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Dwindling investments in Southwest states

By Editorial Board
14 December 2020   |   3:06 am
A report that investors consider four of the six states in the Southwest geopolitical zone unattractive is, given the manifest opportunities of the area, embarrassing and indefensible.

A report that investors consider four of the six states in the Southwest geopolitical zone unattractive is, given the manifest opportunities of the area, embarrassing and indefensible. The governors and the people of these states should wake up to their development responsibilities, or remain on the rung of the poor in the country. It is reported that Lagos and Ogun states received $81. 8 billion (97 per cent) of about $93.3 billion Foreign Direct Investment (FDI) that came into Nigeria between 2013 and the first quarter of 2020. In 2019 when FDI worth $23.99 billion came into the country according to figures quoted from the Nigeria Bureau of Statistics (NBS), Oyo State received $3.74 billion and Ondo State a miserable $30,000.

The governments of these states must quickly put on their thinking cap to address this serious aberration. Routine excuses about dwindling revenue from the Federation Account or low internally generated revenue (IGR), are no longer acceptable. The Southwest was not always like this. As recently as 2013, the six states of the region jointly contributed $78.814 billion, more than a quarter, to the national GDP of about $287 billion. Much earlier, during the First Republic, the Western Region (including the later excised Midwest Region) was a well-planned, well managed, and thriving economic entity that needed nobody’s handout to execute its development plan. Under Chief Obafemi Awolowo’s visionary economic development agenda, a comprehensive agro-industrial strategy harmonised the productive strengths of the region to generate the resources that built a network of roads into the rural agricultural areas, industrial layouts where factories processed the produce from plantations and farms, ancillary research institutions, schools, hospital and more. Those were the days when hard thinking and committed leadership were central to governance.

Modern managers of these states must objectively interrogate why investors don’t look their way and act quickly to correct the anomaly. The states – Osun, Oyo, Ondo, and Ekiti are blessed with natural and human resources to do much better economically than what obtains at present. Ondo State, a lucky oil-producing state is blessed with a landmass of over 15,000 sq. kilometres of the tropical rain forest and agricultural land, a huge bitumen deposit, deposits of gold, marble, granite, clay, and gemstone.  Ekiti State (about 6,000sq.km.) stretches across tropical forest northward into guinea savannah vegetation favourable to produce food crops such as yam, cassava, maize, kolanut, and cash crops such as timber; Osun is also blessed with Ero, Ose water resources and such mineral deposits as clay, kaolin, granite, columbite, feldspar and more. Oyo State (about 28,000 sq.km.) has vast land and a climate favourable for the cultivation of a wide range of cash and food crops including cocoa, palm produce, cocoyam, cassava, and millet. The state has deposits of marble, kaolin, and clay. Therefore, under a development-focused leadership, these states can attract local and foreign investments. The states also have huge potentials for tourism with such sites as the Ikogosi Warm Springs and the Arinta Waterfalls in Ekiti State, the Osun River goddess festival and the Erin-Ijesha Waterfalls, among others.

Security is an important factor in harnessing developmental potentials. But other factors including a steady supply of electricity, excellent road, rail and water transportation are the no less important sine qua non to move people and goods cost-effectively. With a huge and ready market, the only missing link is good and exemplary leadership, which the governors and their teams are expected to provide.

Granted that Nigeria is an unsafe entity at this time, the Southwest states’ initiative of a harmonised security strategy of Amotekun, a local outfit familiar with the respective terrains, is good even if inadequate. The governors must work harder towards a federal structure in which they can fully control their security rather than relying on a federally-controlled police system. They must also do the needful on infrastructure. Notably, the states established, since 2013, the DAWN (Development Agenda for Western Nigeria) Commission based in Ibadan, to design and implement the regional integration agenda of the Southwest region. The potential of this strategy is high, given the regions’ various natural and strategic assets.

Also, the long-existing Odu’a Investment Company Limited owned by the six states of the Southwest prides itself as ‘‘a conglomerate with substantial investment in Real Estate, Printing and Publishing, Equipment Leasing, Food and Beverages, Agriculture and Agribusiness, Construction and Manufacturing, Hospitality, Financial Services, and Oil and Gas.’’ Now is the time for the investment octopus to make its presence felt in the socio-economic development of the region. Between the DAWN Commission and the Odu’a Investment Group, a solution to the paucity of investment in the region can be found.

The Southwest region has every reason to be investment-friendly; and they have no business being poor, provided that the states exhibit quality leadership.  Evidentially, these states have not been judicious in their application of public funds. Besides the unpardonably wasteful spending on both sitting and former public officials, the budget allocations are, generally not development-focused. In its 2020 budget that was reduced from N124.5 billion to N91.13 billion, Ekiti State is devoting about 62 per cent or N56.558 billion to recurrent expenditure and N34.571 billion to capital investment. 44 per cent (N82.7 billion) of Ondo State’s N187.858 billion budget is going into recurrent expenditure and the 42 per cent or N80.47 billion for capital projects.  While Oyo State falls in this category, its capital budget for 2020 has been increased by 20 per cent more than the preceding year even as the overall budget reduced from N285.2 billion in 2019 to N208.8 billion.

On the other hand, it is remarkable that the investor-attractive states of Lagos and Ogun devote more of their budgetary allocations to capital projects. For Lagos, N508. 86 billion of its N920.46 billion (55 per cent) is intended for capital investment; Ogun will commit N271.2 billion of its N449.9 billion (60 per cent) to capital expenditure. Surely, the difference in fortune is in part determined by the priority of each state –as determined by its leaders.

Notwithstanding the outrageously aberrant constitutional provision that creates an ‘‘Exclusive List’’ of resources under the control of the Federal Government, there are recent legal provisions that grant a way round it such that states that are truly determined can, indeed already do, exploit their natural resources in partnership with credible investors, including collaboration with artisanal entrepreneurs. The Southwest, or indeed other parts of the country, has no reason to be poor or unattractive to investors unless its leadership suffers from a poverty of thinking at corporate and political levels.