Trading Up

During its half-century since independence, Nigeria has gained a reputation for inefficient use of its natural resources and a weak government system of patronage and high corruption. However, with the democratic election of previously de-facto President Goodluck Jonathan, experts believe that the country will finally be able to take off in growth. According to the economist Jeffrey Sachs, Nigeria has the potential to join the BRIC countries, turning it into BRINC (Brazil, Russia, India, Nigeria, China) by the end of the decade. Despite the country’s reforms since the death of the dictator Sani Abacha in 1998, it has been slow to develop its core infrastructure, with funds allocated for public projects often lining the pockets of government officials.

With 250 ethnic groups and division between the Islamic north and Christian south, Nigeria has a history of conflict. The possibility of conflict between parties that share different group identities is often aggravated by a lack of basic residential infrastructure. In the Nigerian state of Lagos, with a current population of 15.5 million and a UN-projected population of over 24.5 million by 2015, many lower-income residents occupy tenement properties with minimal functionality due to lower costs. The most common design of such properties, known as you-see-me-I-see-yous, is characterized by overcrowding and multiple families with different socio-cultural backgrounds sharing the same common room—a design said to have been imported from Brazil at the end of the slave era.

In a recent study by Covenant University Professors Oni Ayotunde Olawande and Durodola Olufemi Daniel, which focuses on the causes of frequent conflicts in the low-cost tenements, residents of lower-income housing across multiple neighborhoods of the Lagos metropolis ranked eight reasons for the various causes of conflicts, including misrepresentation, threats to parties’ interests and concerns, and non-settlement of bills. The relative importance indices were between 53 percent and 81 percent, with 81 percent of respondents naming inadequate infrastructure (e.g. kitchen and bathroom facilities) as the primary cause of clashes within residents represented by the study group. The results emphasized the role an adequate quality and supply of housing could play in reducing problems in rapidly growing Lagos. Subsequently, the Lagos state government has started providing land and support to developers with the capacity to increase housing inventory, especially units for low-income residents. The country’s Federal Housing Authority will increasingly rely on private developers to do this.

In order to productively accommodate its high annual population growth rate of four percent, under the direction of Governor Babatunde Raji Fashola, the Lagos state government has busied itself with urban planning and coordinated with international developers to expand its road system,  that will increase real estate value and accessibility to its central business districts. New projects include the expansion of the Lekki Airport, which is being managed by the Lagos Airport Development Company (LADC), a project company created under the Lagos state government. The creation of this new hub will complement and support the Murtala Mohammad International Airport (MMIA), currently the only functional international airport in western Nigeria. The proposed site of Lekki Airport is within the Lekki Peninsula, 10-15 km away from the mainland at various points and around 30 km northwest of MMIA in Ikeja, the capital of Lagos state and a large component of the Lagos metropolis. The project is part of the government’s planned Lekki Free Trade Zone, which is set to be a industrial, commercial, financial, and recreational hub for Nigeria. Projects such as this and Eko Atlantic City, another project using land reclaimed from the Atlantic Ocean to feature new residential developments, modern infrastructure, and business centers, will give Nigeria a big push forward in its modernization.

Nigeria’s accumulation of infrastructure through these and other large-scale development projects will be very costly. According to the Financial Times, in the past four years, the Jonathan administration and that of Umaru Yar’Adua before him spent over US$200 billion in government revenues, including over US$23 billion from the excess crude amount reserves left by previous administrations to save revenues due to higher than budgeted oil prices. In addition, the Jonathan administration borrowed excessively, increasing external debt from US$3.719 billion at the end of 2009 to US$5.227 billion by March 2011. However, not one policy initiative or major infrastructure project has been completed. Inflation of the naira currency has destabilized the economy and decreased foreign and domestic investment.

However, optimism for Nigeria is not unwarranted. According to the World Bank, Nigeria accounted for 30 percent of foreign direct investment to sub-Saharan Africa last year. China and India’s rise have brought Nigeria along by driving demand for Nigeria’s vast hydrocarbon deposits, as well as its various agricultural products and manufactured goods. China has also strengthened ties to the country by providing aid to help develop its industrial capacity and to finance core infrastructure systems such as railroads, highways, and power grids. During President Hu Jintao’s visit to Nigeria in April 2006 and the Beijing Summit of the Forum on China-Africa Cooperation in November of the same year, Chinese leaders expressed cooperation and support for the construction of the Lekki Free Trade Zone.

The amount of federal revenue allocated to Lagos state increased from 2004 to 2007, before decreasing until 2009, in part due to the global economic crisis and oil worker kidnappings. The Lagos state enacted property tax laws that allowed internally generated revenues to increase steadily during the same years as funds from the federal account were diminishing. In Lagos, at least, growth is persistent. While accumulating infrastructure is not a one-step fix to Nigeria’s problems, it is a major platform upon which the resource-blessed country can realize its potential.