Special Status for Lagos: In Whose Interest?

For a long time, the call to give Lagos State a special status has been championed by different people within and outside the state. Although it has been unsuccessful so far, it did not stop Governor Babajide Sanwo-Olu from renewing the call as he demanded state police, fiscal federalism, and a special economic status for the state at the opening of the two-day Senate Zonal public hearing on the review of the 1999 Constitution.

In the Governor’s words, “For us in Lagos State, the issues of State Police and fiscal federalism are at the top of the priority list for us, in this ongoing review process. Equally fundamental, particularly for us in Lagos State is the issue of a Special Economic Status for Lagos, considering our place in the national economy and the special burdens we bear by virtue of our large population and limited landmass. I believe the need for this Special Status has been sufficiently articulated and justified. It suffices for me at this point to restate that this request is by no means a selfish one, but one that is actually in the interest of every Nigerian and of Nigeria as a nation.”

Going further, he asserted that the progress and prosperity of Nigeria are inextricably linked to the progress and prosperity of Lagos State. A Special Status for Lagos State, therefore, must be a concern not only for the people of Lagos State alone but for all Nigerians.

It will be recalled that in October 2016, the Nigerian Senate voted against a bill seeking special status and federal grant for Lagos State. The bill sponsored by OluremiTinubu, the All Progressives Congress Senator representing Lagos Central was rejected. Consequently, the bill, SB 112, failed to scale the second reading for the committee stage. The bill amongst other things; sought one per cent of federally generated revenue as a special grant for Lagos State in view of the state’s socio-economic significance. The bill also seeks to compel the Federal Government to recognise Lagos as the country’s commercial capital.

Lagos is undoubtedly the leading state in Nigeria in many aspects. It is the country’s commercial powerhouse and a critical stakeholder in any national deliberation. Lagos is definitely worth the fight. Although the state is Nigeria’s smallest by land area, it is one of Africa’s largest city by size: a densely packed megalopolis that is home to an estimated 21 million people that grows by 600,000 annually. This population is projected to double by 2050, and the megacity problems could equally double. Lagos is bursting at the seams as more people arrive in search of opportunities, creating an increased demand for roads and electricity, amongst other essential amenities.

Nigeria’s chief economic centre, Lagos, is responsible for around 30% of the country’s GDP. If Lagos were a country, its economy, worth $150 billion in 2020 would be the seventh-largest in Africa, ahead of Cote D’Ivoire and Kenya. Lagos’ wealth can partly be attributed to its strategic location along the Atlantic coast.

It is host to Nigeria’s two busiest ports; the Port of Lagos and Tin Can Island Port and extensive (albeit congested) air and road connections. Unlike Nigeria itself, Lagos’ own economy is diversified, generating billions from manufacturing, transportation, construction, and wholesale and retail trade, enabling the state to run like a well-oiled machine without needing to entirely rely on allocations from the Federal Government.

Additionally, Lagos accounts for over 60% of the country’s industrial/commercial activities. The budget size of the state is larger than the budget of many countries in Africa. Population wise, it is a combination of 19 Africa Countries -Liberia, Mauritania, Namibia, Botswana, Lesotho, Gambia, Gabon, Guinea-Bissau, Mauritius, Equatorial Guinea, Djibouti, Comoros, Cape Verde, etc.

Impressive as this description may look, Lagos still has a long way to go. It is the third most stressful city in the world, according to a 2019 Zipjet report, behind Kabul and Baghdad. Although it generates much more revenue internally compared to other states, the state struggles to provide infrastructure and keep pace with an exploding population. An estimated two million Lagosians live in abject poverty. Millions more are homeless and jobless, sleeping under bridges, and criminality in the state skyrockets on a daily basis.

This was one of the reasons given by Sanwo-Olu for the expediency of granting Lagos the request this time around: the inevitable burdens that come with having such a dense population with a limited landmass. Lagos is known to be a cosmopolitan state; having a high representation of Nigeria’s three major tribes and many other minorities.

A major point of argument given in the Senate by legislators who backed up Senator Tinubu’s request then was that the state should reserve a certain percentage of Value Added Tax (VAT) proceeds, being the state that provides the largest portion of VAT returns made to the Federal Inland Revenue Service (FIRS). Data from the National Bureau of Statistics revealed that 70 per cent of the N5.2 trillion taxes collected in 2018 came from Lagos State alone, a trend which was sustained in the following years. This is unsurprising owing to the fact that Lagos is home to the country’s major business giants and top corporate national and multinational firms in finance, manufacturing, trading, banking, investment, entertainment, fashion, consulting etc.

If a certain percentage of all federal tax income derived from the state can be reserved and ploughed back into the state; it will be a step in the right direction. Oil-producing states in Nigeria battled hard before they finally got 13% derivation payment from sales of oil from the Federal Government. If certain states discourage the sales of alcohol produced by breweries in Lagos in their own states and still earn VAT revenue on such products; it is only just and fair for Lagos to be entitled to a predetermined chunk of some returns from taxes generated from the state before remittances to FIRS.

With Lagos bearing the environmental brunt of domiciling all these business giants that produce these enormous taxes; as well as being home to the most active ports in the country, all must be done to put the state in an economic position to cater continually for the needs of these industries, as well as stabilise macro and microeconomic development in the state.

The monies ploughed back into the state can be used to develop and launch new series of infrastructure that will increase ease of doing business, while also addressing the various persistent security and infrastructural challenges associated with the state. The Federal Government can institute an independent board of auditors that the state will account to annually, regarding how funds ploughed back into Lagos are utilised to develop the state.

Sanwo-Olu also demanded the creation of state policing as he believes it will be a more efficient model of tackling insecurity and rising criminality in the state. The Federal Government should know well that granting this request will only lead to other states demanding for same and it must be ready to either decentralise the police force entirely or hold on to the current unitary system.

While the idea of declaring or “gazetting” Lagos officially as a “Special State” may be an overstretch, and the name-tag may be part of the reasons for differentiated opinion when the bill was rejected at the floor of the Senate, perhaps the name-tag should be clearly described as a figurative description to prevent unnecessary ripples in the polity and a surge in demand for such appellations by other states too. It is more important to pay attention to the key elements of the special status regarding the demand than actually placing precedence on calling Lagos a “Special State” in the Federation.

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With regards to special grants, the idea of statutorily allocating 1% of all government revenue to Lagos seems distasteful and will likely lead to nationwide agitations. It is noteworthy that Lagos has always been a recipient of special grants from the Federal Government to assist in tackling certain unforeseen challenges. For instance, at the outset of the COVID-19 pandemic, the Federal Government released N10 billion to help Lagos State combat the spread of the epidemic as the state was the disease’s epicentre in the country. Being the major gateway into the country’s economic hemisphere, it is normal for the state to continually be a recipient of certain intervention funds from the Federal Government to successfully tackle pressing emergencies.

Lagos definitely requires more assistance and support to effectively deal with the challenges of urbanisation and galloping immigration. It is Nigeria’s most popular state; and the number one investment destination in the country. It is a state with immense untapped goldmines especially in the non-oil areas of tourism, labour-intensive industrialisation, and series of public-private partnerships that could be harnessed to maximise the state’s burgeoning economic potential.

Leading commercial cities in different countries like London (UK), Maharashtra (India), California (United States), Bavaria region (Germany), Paris (France) all have that history of consistent backing and support by their respective central governments to position and consolidate their huge economic input as long-term strategic backbones of the countries. Lagos State also deserves such treatment in the overall interest of the country.

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