Lagos’ quest to become the financial hub of sub Sahara Africa will take a longer time to materialise, as a new report places Nairobi and Johannesburg ahead of the bulging megacity.
Data from consulting firm Price Waterhouse Coopers (PwC) analysing cities in terms of their relative strengths, show Nairobi and Johannesburg as the region’s top destinations in terms of financial services, with Lagos coming behind.
Lagos’ underperformance in PwC’s indices is not unrelated to its dearth in infrastructure, as well as lingering difficulty in its business environment.
The report showed that Nairobi and Johannesburg are ahead of Lagos in the area of infrastructure development.
In terms of ease of doing business, Nairobi recorded 12 points out of a possible 20, Johannesburg scored 19 points, while Lagos scored 8.
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The Foreign Direct Investment (FDI) index based on the report, also showed Nairobi becoming an investors’ favourite, scoring the maximum 20 points, while both Johannesburg and Lagos were tied at 18 points.
Lagos however ranked as the top spot in culture, as the centre of music, as well as an essential venue for movies (Nollywood).
However, when gauging opportunities in the surveyed African cities, Lagos outperformed peers in the middle class growth category, as it scored 18 points, while Nairobi and Johannesburg scored 13 points and 6 points respectively.
Analysts say Lagos will become more attractive to investors if money is spent on infrastructure development, given the immense opportunities in its rising population and burgeoning middle class.
“Infrastructure investment needs to expand”, said the PWC report.
“Africa’s cities cannot maintain their current levels of growth without enhancing their infrastructure,” it said further.
Some constraints for Lagos, according to PWC include its clogged city centers and constraints on river crossings, citing that the inability to access central business districts over rivers is often a major cause of the congestion.
“Although Lagos has three bridges to the mainland, a journey to the airport that only takes 20 minutes on a Sunday morning, can easily take three hours or more on a weekday evening, especially in the rainy season, the report said.
The report sees rail infrastructure as the answer to the notorious conundrum of road building.
The World Bank has estimated that while sub-Saharan Africa needs infrastructure investment of nearly $100 billion annually, it currently gets less than half of that.
Lagos has accessed World Bank loans to part finance its light rail project estimated to cost N160 billion ($800 million) to complete, in order to meet the transportation needs of its 21 million people. The blue line light rail project however remains uncompleted seven years after construction began.
BALA AUGIE & EDOZIE IFEBI
