Economics and Business Climate Overview of Lagos, Nigeria.
1.0 Background Information
1.1 Geopolitical Profile
The smallest in area of Nigeria's states (total land area of three thousand, five hundred and seventy seven square meters), Lagos State is the most populous state (with over eighteen million people according to 2006 population census) and unarguably the most economically important state of the country and the nation's most urbanized (Economic Intelligence Unit, MEPB 2012).
This large, mostly young, population offers both an abundant workforce and a larger emerging and relatively untapped market for consumer products and services (Lagos State Government 2012).
1.2 Business and ...view middle of the document...
Additionally, a significant number of banks and other financial organizations in Nigeria have their head offices in Lagos. Local, regional and global markets have easy access to Lagos due to its strategic location. Over fifty percent of the major ports in Nigeria are located in Lagos.
2.0 Present Business and Economic Environment Condition
2.1 Business Environment Leverage
Aside the great potentials possessed by the business and economic environment of Lagos, just to mention but a few, there are various incentives in place for both local and international prospective and current investors to take advantage of.
For investors willing to set up pioneer industries across various sectors of the economy, the government has put in place a profit and dividends tax holiday of up to five years (Lagos State Government 2012).
Keen investors desiring to invest in the agricultural sector can also take advantage of an Agricultural Credit Guarantee Scheme Fund (ACGSF) administered by the Central Bank of Nigeria (CBN) which guarantees up to seventy-five percent of all loans made by commercial banks to agricultural related activities. Manufacturers are also entitled to rapid depreciation allowances. Mining also qualify for three years tax holiday (Lagos State Government 2012).
For SMEs, there is an SME fund which will make cheap funds at a single digit interest rate accessible to qualified SMEs for improved productivity and job creation. In addition, SMEs pay a lower rate in the first five years in several sectors. Dividends are also exempt from tax.
There is availability of up to five Free Trade Zones (FTZ) where foreign ownership of business can be up to one hundred percent. Free trade zone enterprises are also exempted from all federal, state and local government taxes, levies and rates. Importation of capital equipment, machinery, raw materials and spare parts are duty free. Moreover, there are absolute freedom form legislative provisions pertaining to taxes, levies, duties and foreign exchange regulations with unrestricted remittance of profits and dividends earned by foreign investors.
2.2 Business Environment Setbacks
Despite the business environment and economic leverage that exist in the city of Lagos, it’s quite unfortunate that all is not rosy as it sounds as there are some setbacks confronting the business environment of its economy. Some of the major cross cutting issues having negative impacts on the business environment of Lagos are;
i. High cost of energy as a result of erratic power supply. This has yielded to business sustainability challenges and constant rise in operating cost.
ii. Lack of security which have negatively impacted on the business confidence of prospective and present investors. This has also in turn escalated the risk of doing business in some parts of the state and the country as a whole.
iii. General decline in sales due to weak consumer demands.
iv. Seasonal fuel scarcity resulting in high cost of...