OGUN OVERTAKES LAGOS IN INDUSTRIALIZATION Tuesday, 21 October 2014 22:38 Written by Femi Adekoya • Why commercial estates are turning to religious centres, residential areas • Bureaucracy, corruption stretch business incorporation beyond 24 hours • SMEs’ mortality ratio remains high INDICATIONS are increasingly emerging that Ogun is set to overtake Lagos in industrialisation as churches are being set up in place of factories in the latter state. From Ikeja to Ogba, Isolo, Ilupeju, Amuwo-Odofin, Kirikiri and other industrial estates in Lagos, there is an emerging trend that has been ignored for too long - the gradual transformation of these estates to religious centres and/or residential estates. Indeed, from The Guardian’s investigations, it may be safe to infer that almost every street in Lagos, except for some highbrow residential estates, houses at least three religious centres, especially churches. With many religious institutions unregistered, unlike business enterprises that require incorporation, the Corporate Affairs Commission (CAC) puts the figure of registered incorporated trustees which include religious organisations around 60,000 till date while the number of registered limited liability companies stand at over one million. On the other hand, the predominant action is to have business names that are often used to serve several purposes, a figure the CAC puts around three million. Recent entrepreneurship data by the World Bank showed that Nigeria’s new business density remains low at 0.91 per cent representing 81,144 new businesses created in 2012, reflecting trends in new firm creation, the relationship between entrepreneurship and the business environment, and the effect of the financial crisis on entrepreneurial activity. Already, out of the figure by the World Bank and existing businesses, 49,000 registered firms are set to be delisted by the CAC over failure to file their returns, reflecting a recurring issue of high mortality rate of small businesses. Lagos State, which hitherto boasts of housing blue-chip industries, is gradually losing the bragging rights to other states as competition intensifies for its prime lands by religious bodies and wealthy persons who desire to fill the housing deficit gap created by the high population density in the state. Except for a few warehouses maintained by distributors of foreign business chains who are not usually interested in building factories/industries in Nigeria, key industrial activities in the country, especially in Lagos, are becoming out of fashion. Apparently stifled by the lack of ease of doing business in the country occasioned by parlous infrastructure, multiple taxations, inconsistency in federal and state governments’ policies, high cost of funds, among others, many industries have either shut down operations or moved their businesses outside the country. For instance, the Ogun State government revealed that over 100 companies have shown readiness to locate their manufacturing outfits in the state, with 32 of this figure already on ground at different levels of operation, while 27 have fully commenced operations, a move that has spurred the state government to restructure its bureau of lands and survey for such activities. Specifically, from the Sango Ota axis to Agbara, Ewekoro, Ibese, Ifo, Ibafo, Magboro and Sagamu, not less than 50 major manufacturing firms including Procter and Gamble, Nestle, Dangote Cement, Lafarge Africa Plc, WEMPCO Steel Mill, Multitrex Integrated Foods Plc, Drugfield, Kolorkote, Fidson, Intercontinental Distillers, Pure Chemicals, Fine Chemicals, Farmex Mayer, Shonghai Packaging, Eagle Packaging, Leady Pharma, May and Baker, Nycil Ltd., Honda Nigeria Plc, and Assometal, Nigeria Foundry Ltd., Dufil Indomie, Federated Steel Mills, Tower Aluminium, Nigerian Breweries, Nigerian German Chemical and Obasanjo Farms have registered their presence. On its part, the Lagos State government is intensifying efforts to develop four new industrial estates located in Ibeju Lekki, Ijanikin, Ikorodu and Epe after some efforts at renovating its four existing small-scale industrial estates located in Isolo, Yaba, Sabo and Matori. Existing industrial premises in Lagos have become nearly moribund with skeletal operations and factories converted into mere warehouses and into religious worship centres, especially churches, while the few operating factories are not functioning at full capacity. The Guardian learnt that religious institutions wielding high economic power and hardly restrained by statutory requirements expected of limited liability institutions, find such abandoned factories and warehouses attractive for their activities. The World Bank in its doing business report rated Nigeria alongside other 188 economies number 147 on the ease of doing business, nine points drop in its rank from position 138 recorded in 2013. Key factors that depressed the indices include starting a business, getting electricity, getting credit/loans, protecting investors and paying of taxes. Indeed, the imperative of making the business environment conducive for industries to operate remains key as emphasized by stakeholders. Similarly, latest business confidence index of the Lagos Chamber of Commerce and Industry (LCCI), shows that medium and small manufacturing enterprises are the most hit by the lingering challenges constraining productive activities in the country. According to the chamber, the most disturbing factors for manufacturers include, power supply challenges, logistic and infrastructural challenges, the influx of imported and substandard products, preference for imported goods by Nigerians, poor access to credit, high cost of doing business, and inhibitive activities of government. On the country assessment level, the World Bank noted that Nigeria recorded significant improvements in its Doing Business Index within the last four years, but tasked the Federal Government on the need to address lingering challenges experienced by small businesses. Prof. Leke Oduwaye of the Department of Urban and Regional Planning, University of Lagos, in his treatise on ‘Urban Planning Implications of Changing Land Use Structure of Metropolitan Lagos, Nigeria’, noted that religious land use has always been part of residential facilities in the land use structure of Lagos except for few religious locations within commercial districts such as in Lagos Island and Ikeja. According to him, the major phenomenon recorded in this land use class has been tremendous development of religious places in every nook and corner of the city especially in built-up residential areas. “Churches and mosques are the most prominent features. An average of about 10 places of worship of various sizes can be observed per square kilometre of any built-up residential area except in government and private estates. The number is higher in high-density residential areas. “This is a major problem especially when consideration is given to the mode of worship with loud speakers, which are installed outside the buildings, thus generating high level of noise during services. Other problems arising from these unapproved places of worship include vehicular congestion and heavy human traffic problems of which car parking is a major aspect.” President, LCCI, Alhaji Remi Bello, stressed the need for government to create a conducive environment for businesses to thrive. According to the chamber, the challenges associated with the delivery of goods and services from one point to another within Lagos State have emerged as some of the factors stifling businesses. The Chairman of the Professional Practice Group of the LCCI, Abayomi Adebanjo, noted that the implementation of policies in the country was often devoid of active participation of key stakeholders. For instance, he noted that though lofty in its aspirations, the 24 hours’ duration for the incorporation of businesses was unrealistic considering the various bottlenecks encountered by businesses in the course of registering a business. “There is a need for increased stakeholder engagement to aid the implementation of policies. Making declarations on the timeline for business incorporation should be considered alongside other factors as there are other regulators involved in the process. Small businesses experience several bottlenecks in wading through different regulators in the country. We need structures that are sustainable to engender growth in the country”, he added. The World Bank in its report reiterated this move noting thus: “Starting a business is an act of faith. Many entrepreneurs invest and risk their personal savings in business plans they believe in. Starting a new business involves multiple unavoidable obstacles, but excessive bureaucracy should not be one of them—because entrepreneurship matters for economies’ performance. In fact, there is a positive relationship between entrepreneurship, growth and job creation.” With the decline in the formal sector, Oduwaye stated that the informal sector had emerged as the dominant feature of the cityscape. “Usually in the form of scattered small-scale service points, the bulk of the informal sector usually operates along major roads and within neighbourhoods. This sector has also assumed the services formally provided by supermarkets, furniture sales shops, electronic stores, and hardware shops. “Following the demise of the formal sector, of which these units of business were a part, it is important to reiterate here that the collapse of these formal service units is due to globalisation, which has eroded local industries, which used to produce the goods sold at these shops but which can no longer do so because of their non-competitiveness within a globalised economy. “Since the informal sector can afford to offer similar services at lower prices made possible by relative lower overheads, of the doubtful quality of the goods, they become the only available avenues for consumers, even at a high risk. The Lagos streetscape is dotted with small scale sale shops offering a wide range of services from household items, electronics, furniture, hardware, and cobbling, packaging and sundry cottage manufacturing industries. “In the market sector, hawking, itinerant salesmanship and home trading thrive while in the service sector, catering, telephony service, hair-care, vulcanizing, motor mechanic among others dominate . The city landscape is in fragments of dirty production and service points with no regard for land use zoning. As with changes in land uses, the informal sector is now a major source of revenue for government at the local level. Informal enterprises are closely monitored to pay sales tax by local government authorities. It can be concluded therefore that the informal sector is currently a major provider of employment in Lagos.”
Posted on: Wed, 22 Oct 2014 12:31:16 +0000
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