Sharada/ Challawa, Kano Bompai, Anambra/Enugu,  Bauchi/Benue/Plateau, Rivers, Kwara, and Abia.

In the second half of 2016, MAN survey shows that N313.62 billion worth of investments were directed to Ogun out of the total N448.94 billion. This represents 70 percent of the total. Like in the first half, Apapa and Ikeja industrial zones stampeded for the remaining 30 percent investments with other zones. MAN is the largest manufacturing association in West Africa with over 2,000 companies as members.

The year, 2017, was, however, a bit different. Out of N329.94 billion invested by manufacturers, 32.9 percent (N108.87 billion) went to Apapa zone. Ogun zone attracted 28.4 percent (N93.76 billion), while Ikeja got N67.27 billion (20.4 percent of total investment).

In the second half of 2017, manufacturers made investment estimated at N176.69 billion. Investment in this period, like in the first half, was down, but Ogun still fared better than Apapa and Ikeja.  While 28.9 percent or N51.11 billion worth of investment went to Ogun zone, 24 percent or N42.46 billion was chanelled to Ikeja, while 20 percent or N35.33 billion went to Apapa zone.

But it is still clear that the performance of Ogun in 2017 was lower, when compared with previous years. Some manufacturers point to poor infrastructure as one key element that hurt investments in Ogun last year.

In a previous interview, however, Frank Udemba Jacobs, president of MAN, told BusinessDay that manufacturers found Ogun a good investment destination pre-2017 due to the government’s commitment to industrialisation.

“Manufacturers are happy with Ogun because they get incentives from the government,” said Jacobs.

The key enablers of the upward movement of investments to Ogun pre-2017 were tax and land rebates, which lowered production cost in the long run.  It was easier and seamless to get certificate of occupancy (C of O) in Ogun, a manufacturer in the food and beverage industry told BusinessDay.

There is also a one-stop shop that allows investors to have a single point of contact for their dealings with the various ministries, departments and agencies of the state.

The cost of doing business in the state has been better than Lagos, as taxes are fewer and space is still available. Manufacturing requires a lot of space, which Lagos does not offer them currently.

Bimbo Ashiru, Ogun state Commissioner for Commerce and Industry, said in May this year that a total of 311 manufacturing plants had either set up or expanded factories in the last seven years, saying that “Ogun state has attracted huge foreign direct investments running into several billions of dollars”.

Ashiru added that apart from expected new investments in petro-chemical, oil and gas, manufacturing, agriculture, food and beverage, mining, pharmaceuticals, technology, among others amounting to $5.4 billion as being tracked by Nigeria Investment Promotion Commission, a number of manufacturing industries are to inaugurate factories in few months.

In the three-year review, more investments moved to Agbara, Igbesa, Abeokuta, Sango-Otta, Ibafo, Mowe, Ijebu-Ode and Sagamu industrial clusters, all in Ogun State.

In 2014 alone, new investors such as Shongai Technologies Limited, Ijako in Sango-Otta, Apples and Pears Limited, Ceplas Farms Limited, Greenlife Bliss Healthcare Limited, and Sumo Steel Limited, berthed Ogun.

In the last three to four years, manufacturers have either moved from Lagos to Ogun or relocated their factories to the state, leaving only administrative offices in Lagos. Some of the companies that have done that include Fidson Healthcare, May & Baker,  Pure Chemicals, Eagle Packaging, Nycil Limited, and Dufil, among others.

Analysts say Ogun is benefitting from proximity to Lagos. A research done by The Economist in 2015 showed that  an average company in Lagos 956 hours per year in paying taxes. However, things are changing in 2017 as the recent Doing Business Index by the World Bank shows some positive changes in doing business in Lagos.