May 8, 2013

N7.62trn informal sector booms in Lagos

By Olasunkanmi Akoni & Monsur Olowoopejo

THE Lagos State government has disclosed that informal sector in the state is worth N7.615 trillion ($48.2 billion). The sector  is locked outside the state’s legal framework, which  is under-capitalising business activities in the state.”

The government however said it was working on modalities to formalise the state’s informal sector. It has also assured investors that the Lekki Free Trade Zone would be made a fully functional investment haven that will help improve the industrial sector.

Commissioner for Commerce and Industry, Mrs. Olusola Oworu, disclosed this during the 2013 ministerial briefing on the activities of her ministry at Alausa, to commemorate the sixth year of Governor Babatunde Fashola’s administration.

According to Oworu, “an estimated  $48.2 billion was locked in the extralegal sector with concomitant under capitalisation of business undertakings, and impoverishment of the masses.” She explained that these assets existing in the informal markets/extra-legal economy are classified as dead capital or locked assets.

“Despite the status of Lagos State as Nigeria’s economic nerve centre, several business transactions were done outside the formal economic structure in what is otherwise termed the informal sector or shadow economy which has been found to be quite massive in size in the state.

This scenario leaves much to be desired in terms of the ability of operators in this sector to leverage on their assets for the creation of the much needed capital essential for the growth and expansion of their businesses,” she said

The commissioner added that the state government had commenced works on the development of the Lekki-Epe International Airport to complement activities at the LFTZ and also provide alternative air transport services in the State.

“The Lekki-Epe International Airport is designed to handle 5 million passengers annually with provision for a modular terminal for future expansion. Preliminary works on the project have commenced the clearing of 150 hectares (run way), 4.5km of the access road and 9 kilometres of perimeter road,” she added.

Oworu pointed out that the airport would be built and managed by private investors, noting that the process for the selection of private investors to develop and manage the airport has commenced. She said the process of selecting the private manager had been contracted to a team of local and internationally acclaimed consultants namely Stanbic IBTC (Financial Advisers), Arup PTY (Technical Consultants), Norton Rose (Off-shore Legal Consultants) and Banwo & Ighodalo (Local Legal Consultants).

The commissioner also lamented the inadequacy of facilities at the Apapa and Tin-Can Island Ports, thereby necessitating the need for Lekki Deep Seaport. She said the state government with the Federal Government through the Nigerian Ports Authority and a private investor – Lekki Port LFTZ Enterprise (LPLE) had commenced the development of the Lekki Deep Seaport.

“Presently, shareholders agreement has been executed while preliminary works have started at the site. When completed the Port would relieve the pressure on the Apapa and Tin-Can Island Ports and would also support business activities at the Lekki Free Zone.”

The commissioner said the construction of the Port is expected to last for about four years and over 10,000 jobs are projected to be created directly and indirectly during the construction period while over 169,000 jobs would be generated directly and indirectly when it becomes fully operational.