SMART CITY AND THE 21ST CENTURY ECONOMY: LAGOS IN FOCUS

  1. Opening Remarks and Introduction

I am delighted to be part of this Summit and i thank the organisers for inviting me to present a paper. I am optimistic that with the calibre of people behind this Summit and those participating, i know that this event will not just be another talk-show but it will be one that will help shape the crafting and implementation of government policies in a positive manner so much so that we can all enjoy good governance or what is popularly called the dividends of democracy.

The topic of this segment of the Summit is apt within the context of the on-going discussions at different forums on how countries of the world and cities therein can be part of and catalysts of the 4th Industrial and Economic Revolution that is kicking off.

The 21st century economy definitely will be a clear departure from that of the 20th century in terms of what will be growth-enhancing factors due to the changing face and pace of technological development cum innovations bringing on board a different approach to the ways things are done in every sphere of life. While previous centuries and the present century still accommodate somewhat labour-intensive and manual approaches, this might not be so in the 21st Century with increasing digitisation and strides in ICT. Also, it is expected that in the 21st century, cities will play more significant roles in development strides and no wonder it is being said that while the 20th century has been the century of nations, the 21st century will be a century of cities.

Consequently, cities will be expected to play major roles in enhancing economic competitiveness and driving economic growth. In the light of the competition for investible funds across the globe, cities definitely will have to play roles in attracting businesses, talents, skills and funds.

The quest for cities to continuously make positive impact on the growth of nations and also enhance the quality of life of citizens therein as well as remaining relevant in the global environment requires a continuous transformation of such cities.

The transformation of cities is mainly centred around infrastructural renewal as it concern critical infrastructures like transportation infrastructure, power infrastructure, security infrastructure and others especially in contemporary times when the concept of functionality and smartness of cities have become topical in development circles.

The stiff competition for finance and high skilled labour has made it imperative for proper planning and management of cities by those responsible for crafting policies and implementing such policies to engender growth and development. For example, London has been the major financial hub in Europe until recently due to Brexit and steps were deliberately and continuously taken to ensure that London does not lose her financial hub status to other cities in Europe hence the continuous renewal and expansion of critical infrastructures in the city.

The concepts of functionality and smartness of cities in a simple sense is defined in terms of effectiveness, efficiency and speed respectively and this is often tied to the infrastructure in place. There is an established causality between the stock of infrastructure and the rate of development in any clime and researchers have found out that more developed countries have core infrastructure stock (roads, rails, ports, airports, power, water, ICT) equal in value to about 70% of GDP with power and transportation infrastructure accounting for almost half of the total value. Hence, if Nigeria and Lagos in particular considering its role in the economy of Nigeria and potential in Africa must develop and remain relevant in the 21st century, a similar pattern is desirable.

It is on record that only seven countries in sub-Saharan Africa have electricity access rates exceeding 50%. These countries are Cameroon, Cote d’Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa and the major cities in these countries do not suffer from epileptic power supply and they usually have top-notch transportation, communication and security facilities. Others in the region have an average grid access rate of just 20% and dysfunctional transportation, communication and security systems.

As at 2012, Nigeria’s core infrastructure was estimated as 20% of GDP and as at year 2018 it was estimated to be 22.5% of GDP because of low public and private spending on infrastructure compared to an average of 70 per cent of GDP of more advanced middle-income countries of similar size. Nigeria’s infrastructure deficit has been a major hindrance to economic growth. Nigeria’s road density for example is only a fifth of that of India, and Nigeria’s per capita power consumption is 136kWh per annum which is less than 3% of South Africa’s 4,803 kWh. All these unenviable statistics have negative effects on a densely populated megacity like Lagos as the basic facilities need of an average Lagosian is not often met and such the potential contribution citizens would have made to the Lagos economy is not achieved. Nigeria before now was classified among emerging markets that was to compete with Brazil. Russia, India, China, South Africa but as it is today we are seen more as a fragile State.  Lagos also used to be a pleasant city to live him but unfortunately it was named the third worst city to live in all over the world and the reasons for this are not farfetched.

Sometime back in 2013, the Federal Government under ex-President Goodluck Jonathan took an ambitious and bold step to develop a National Integrated Infrastructure Master Plan (NIIMP) and in linewith the growth aspirations of Nigeria as encapsulated in the National Integrated Infrastructure Master Plan (NIIMP) using the rebased GDP figure, it was estimated that a total investment of USD 3.0 trillion will be required for a period of 30years beginning from year 2013 to build and maintain infrastructure. (Note that this estimated figure was done at a time when the exchange rate was N156 to a dollar)

According to the preferred growth plan which is the accelerated path, Nigeria needed to increase investments in infrastructure from USD 10 billion per annum to USD 15.9billion in 2014 and USD 51.1billion in 2018 averaging USD 33billion per annum (5.4 % of GDP) for the 5-year period 2014 – 2018. Thereafter, the investment rate should further increase to 7.9% of GDP by year 2019 -2023 period and remain above or close to 7% of GDP for the rest of the 30year plan until 2043.

Based on growth strategies, outcome targets and international benchmarks, the total investment of USD 30 trillion over 2014-2043 should comprise investments in these categories:

Energy – USD 1000 billion being 33% of total

Transport – USD 775 billion being 25% of total

Agriculture/Water/Mining – USD 440 billion being 13% of total

Housing and Regional Development – USD 350 billion being 11% of total

Information Communication Technology – USD 325 billion being 11% of total

Social Infrastructure – USD 150 billion being 5% of total

Vital Registration and Security – USD 50billion being 2% of total.

Note: All estimates were done at an exchange rate of N156 to a Dollar

States were expected also develop State Integrated Infrastructure Plans (SIIPs)

  1. A Focus on LAGOS

Considering the critical role Lagos plays in Nigeria as the economic/commercial capital of Nigeria and a Centre of Excellence from which other States learn, it is imperative for Lagos to get it right concerning infrastructure development even as it desires to become a foremost functional and smart city in the Africa continent. However, how well this is achieved will depend on the approach the government desires to employ i.e. either of linear growth path/spending or the accelerated development path/spending

The quest for a functional and smart city has been the driving force behind urban infrastructural renewal in most parts of the world across several continents especially in megacities like London, Delhi, Los Angeles, New York, Moscow, Seoul, Cairo, Beijing, Osaka, Karachi, Mumbai, Istanbul, Bangkok, Jakarta, Sao Paulo, Manilla, Dhaka, Shanghai and   Tokyo where infrastructure improvement is done continuously.

Hence, focusing on Lagos that has been in existence centuries ago and which became a State on 27th May, 1967 which is over 52 years as at now, efforts must be made to make significant developmental progress. Lagos has gone through different phases demographically, administratively, economically and developmentally and it is time for Lagos to catch up with other notable cities across the globe that are functional and smart. Consequently, focusing on infrastructure is the right thing to do and such a discourse as we are having for these two days is a noble thing to do and I commend the organisers of this event.

Going by the Lagos State Development Plan (LSDP) document, the goal is that by 2025 Lagos should be Africa’s model Mega City and Global Economic and Financial Hub that is safe, secure, functional and productive. While this vision and goal as encapsulated in the LSDP is noble and steps are being taken to actualise this, the truth is that we are far from it. We must understand that for Lagos to become a smart city and Africa’s Financial Hub, top-notch infrastructure that will support the real sector and service sector must be in place even as some empirical studies consistent with the demand-following causality of the relationship between finance and development have established that “Where enterprise leads, finance follows”

It is important to state that there is a difference between a FUNCTIONAL CITY and a SMART CITY. The concept of functionality of cities focuses on urbanism and the importance of planning. It tries to look at cities like a machine with the inter-relatedness of its parts for effectiveness. A city may be a functional city but not a smart city but if a city is a smart city, it must be by implication a functional city.

A smart city is a municipality that uses information and communication technologies to increase operational efficiency, share information with the public and improve both the quality of government services and citizen’s welfare. The characteristic features of smart cities are that they promote inclusive, people-focused, efficient, technology-driven development, e-governance and public participation in government. It also ensures increased mobility, safe and more liveable livelihoods.

For example the process for revenue collection and certain certifications should be such that human interaction is reduced to the barest minimum or even nil.

It’s heart warming to hear that there is an e-tax framework in place now, this should be extended to even issues of traffic and people management.

In a more generic sense and within the context of new thoughts on development management, a smart city guarantees access to public resources to be used for the common good, promotes urban renewal actions, reduction in carbon dioxide emissions (emissions from vehicle and pollution), favours ethical consumption, promotes recycling and guarantees efficient traffic management. A striking underlying feature of functional and smart cities are top-notch infrastructures.

The obvious is that Lagos has in recent times become more or less a one-city State as the earlier visible features that delineated/separated communities and distinguished the main City from suburbs have disappeared. This reality of a one-city State with its attendant challenges then requires that governance in terms of the provision of physical infrastructures must now be done deliberately in such a manner that a somewhat even development can be achieved in order to prevent the negative consequences of uneven development.

Actions towards doing this also must be deliberate on the part of the government and other stakeholders. With the attainment of a megacity status and as we know this status is more related to its population which stands at over 22 million now, beyond this Lagos must be transformed into a functional and smart city sooner than later by intentional actions of government and major stakeholders.

Any city with a population over 10million people is considered a megacity and it is estimated that as at now Lagos has a population of over 22million people and researchers have posited that the population of Lagos may hit the 30million mark by year 2035.

Estimated and projected population of Lagos State

20162017201820192020202520302035
20.7m21.5m22.1m23.4m24.2m25m28m30m

It is heart-warming to hear our Governor, Governor Babajide Sanwoolu say that he intends to make Lagos a business friendly environment. To make this happen and by implication have a functional and smart city, urban infrastructural renewal is imperative. If Lagos is to compete with cities like Johannesburg, Cairo there is obviously the need to step up the level and quality of infrastructure especially those that will efficiently support business transactions and like I posited earlier, this is more so against the backdrop of the stiff competition for finance among countries in this era of globalization and flow of capital to favourable regions of the world.

The inherent benefits of Lagos becoming a functional and smart city among others include:

  1. Reduction in cost of governance
  2. Enhancement of the ease of doing business
  3. Increased potential to attract funds and support.
  4. There will be no for street urchins, beggars and touts to operate.
  5. Reduction in crime
  6. Higher productivity by the citizens, businesses and the State.
  7. Reduction in unemployment
  8. Higher standard of living
  9. Longevity of life
  10. Lagos can take advantage of its full potential in entertainment etc.

In order to have quest of making Lagos a Smart city, there basic things and factors that will be needed and these include:

  1. The political will to see the vision of a Smart Lagos through.
  2. Efforts at building a learning economy
  3. Sincerity of purpose
  4. The right human capital – personnel to drive the process
  5. Sustainable funding model
  6. Citizen’s engagement
  7. Local government administration involvement is very  important.

Infrastructure and Total Factor Productivity

What are Infrastructures?

Infrastructures are fundamental facilities and systems serving a country, city or other areas including the services and facilities necessary for its economy to function. Infrastructure is used to describe the facilities which support modern human life. They are the basic physical systems of a nation or business.

Understandably, there are what is referred to as core and noncore infrastructure and in the category of core infrastructure are power/energy, roads, rails, ports, airports, ICT and water while in the category of noncore infrastructure are housing, mining, security, agriculture. It then makes sense that if accelerated development is desired, attention must be paid to core infrastructures especially Energy and Transportation.

Core infrastructures are those that are more relevant from the perspective of what is known as total factor productivity in Economics. Total factor productivity (TFP) is the portion of output not explained by the amount of inputs used in production, hence its level is determined by how efficiently and intensely the inputs are utilised in production. TFP is a measure of the efficiency of all inputs to a production process. For example, the marginal cost of productivity is reduced when power supply is constant and goods produced can them be more competitive in the global market beyond the West-Africa sub-region.

Interestingly but unfortunately, a study by the Manufacturers Association of Nigeria revealed that in industrial clusters, the power supply is only for an average of 3 hours in a day. This is poor but can be improved on with determination.

  1. Why Lagos should become a Functional and Smart City?

The need for this is underscored by the following:   

  1. A smart Lagos City will help check/curtail indiscriminate influx of people that can’t add value to the city/state.
  2. Lagos has the largest concentration people and businesses in Nigeria.
  3. A functional and smart Lagos city will help reduce the incidence of touting, extortions and physical abuse (Area boys, LATSMA operational deficiencies etc)
  4. A smart Lagos City will enhance tourism and the revenue derivable from the sector.
  5. The quest for efficiency in transaction and administrative cost. (payment done in UK for electricity)
  6. It will enable citizens to plan their travel time, achieve effectiveness and efficiency.
  7. If CCTVs are installed all over Lagos and powered, it will reduce crime drastically.
  8. The need to improve the quality of life of citizens. (Life expectancy)
  9. The need to enhance competitiveness to attract foreign capital and expertise. (The case of Kigali in Rwanda)
  1. What types of improved infrastructure must be in place.
  2. Power or Energy Infrastructure.

The energy sector is made up of the oil and gas as well as the power sub-sectors with the capability to adequately transform a Nation/State if properly harnessed and managed because of the multiplier effect it has across all sectors of the economy. Nigeria as at now has various potential energy sources as fossil fuels, hydro, solar, geo-thermal and biomass but they have not been properly tapped, developed and deployed. It is estimated that Nigeria has enough gas reserves to generate over 50,000 MW while the total exploitable largescale hydropower potential is estimated to be about 12,000 MW.

It has been estimated that Lagos alone needs a minimum of between 6000 megawatts as at now to support a 50% capacity utilisation as regards the installed capacity of our factories and the obvious is that in the next few years the energy demand will definitely be higher. If power must be gotten right, beyond generation, the transmission component is also germane. Nigeria’s transmission network is basically two types – 330 kV Network and the 132 kV Network. For each network, there are two elements of basic transmission infrastructure needed which are transmission lines and transmission substations. So if Lagos is to improve power supply, the number of substations and transmission lines must of necessity increase.

That is, there is the need for more Gencos and Discos with the obvious need for more and better Transmission lines. The issue of the right energy mix in the Lagos axis is also essential looking at renewable energy like solar, wind, hydropower and biomass.

  • Transportation Infrastructures

Nigeria as at 2013 had a road network of 202,000 km with federal roads being 35,000 km, State roads 17,000 km and Local Government roads being 150,000km with most of the local government roads unpaved. Though the total length of tarred roads in Lagos as at now is over 6000 km which includes Trunk A and Trunk B roads, for a place like Lagos, the idea of transportation must be beyond just road infrastructure but a more integrated transportation system of modern trains and rail lines, underground trains, water ways and airports. There must be deliberate steps taken to optimise the different possible modes of transportation. Lagos should at least have two major international airports in addition to the local airport and a functioning contiguous airport. (Abuja is the leading light now in road transportation infrastructure)

There might be the need to revisit the plan made by the Jakande administration as per the Metro Project that was purportedly cancelled by the Federal Government. The concept of Transit Oriented Development (TOD) is much desirable in Lagos if the quest for making the city functional is to be achieved.

There is the need for an Integrated Transportation System that will require less of human interaction as we have LATSMA all over the place and many of them have become a nuisance to Lagosians. We can have safer roads and efficient traffic management system if cameras are installed and traffic lights are functioning.

On the average on a daily basis, it has been estimated that a minimum of 12 million Lagosians travel long distances within Lagos commuting to their places of work, schools and business appointments. Unfortunately the unnecessarily long travel time within Lagos as at now causes the loss of several man-hours that translate to the loss of revenue and opportunities that are enormous and which cannot be easily quantified. Trucks on Lagos roads have compounded the problem and the lack of holding bays and public motor parks is a major problem. This is where the LGAs and LCDAs ought to step in. Having multi-layer car parks, over-head bridges should be the focus of the government in Lagos due to little space of land available.

Local governments must be encouraged and if need be, compelled to build public car parks and good drainages. Poor drainage system lead to the failure of roads across the State and this is one area where Local Government Authorities have to be functioning but it seems most local government officials are not thinking seriously along that line.

The need for more interconnected road networks, rail lines, airports and better water ways cannot be overemphasised.  The number of tarred roads though on the increase in Lagos it is still grossly inadequate and the connectivity is also poor. The growing population of Lagos over the years should have called for proactive steps and a deliberate shift from road expansion to the expansion of rail lines especially on the Lagos Island to Ikorodu axis and waterways for which Lagos has a competitive advantage with the massive water bodies that surrounds Lagos due to the effect of the Atlantic Ocean.

Ordinarily considering the status of Lagos as the commercial capital of Nigeria and the 4th largest economy in Sub-Sahara Africa, at least two international airports will be a good way to start.

  • Information Communication &Telecommunication (ICT) Infrastructure: In ICT, despite the existing 9.8Tbs of broad band connectivity, there is a great gap in what is known as the last mile connectivity in Nigeria and Lagos State. Lagos will need more base stations, microwave radios and more kilometre of fibre-optic cables. Of prime importance in this sector are basic voice/data services and last mile connectivity for broad band internet access.

ICT is important for e-governance which is a major feature of smart cities and to create a knowledge based economy, there must be increased access to computing devices and connectivity in schools, at work and even homes. (Digital/Internet connectivity for building a learning economy)

ICT is also very important in improving security globally now especially with the recent wave of globalization of crime (illicit flow of cash and arms, identity theft, terrorism etc)

  • Housing (Social housing, affordable housing, rural housing, mobile housing): the obvious is that most Lagos households cannot afford adequate and decent housing hence deliberate state housing policy and actions must be put in place to complement the National Housing Policy of the Federal Government to ensure affordable housing either through mortgage  or other interventions like access to land and better use of land (High-Rise Buildings)
  • Waste Management: The recent events in Lagos has again brought to the fore the need for a robust, effective and efficient waste management system that can adequately ensure proper recycling of wastes and possibly explore the potential in converting wastes to energy/generate power. In a related manner, because of the peculiarities of Lagos State often being assailed by the Atlantic Ocean, necessary infrastructures for environmental safeguards to check flooding and erosion are desirable.
  1. Infrastructure requirements and supply as well as funding gaps

It is on record that there are supply and funding gaps in infrastructure delivery in Lagos State and Nigeria at large. As it stands now from existing literature, an estimated 870megawatts is presently supplied to Lagos as against 12000 megawatts needed. It has also been estimated that by 2025 Lagos will be needing 15,000 megawatts of electricity and for telecommunications N1.7trillion will be needed by 2025.

Understandably, funding gap exists because of the relatively low private sector investment and involvement in Nigeria coupled with the unpredictability of revenue that will accrue to governments at all levels due to crude oil price volatility and other exogenous factors that is further compounded by an upward inflationary trend and the instability of foreign exchange rate. However, this can be hedged against. In 2018 Lagos is to spend N136billion on roads and related transportation infrastructure and this is commendable though there is still much work to be done. In a general sense, the challenges to the provision of top-notch infrastructure are listed below.

  1. Challenges to enhanced infrastructure in Nigeria/Lagos
  2. Policy failure:  In time past especially during the military era, this was a great challenge. Macroeconomic fundamentals must support the policy of government. Policies should be coherent and consistent.

For example, at the federal level there was a plan at revising laws that place the construction and management of roads, rail, aviation and maritime infrastructure under the exclusive purview of the federal government. There is the need to increase fiscal incentives and increase the concession management of infrastructure, aligning with bilateral service agreements, reducing agency fees and improving infrastructure maintenance capabilities.

  1. Poor planning (Pareto efficiency and dislocations): Ineffective planning has been a major problem in the past. Things must now be done in such a manner that in making some people better-off we don’t make others worse-off and as such while increasing private sector involvement, we must adopt cost-effective tariffs. As was planned at the federal level, steps at incentivising local producers of gas to allocate more gas to generating plants must be sustained. The gas supply agreements should not be breached.
  2. Lack of political will to do the needful e.g. the unchecked migration to Lagos and the increase in the number of beggars on the streets.
  3. Funding problems: Hence more innovative and creative funding approaches must be used especially the Public-Private-Partnership track. To encourage PPP, there is the need for Research and Knowledge Sharing on the Economics of Transportation with all stakeholders so that the government can get their buy-in.
  4. Transparency and Accountability Issues: Leakages in public financial management process has always been a great challenge in Nigeria. A robust and technology-driven PFM framework is needed. There should of necessity be the fair regulation of private sector players involved in the provision of infrastructure as well.
  5. Trust deficiency by the public (A recent study we did on Perception Index about Tax Administration in Nigeria shows that most Nigerians will ordinarily not want to pay their taxes because they feel such taxes are not well used for the common good.
  6. Vandalism and lack of maintenance culture: Efforts must be made to maintain and protect existing infrastructure.
  7. Inadequate human capacity or technical capacity in Nigeria for sustainability and lateness in taking action.

Despite these aforementioned challenges, there are existing factors that can help the drive of government to deliver well as it concern infrastructure renewal. 

  1. Prospects for attracting and delivering top-notch infrastructure to Lagos
  1. The scramble for Africa (China, USA, Europe)
  2. The popularity of Lagos and its inherent potentials as the biggest economy in West Africa with sea ports.
  3. The huge population and active labour force
  4. Adequate technology that can be deployed and knowledge already available in the market place.
  5. Capable Nigerians are in and out of the country willing to serve their fatherland.
  6. Existing expertise and possibility of collaboration with tertiary institutions in Nigeria in a cost effective manner.
  7. It’s an avenue for generating revenue by the government and private sector stakeholders.
  8.  Existing and potential funding sources
  1. Government: Budgetary appropriation. (Federal Govt and the Special Status for Lagos, State Govt budget, Local Government budget.
  2. Public Private Partnerships
  3. Deregulation, privatisation and commercialisation.
  4. Efficiency gain
  5. Multi-lateral Organisations
  6. Trust funds
  7. Pension funds
  8. Capital market (Green bond)
  9. Foreign private capital
  10. Philanthropic sources

10.0. How Lagos government can get the provision of infrastructure right and become a Smart City.

  1. Lagos State government must get the POLITICS right with the Federal Government (special status for Lagos), State Legislators, Local Government administrators, Traditional rulers and Community Based Organizations.
  2. Lagos State government must get the POLICY right and the sequencing of policy.
  3. The government must get the PATTERN right.
  4. The government must get the PROBITY right
  5. The government must get the PERPETUITY framework right and in this regard, a State Integrated Infrastructure Master Plan is desirable.

In addition, in the South-West, there is the need for a regional infrastructure master plan and development to reduce the pressure on Lagos.

Key issues that should guide our planning process

Even now that citizens are desirous of better ways, faster ways and safer ways of living, the government must not lose sight of the need to ensure that services are affordable, available and convenient to access.

THANKS FOR READING.

Dr Olalekan OBADEMI, Country Team Lead, Focused Development Associates, Nigeria. www.fdass.com

Email Contact: [email protected] or [email protected]

Tel: +234-8036285605 

1 thought on “SMART CITY AND THE 21ST CENTURY ECONOMY: LAGOS IN FOCUS”

  1. Owolabi Nurudeen

    This publication is a great scholarly work that has come at a good time when Nigeria is in “transition” from the old to new order. It will serve as an excellent reference in the remodelling, reengineering and reworking of not only Lagos State but other neighbouring States that will be grossly impacted by developments in Lagos. Truly we need a functional and smart Lagos.

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