There Is Need To Strengthen Inter-state Competitiveness – Ambode

Address delivered by Mr. Akinwunmi Ambode, governor of Lagos State, at The Nation’s 1st national forum on the economy at Lagos Airport Hotel, Ikeja, on Thursday, April 7, 2016.

I sincerely appreciate this initiative of the Management of The Nation Newspapers in organizing the maiden edition of National Forum on the Economy – with the theme: “National Economy, The Way Forward”.

Despite boasting the biggest economy in Africa, Nigeria’s economy remains largely undiversified with crude oil sales accounting for over 90% of total revenue. As a result, our economy is always vulnerable to volatilities in the international oil market coupled with the impact of many years of corruption and wastages. This is the reason for our present economic nightmare.

It is very unfortunate that we wasted the golden opportunity to deploy the trillions of dollars earned from our oil exports to develop the critical sectors of the economy including power, agriculture, industries, solid minerals, transportation infrastructure among others.  No doubt, if we had done the right thing as some other oil producing countries did, keeping in mind that crude oil is a finite resource, we would not be experiencing the devastating effect of oil price crash on the scale we are experiencing it now.

We are now being forced to do, with pains, what we should have done with ease years ago. The task of charting a new direction for the economy is not going to be a tea party.  Various policy options must be identified and assessed on the basis of our current situation and needs.  Moving our economy forward requires thinking outside the box and doing things differently. We need creativity, innovation and the courage to take difficult and tough decisions.

The leadership of the country at national and state levels must have the courage to take tough decisions and make sacrifices in the near term which will, in the long run, make our economy stronger and sustainable and, consequently result in prosperity across all regions of Nigeria.

One way to revive our economy will be to explore and expand inter-State relations, strengthen regional competitiveness by maximising economies of scale, regional optimisation of assets and endowments and mitigation of afflictions and natural disasters. Other potential areas for inter-State collaboration include transport infrastructure to facilitate market linkages, education, market development, human capacity building, security and intelligence sharing, among others.

I must stress, however, that this idea is not an entirely uncharted territory for Nigeria. Prior to the oil boom era, Agriculture was the mainstay of Nigeria’s economy and contributed about 65% to the country’s GDP and represented close to 70% of total exports. Through farming, Nigeria was able to feed its population while major cash crops were exported to earn foreign exchange. From the cocoa and rubber plantations in the West, the groundnut pyramids and cotton in the north, to palm oil in the east; each region was identified by its economic areas of comparative advantage which were collectively harnessed towards ensuring food security and inclusive growth across the country.

Given our current economic challenge, I believe it is time we take a cue from our old ‘playbook’ for a viable ‘game plan’ to revive our national economy. States and regions must once again begin to leverage on their respective areas of comparative advantage by establishing partnerships towards establishing inter-State or inter-regional commodity value chain. We must re-start inter-state/regional cooperation.

It was in realization of this that Lagos and Kebbi States signed a Memorandum of Understanding a few weeks ago. Kebbi State is the largest producer of rice in Nigeria while Lagos state, the most populous state in Africa, consumes rice, mostly imported rice, worth N135b annually. With this partnership, which covers food production, processing and distribution, Lagos State and Kebbi State have taken steps to explore our areas of comparative advantages to achieve food security for Nigeria and save our foreign exchange. In specific terms, this collaboration will produce 70% of Nigeria’s rice demand.  The multiplier effect of this collaboration will be felt in the areas of job creation, the development of ancillary industries, the strengthening of our local currency against the Dollar and other major international currencies.

I believe more of this inter-state collaboration should be encouraged as a major driving force for the diversification of the economy.  There are many more areas of collaboration to be explored in the nation. The political leadership must develop the will to make this initiative work, to achieve food security and promote backward integration for industrial growth.

I wish to state at this point that Lagos State has always embraced inter-state cooperation as a strategy to fast-track economic growth and development. Prior to the agreement with Kebbi State in the Northwestern Nigeria, Lagos State has collaborated with States from within the western region in the areas of comparative advantage for the partner States.

Lagos State currently has 84 hectares of land in Osogbo, Osun State, out of which 20 hectares is used for palm produce, while others are used for rice farming, cassava and maize. Lagos State also acquired additional 1,000 hectares of land in Osun, 500 hectares in Ogun and Oyo each and 50 hectares in Abuja to support farming. In addition, all granite used in construction in Lagos State are being sourced from quarries located in Ogun State. These relationships have proved especially beneficial for Lagos State given its low land mass and the rapid urbanisation and industrialisation in the State.

It must however be noted that for regional or inter-state cooperation to yield the desired result in terms of enhanced inclusive growth, we must put in place a functional modern rail and water transportation system. The movement of goods, materials and people by road is not only inefficient but fraught with risks, safety hazards and detrimental to our roads.

The Lagos/Kebbi initiative for example will involve movement of thousands of tons of paddy rice to Lagos for processing in the mills. This can only be achieved more efficiently through a modern rail system which at present remains largely undeveloped.

Your Excellencies, distinguished ladies and gentlemen, we must brace ourselves, take the tough but right decisions, individually and collectively, so that we can have a better tomorrow. Together, we can make Nigeria greater.