Lagos overtakes Ogun in new manufacturing investments
Lagos State has overtaken its closest rival, Ogun, in real sector investments as manufacturers preferred to set up new plants and expand frontiers in Nigeria’s economic capital in 2017.
Between 2014 and 2016, more than 70 percent of investments in agro processing, heavy and light manufacturing went to Ogun, while Lagos, which is mainly made up of Ikeja and Apapa industrial zones, often attracted less than 20 percent of the total, according to data from the Manufacturers Association of Nigeria (MAN).
But the trend changed in 2017 as the most recent data show that Ogun state received only 28.59 percent of all the investments last year, whereas Lagos got 50.11 percent of total investments that year.
Manufacturers point to poor infrastructure in some industrial clusters as a major reason why they cut back investments in Ogun. Agbara—a major industrial cluster hosting large enterprises such as Unilever, Nestle, Pharma Deko, GlaxoSmithKline (GSK), Evans Medical Plc and Beta Glass, among others—has bad roads. In fact, many roads along Igbesa-Agbara axis of Ogun State are bad.
Obi Ezeude, CEO of Beloxxi’s Industries, complained on February 8 this year, during a factory commissioning, that poor state of roads in Agbara was hurting manufacturers.
“The road is still not fixed up till now. Fixing that road would be a big boost to manufacturers,” Frank Jacobs, president of MAN, said. Segun Ajayi-Kadir, director-general of MAN, outlined three likely causes of decline in industrial investments in Ogun.
“Ogun State, in recent times, has had its own challenges. The roads in Agbara have become bad and there have been various reports of breakdown by our members.
“Secondly, there was a lull in the economy, which must have affected Ogun. Ogun State could have benefitted more had there been more relocations of factories. More so, Ogun has the water fee and is almost following the Lagos route,” Ajayi-Kadir said.
He said manufacturers had rushed to Ogun for investments earlier, but recent changes might have affected sentiments towards the state.
Manufacturers add that things are becoming more predictable in Lagos and less so in Ogun as many government agencies are now asking for duplicate fees and levies in Ogun.
“Ogun is gradually becoming less organised,” said Olusegun Osidipe, director of research and statistics at MAN. “Many things are still handled manually in Ogun, but you can easily check who owns a piece of land on the system in Lagos. You know how much to pay on Land Use Charge in Lagos, but not so in Ogun,” Osidipe said. Kellogg’s, an American multinational food manufacturing company, set up in Lagos in 2017.
De United Foods bought the noodles section of Dangote Flour Mills in November of last year. Several firms in Lagos acquired bought new machines, buildings and vehicles last year, manufacturers said.
The data show that out of N329.94 billion invested by manufacturers in the first half of 2017, 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, manufacturers made investment estimated at N176.69 billion. While 28.9 percent or N51.11 billion worth of investment went to Ogun zone, 24 percent or N42.46 billion was channelled to Ikeja, while 20 percent or N35.33 billion went to Apapa zone.
Combining the first and second half, Ogun got N144.87 billion out of the total N506.63 billion, representing 28.59 percent. However, Apapa got N144.2 billion (28.46 percent, while Ikeja got N109.73 billion (21.65 percent). This means that Ikeja and Apapa got N253.93 billion, representing 50.11 percent. But before 2017, Ogun alone often dwarfed both Apapa and Ikeja put together.
In 2014, for instance, 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 to the investments respectively, representing a combined 15 percent of the total.
Similarly, manufacturing investments worth N309.33 billion were made in the second half 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.
Also, 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.
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.
Ogun State government requested investors and entrepreneurs to put down 30 percent cost, while government contributes 70 percent to fix decaying infrastructure such as roads within industrial estates in the state. Up till now, the formula is yet to work.
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