The Lagos Way

The Lagos Way This paper seeks to redefine the way forward for Nigeria using Lagos State as a model for pursuing development as the old model of development financed from statutory allocations gives way to a new model financed from the productive activities of Lagosians and how the Lagos Way can further be improved upon.

KINGSLEY OMOSE 3/20/2009

Contents 1. Project Nigeria and the Lagos Way

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2. The Lagos Way and the Bell Jar Effect

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3. The Lagos Way: Time for Bolder Action?

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4. The Lagos Way: Designing a New Order

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5. The Lagos Way: Investing in Nigerians

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6. The Lagos Way: Liberalizing Business Registration

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7. The Lagos Way: Improving Access to Justice

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8. The Lagos Way: Unleashing Dead Capital

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9. The Lagos Way: A Season of Equalization

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10. The Lagos Way: Liberal or Conservative?

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Project Nigeria and the Lagos Way (Part 1) I recently came across a definition of faith that has restored somewhat my hope in the attainment of the awesome possibilities of what I call Project Nigeria. According to the New Century Version of the Bible, "Faith means being sure of the things we hope for and knowing that something is real even if we do not see it". This definition set me thinking and I realized that I had almost lost faith in Project Nigeria seeing that my recent articles had been lamentations saturated. Matters had not been helped by the ongoing global economic recession which has now gripped the Nigerian economy in spite of assurances by some that we were insulated. Fall in crude oil prices to record levels and capital flight have seen the Naira also fall in value and the Nigerian Stock Market severely crippled. But having read about faith as being sure of the things hoped for, I was shocked to find that there was nothing within my recollection that I was hoping for regarding Nigeria. It was as though a thick dark cloud was hovering over Nigeria, completely blocking the light from the Sun from illuminating any sector of Nigeria.There is no sector you look at in Nigeria today that has any semblance of positive news whether finance, manufacturing, oil and gas, education, health and other social services. Every where you go the monster called corruption has become entrenched and something one must partake of in to survive the harsh jungle reality that Nigeria has become. The adoption of a democratic system of government has become an albatross on Nigerians draining available resources to the political actors that have hijacked the system. In the midst of all the gloomy news and dire forecasts, I would have to concede that there are many things I am hoping for regarding Lagos State. The popular theme of Babatunde Raji Fashola, the Executive Governor of Lagos State, "Eko O Ni Baja" (Lagos will not spoil) is becoming a reality right before our eyes. I am not just referring to the introduction of a mass transit system and the extensive infrastructural development going on across the state. I am also not just referring to the restoration of law and order back to our streets and the environment or the educational and health initiatives introduced by the government. Also long forgotten communities such as Orile-Iganmu in Coker Aguda LCDA are experiencing development ensuring their integration into the larger Lagos ommunity.The ability of LSG to drive its development plan relying on a mix of internal generated revenue, debt financing and a public private partnership is delivering real dividends. Reliance on Statutory Allocations and VAT proceeds has almost being relegated to the background thus freeing the state from the stranglehold of a dependent mentality. Lagos State did not arrive at this position by choice but out of necessity occasioned by efforts on the part of the then Obasanjo government to financially cripple Lagos State. 3

Not even the intervention of the Supreme Court could sway the Obasanjo government to release withheld statutory allocations. This was in an effort to make the Bola Tinubu government to jump political ships or loose out in the power struggle. Thank God that Bola Tinubu did not yield to the blackmail unlike the governors of some Northern States have already done and more are planning to do. That confrontation forced the Bola Tinubu government to look inwards to other sources to generate revenue to meet its developmental goals. Today Babatunde Raji Fashola is building on that foundation which is making Lagos State Nigeria's beacon of hope. Relegated to the background are complaints about increasing Lagos State's share of statutory allocations considering its huge population and limited land area. Lagos State Government has finally come to realize what developed nations have always known and whiles the rest of Nigeria is still grouping in the dark. It is this, that the people and not natural resources are the best assets of a nation and explains why developed nations have productivity indexes. PIs accurately measure the productivity of the people so as to gauge the health of the economy seeing that taxation is the main means of generating state revenues.Developed nations are confident enough to leave major sectors of the economy in the hands of the private sector while ensuring that adequate regulations are put in place. These developed nations have been somewhat lax in their oversight functions of late resulting in the present global economic crises. However, the dividends of the boom years have lifted millions of their citizens from the depths of poverty into the middle class. It is the billions of US Dollars that governments of developed nations took in during the boom years that are now being injected into their economies as stimulus packages. Countries such as Nigeria who depend on commodities as the main stay of revenue generation are busy trying to defend the value of their national currencies. Using dwindling foreign exchange reserves amidst falling foreign revenue earnings the responses of these countries will not achieve the desired results. OPEC, the cartel of oil producing countries has drastically slashed daily production of crude oil in vain efforts to push up prices. In January 2009 the revenue available for sharing in the Federation account fell by N150 billion especially with the crises in the Niger Delta and fall in crude oil prices. Receipts from crude oil will continue to fall plunging the Federal, State and Local Governments that are yet to be weaned from relying on crude oil proceeds into financial crises.

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In the midst of this the Lagos State Government is pushing ahead with many capital projects and has just raised N50 billion through a bond that was over subscribed. What LSG has done is to present its monthly IGR as proof that it can meet its debt obligations and the investing private sector has endorsed this with a resounding yes vote. The Lagos Way is the pathway to development for the Federal, State and Local Governments, as survival in the deepening global economic recession depends on it.

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The Lagos Way and the Bell Jar Effect (Part 2) The impressive results of the administration of Babatunde Raji Fashola in Lagos State are being financed through an aggressive revenue drive by its relevant agencies. At the core of this aggressive revenue generation is the Ministry of Finance and the Lagos State Board of Internal Revenue in addition to other agencies and directorates. Lagos State receives about N2 billion monthly as its share of statutory revenue allocation and VAT proceeds, but its internally generated revenue exceeds N10 billion monthly. With the expanding list of development projects planned for execution in the next few years, LSG is already ramping up its IGR especially as statutory allocations are declining. In Nigeria's version of the practice of Federalism, the bulk of sectors for revenue generation outside taxation of individuals are controlled by the Federal Government. Although Lagos State generates the largest VAT proceeds, the money is shared among the 36 states and the Federal Capital Territory using a formula that shortchanges the state. Thus Lagos State has limited options in the various means it can resort to in ramping up IGR to meet its developmental challenges which are unique due to its mega status. However LSG has not shrieked from taking up this challenge and has over the years implemented other measures to increase its taxable base. Lagosians deserve some praise as they have borne the brunt of the aggressive revenue drive embarked upon by LSG.They are however consoled by the developments they see going on around the state and the plans slated for implementation in the near future. Lagosians have a legal duty to pay their taxes but the Babatunde Fashola administration is executing its development agenda in a way that makes the duty easier to discharge. However, in the light of the global economic crises, which has not spared the Nigerian economy, LSG aggressive pursuit of IGR may run into a head wind. This is because as the economic fortunes of Lagosians and businesses in Lagos nose dive, the IGR of Lagos State will also be affected. From the near collapse of the Nigerian Stock Market, to the financial crises rocking the banking sector, and the ongoing lull in the property market, no sector has been spared. While developed nations are packaging stimulus packages containing a mix of tax cuts and massive spending, the possibility of that happening in Lagos State is quite slim. The Babatunde Fashola administration is not insensitive to the plight of Lagosians but the developmental and social challenges confronting the state are awesome. Since the infrastructural developments of the 1970s Lagos State has been in a state of steady descent into a mass slum except for the brief revival experienced in the mid 1990s. The developmental momentum already attained by the Babatunde Fashola administration efforts needs to be sustained and supported all well meaning Lagosians.

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Also Lagos State is relying on debt financing to push its developmental agenda, and with the recent N50 billion bond, the debt level of the state may be in excess of N300 billion. There is nothing wrong with the debt situation of Lagos State as long as its IGR supported by statutory and VAT proceeds is sustained at an acceptable level. Should the economic fortunes of Lagosians continue to decline which is likely to result in a fall in IGR, then the state’s creditors may cash in on their bonds. To avoid this, the LSG may further intensify its already aggressive IGR drive leading to possible confrontation between Lagosians and the state government. There is evidence across Lagos State that LSG has already intensified its IGR drive since the start of 2009. In January 2009, our office block was sealed up by officials of LAWMA for not paying for a drum to be used for garbage collection and was only reopened after a fine was paid. Next it was the turn of officials of the Ministry of Environment who have served us notice that our sound proof generator is causing noise pollution. Now we have been served with another notice to pay Land Use Charges for the same building running into millions of Naira. I have also received inquiries from some clients who are locked in battles with their landlords over who has responsibility for paying the Land Use Charge. While we celebrate the monumental developments going in Lagos State, we also must avoid a situation where willing horses may be ridden to their deaths. The recent stimulus packages announced in most developed nations’ shows that governments can not afford to ignore the economic misfortunes of their citizens. But at the same time we cannot even contemplate the reduction or stoppage of the development agenda of LSG. And the willing horses are mostly Lagosians in the legal as opposed to the extra-legal sector, and who are a small percentage of the over 15, 000, 000 people in the state. Lagosians in the legal sector as it were are trapped in a bell jar and kept in display for the IGR drive of LSG. Most Lagosians in the extra-legal sector are caught off from the bell jar while enjoying the developments that are being financed by those in the legal sector. Integrating the legal and extra-legal sectors in Lagos State and albeit, Nigeria, is one of the principal challenges that has to be overcome if the tax base is to be expanded.

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The Lagos Way: Time for Bolder Action? (Part 3) In response to declining oil and gas revenue receipts, the Minister of State for Finance, Mr. Remi Babalola, is recommending that governments at all levels reduce expenditure. He is also calling on governments to enhance non-oil revenue and tolerable fiscal deficit and borrowing that would affect the macro economic stability. This is as oil prices fall far below what they were in 2008 and Nigeria’s OPEC quota is reduced to 1.88 million bpd, compared to the budgeted 2.292 million bpd for 2009.In January 2009, the funds allocated to the three tiers of government dropped to N285 billion as against N435 billion allocated in December 2008, a difference of N150 billion. To Mr. Babalola, the immediate challenge is to avoid a situation where the recession forces deepen and combine with the oil market volatility in creating a vicious spiral. He believes this new situation requires not only further and bolder actions, but also the need to step up level of cooperation and common understanding between policy makers. For a nation that depends 95% on oil and gas receipts and with the deepening global economic recession, Mr. Babalola’s call for further and bolder action is timely. Fortunately Lagos State in what I have come to call the Lagos Way presents a ready pattern for adoption by other governments as a way out of their financial predicaments. The Lagos Way is the ability of Lagos State Government to drive its development plans in the midst of declining statutorily allocated revenue. To achieve this, LSG is relying on a mix of internal generated revenue, debt financing and a public private partnership that is delivering real dividends. The Lagos Way has seen the Internally Generated Revenues of Lagos State rise to stratospheric levels and a weaning from total reliance on statutory allocations. Although the Lagos Way as presently operated is based on good principles it still requires bolder action to meet the challenges of the deepening economic crises. The economic boom that boosted the fortunes of Lagosians was based not on the productivity of Lagosians but as a fall out of global factors. The increase in global economic activities had resulted in increases in the prices of commodities resulting in a tidal wave of funds being pumped into the finance sector. Awash with cheap funds, the finance sector funded all other sectors but the manufacturing sector and small businesses. Some beneficiaries of the era of cheap funds included the Stock Market and the legal property sector which represents only about 5% of total properties in Lagos State.

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Others beneficiary were importers of goods and services, importers of petroleum products and politicians using bank loans to fund their political ambitions. With the reversal in global economic fortunes, trillions of US Dollars have literally disappeared throwing the finance sector into an abyss. Now that the global economy is in recession and probably heading for a depression, the economic fortunes of Lagosians, albeit Nigerians is also taking a battering. The IGR of Lagos State is likely to be affected as the level of revenue generated is dependent on the economic well being of Lagosians and businesses in Lagos State. LSG is expanding the reaches of its taxable base in order to increase revenue being generated but is this sustainable in the face of declining fortunes of Lagosians? LSG has a multi-pronged approach to its internally generated revenue drive at the core of which is the Ministry of Finance and Lagos State Board of Internal revenue. Agencies and departments while enforcing the performance of statutory duties on the part of Lagosians and their businesses also play various roles in IGR. However, one of the weaknesses of the multi-pronged approach to IGR is that an individual or business can suffer multiple hits from the agencies and departments. This may give the impression that some Lagosians and businesses in Lagos are being deliberately targeted resulting in a siege mentality that may be exploited by others. If every taxable adult was captured on the data base of the Lagos Board of Internal Revenue, can LSG sustain the level of its IGR in the face of the economic recession? Where agencies and directorates of LSG to enforce various obligations and duties on Lagosians and businesses at the pains of distress and fines, would that improve its IGR? Do the present revenue generating measures of LSG satisfy the demand for further and bolder action by Mr. Babalola?

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The Lagos Way: Designing a New Order (Part 4) Across the nations of the earth and with their peoples griped by palpable fear, a heavy economic storm is unleashing its power. Issues and facts that once dwelt in the realm of complexity are fast sliding into the realm of disorder. Powerful nations are being rocked by economic crises, the depths of which have not been previously experienced. Leaders of both developed and developing nations are grouping in the dark as it were seeking for solutions that are not there. In search of miracles, other nations are embarking on actions that some years back would have been regarded as an aberration. In America, a black man of African descent has been elected president to chart a part out of the depths of despair that is enveloping Americans. Stimulus package are being announced by most of these leaders in attempts to jump start their nations economies. In Ireland demonstrations are being held to protest the government’s poor handling of the economic crises. In Latvia, bonds issued by the government have been declared to be of junk status while the economy of Iceland is bankrupt. Violent protests have erupted in some Eastern European nations with Ukraine being touted as next on the list as banks and the government teeters on the brink of collapse. The growing economic crises are also threatening the idea of one Europe as the affluent member states tend towards protectionism and the poorer ones call for larger bailouts. The World Bank and IMF are declaring that a long recession lies ahead for many national economies and are rushing loans to needy governments. Meanwhile commodities dependent economies are busy trying to use foreign exchange reserves to prop up local currencies that are plummeting in value. In developed economies banks, manufacturers and service providers are declaring bankruptcy, cutting down production and reducing their work force. Nationalization of the finance and manufacturing sectors are already being implemented even in the bastions of capitalism, i.e. the United States and the United Kingdom. At the core of the crises is the malfunctioning of the capitalist system as espoused by Western nations. The essence of the Western style of life characterized by credit spending against future appreciation in the value of property assets is now under threat. In the midst of the ongoing crises international finance is fleeing the economies of the developed nations and seeking new habitations.

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Whether or not the stimulus packages being announced by developed nations will be enough to attract back the fleeing international finance is another story. What is important is that international finance is seeking new habitations similar to what happened following the economic crises that gripped Asia in the 1990s. This is why the stimulus package announced by President Obama seeks to spend over $700 billion to develop American infrastructure among others. But with the near collapse of the property market which is at the heart of the American credit system it will take a while to stabilize the American economy. And with the American economy stalling, economic giants in Asia and Europe and commodities rich nations alike are in for a hard landing, if not crash landing. In developing nations like Nigeria, the property sector is still in a primitive state where ownership is emphasized as opposed to using property for value added purposes. The infrastructure development is almost comatose as the demands of corruption and developmental needs cannot be met from internally generated revenues. The education sector is still certificate issuance oriented as opposed to skill imparting meaning that there are millions if not billions waiting to be retrained and retooled. Whether you are referring to health, justice, security, manufacturing, transportation etc, nearly every sector except government bureaucracy is in its infancy. With the drastic fall in the prices of commodities on which developing nations depend for finance, the challenge of diversifying and deepening the economic base is an urgent one. For forward looking leaders and nations in the developing nations, the global economic crises actually presents them with opportunities to re-write their destines. Like Singapore, they too can migrate from the Thirdly World to the First World depending on the decisions taken and the processes put in place to actualize them. Prior to the WW 11 the world powers then were Britain, France, Italy, and Japan but that war served as a launching pad for America to become a super power. Today, the super power status of America especially in a new world order characterized by economic prowess as opposed to military prowess is much in doubt. The challenge to be overcome is how to design and build a new system in Nigeria to enable the bringing forth of a new order of prosperity for the peoples of this great nation.

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The Lagos Way: Investing in Nigerians (Part 5) Orile-Iganmu is a densely populated slum in Coker-Aguda LCDA of Lagos State about 10 minutes drive from Lagos Island, the financial capital of Sub-Saharan Africa. The contrast between both communities is so sharp and shocking that it is difficult to believe they are in the same state. I recall my first visit to Orile-Iganmu in April 2007 and how I found it difficult to comprehend how poverty could be dwelling so close to the affluence on Lagos Island. While deals worth billions of Naira were the order of the day in gleaming towers on the Island, Orile-Iganmu seemed locked in a stone-age time wrap. In the last few months though physical development has finally come the way of OrileIganmu courtesy of the Lagos State Government. Facilities at its sole health center are being upgraded and major existing roads are being rehabilitated with new roads being constructed. Although the road construction is resulting in the demolishing of buildings, residents of the community are visibly excited at these developments. The only worry seems to be the need for the road constructions to be completed before the start of the raining season. Flooding has been the bane of the community over the years with the start of the rains seen more as a curse than a blessing. The expectation is that the speedy completion of the road projects will avert or reduce the annual flooding that makes living in Orile-Iganmu hellish. A more subtle implication of the ongoing physical developments that are going on in Orile-Iganmu are the new buildings already springing up in the community. This is also attracting more affluent people to relocate to Orile-Iganmu as rental values increase pushing poorer residents further to the outskirts of Lagos State. Local initiatives have been commenced by some community organizations such as OrileIganmu Progressive Association and Dynamic Youths to empower Orile people. Various trainings are going on to equip youths with vital working skills and also to develop the talents of those interested in the arts. The initiatives also extend to primary school pupils who are being assisted in the pursuit of quality educations. Those in business are being taught entrepreneurial skills while being encouraged to register or incorporate their businesses and embrace banking services. Lectures are regularly organized bringing experts in various fields to share their experiences to help the people adjust to the demands of a changing environment. The goal is for an empowered resident of Orile-Iganmu to emerge and take advantage of the physical developmental efforts of the Lagos State Government in the community.

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The efforts of these local organizations may be on a small scale but they point a pathway to the designing and implementation of a new order towards prosperity for all. It is a system that has to recognize and appreciate the importance of people as the main resource of a nation, state or community. The usual practice is to place emphasis on infrastructural development while the people are pretty much left to fend and train themselves. At least $100 billion of the stimulus package announced by President Obama is to revitalize the American educational sector with even more to be spent on health care. The advances made by America since the 1940s have depended on breakthroughs made by Americans in virtually every field or endeavor. Complacency set in once prosperity which is the offshoot of these advances turned Americans increasingly towards consumerism. The global economic crisis is forcing Americans to reprioritize and pump trillions of USD towards programs that will develop Americans. In Nigeria, education and health are now private sector driven resulting in a pay as you use financing model further widening the gap between the rich and the poor. Trillions of Naira are budgeted and spent annually by all tiers of government with scant regard for the actual development of the Nigerian as opposed to Nigeria. Education, health, housing, and other programs that seek to improve the quality of life of all Nigerians must once more become the top priorities. The treatment of Nigerians as observers in articulating their developmental needs should be reversed in favor of a partnership between the people and those in government. Nigeria will find it difficult in the months and years ahead to fund the infrastructural development projects that have for years cornered a lion share of annual budgets. This is as revenue receipts from the sale of crude oil and gas increasingly decline, but investing in Nigerians will produce the advances that will propel us to prosperity. The untrained, unskilled, un-empowered, uneducated and poor Nigerian of yesterday is at the head of the mob that is wrecking carnage today. There is still time to reverse or reduce the destruction that will be caused by this empowered mob tomorrow but only if the choice is made to invest in Nigerians today.

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The Lagos Way: Liberalizing Business Registration (Part 6) In the last few weeks activities at the Corporate Affairs Commission, Abuja head office and its zonal offices in some Nigerian cities have been moving at snail speed. According to reports, CAC recently relocated to its new head office in Abuja and because its operations are still centralized the speed of its service delivery has slowed drastically. The 1999 Constitution grants the Federal Legislature exclusivity in respect of company registration and ancillary matters. That exclusivity was in turn vested on CAC through the Companies and Allied Matters Act with respect to company registration. CAC also has responsibility for business name registration and incorporation of nonprofit organizations and associations. Although CAC has zonal offices across major cities in Nigeria, these zonal offices serve more as collection centers while the main operations are still carried on in Abuja. The process of incorporation or business name registration starts with an application for name reservation and availability, a process that takes from one to three months. The actual issuance of certificates of registration and incorporation which can only be done in Abuja takes a further one to two months. Transacting with incorporation documents of already registered entities is even more nightmarish as the CAC still relies on hard files for storing documents. In a country of 140 million people, there are less that 800, 000 registered companies with even fewer registered non-profit associations or organizations. Records may not be readily available for the number of registered business names but with the long drawn out registration procedure the figures may not be encouraging. The process of company incorporation is further compounded by the requirement for the payment of stamp duties to the Federal Inland Revenue Service. The limited liability company is the recognized vehicle for conducting business across the nations of the earth, and this is what makes the record of CAC abysmal. The corporate structure allows two or more persons to commence a business as shareholders while limiting their liabilities to the number of shares they subscribe to. In situations where those shares are fully paid for the company structure allows the shareholders to partake of the profits while having nothing to do with its losses. The company as it were is regarded as having a separate legal personality different from its ownership thus allowing it to acquire and sell assets in its own name. This means that a company has what in law is referred to as ‘Perpetual Succession’, i.e. it can survive beyond the death of its founders or shareholders. The company may have a management structure that is different from its ownership structure with its affairs run by the board of directors.

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These directors may also not be shareholders of the company and in advanced economies the requirement of independent directors is taken seriously. Business name registration on the other hand allows an individual to register a trade name for business or work purposes although that individual bears the profits and losses. Although it does not provide the protection of limiting the liability of its owners, business name registration allows a business to have a distinct identity. It also enables the owners to operate bank accounts using the business name and to print invoices, complimentary cards, letter headings and name signs using that name. Incorporated trustees registration are for religious, educational, charitable, community and other such like registrations, entities established usually for non-profit purposes. Whatever type of registration is carried out allows Nigerians to either individually or in groups to conduct their affairs in structures that are recognized by law. Also searches can easily be conducted to inquire into their ownership structures and regarding how their business affairs are conducted to satisfy disclosure requirements. This is why the process of companies transiting from private limited liability status (membership not exceeding 50) to public limited liability is quite cumbersome. Public limited liability companies can offer their shares for sale to members of the public and those shares can also be traded in the Nigerian Stock Exchange. Public limited liability companies thus have the added advantage of being able to raise funding from the general public to fund or expand their business operations. CAC has to be commended for its accomplishments over the years especially in a nation with a mono-economic product and centralized government control. However with the waning of the influence of oil and gas in a global economy in recession, time is ripe for the deregulation of business registration. This is to compliment the diversification and deepening of the nation’s economy with the increasing recognition that Nigerians and not commodities are its main resource. Nigerians have always been commercially minded and this is supported even by documented history, even long before the arrival of British Colonialists. Majority of Nigerians operate extra-legal businesses outside the reach and protection afforded by the law mainly due to the monopoly enjoyed by CAC. Government is the looser when majority of its business minded citizens operate extra-legally and with only the Federal Government collecting corporate taxes. The time is ripe for business registration to be undertaken by all tiers of government and the private sector.

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The Lagos Way: Improving Access to Justice (Part 7) The City of London has just released its Global Financial Centers Index report which rates the competitiveness of cities around the world. Of the top 50 financial centers evaluated in the GFCI the only African city is Johannesburg, South Africa which came out in the 41st position with 511 points. The City of London retained the number one position followed by New York, Singapore, Hong Kong, and Zurich in that order. But the GFCI concludes that there is no safe financial center in the world as the research showed a fall in the ratings of all the cities evaluated. According to the research, this reflected overall negativity about the current and future state of the sector due to the global economic crisis. A financial center is a global city that is a company and business hub, as well as being home to many world famous banks and/or stock exchanges (Wikipedia). The evaluations of these financial centers were based on five key areas - people; the business environment; market access; infrastructure and general competitiveness. The key areas were further broken down into property costs, regulation and taxation, access to customers, and the supply of skilled workers. The responsiveness of government to business’s needs and the overall quality of life in the relevant cities were also included. The research is compiled using online questionnaires completed by financial services professionals across the world. In the last report, 41% of the questionnaire mentioned Business Environment, especially the regulatory environment as the most important competitive factor. Business Environment covers regulation, tax rates, and levels of corruption, economic freedom and the ease of doing business. While I am not despairing over the omission of Lagos in the top 50 financial centers in the world, I am encouraged by the general decline in ratings by all the cities evaluated. According to the research, the fall in ratings was more noticeable in the cities at the bottom of the lists implying that international finance was fleeing to safer habitations. The beneficiaries of the ‘flight to safety’ of international finance have been the cities at the top of the list although their ratings have also fallen. The research concludes that this fall in ratings reflected the overall negativity about the current and future state of the sector. The fall in ratings and the ‘flight to safety’ are understandable given the uncertain responses of government and regulators in the developed world to the global crisis.In the light of the GCFI conclusion that there is no safe financial center in the world, there is opportunity for Lagos to become one of the top financial centers in the world.

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The challenge for Lagos will be how to provide safe landing and retention rights to international finance that is fleeing even the well established financial centers. This seems a tall order seeing that of recent, Accra, Ghana has become the destination of choice for international finance coming into sub-Saharan Africa. There is room for hope as the Babatunde Fashola administration in Lagos State is working round the clock to improve the physical infrastructure in the state. My concern however is in the area of creating an enabling business environment through improving access to justice for all. I concede that since the commencement of the 4th Republic in 1999, the Lagos State Government has worked to improve the administration of justice. The Bola Tinubu administration (1999-2007) built a new High Court complex in Lagos and improved the salaries of judges. Also a new High Court (Civil Procedure) Rules was adopted in 2004 to enhance the speedy dispensation of civil matters. We now have various divisions to handle specialized matters such as Family, Land, Commercial and Criminal etc. The Babatunde Fashola administration has continued the overhaul of the justice system with special emphasis on the magistracy. Efforts are ongoing to improve the recording system in the courts as well as the welfare of the administrative cadre of the judiciary. There are other accomplishments but there is still room for further improvement as the goal is for Lagos to be recognized as one of the top financial centers in the world. First there is need for more Judicial Divisions of the State High Court across the original 22 Local Governments of Lagos State. This will bring justice closer to the people and avoid the present situation where the Ikeja and Lagos Judicial Divisions serve majority of Lagosians. Second, there is need to appoint more judges and magistrates to serve the over 15 million estimated population of Lagos State, again to bring justice closer to Lagosians. Third, more qualified lawyers of non-Yoruba stock including expatriates who are eligible should be appointed to serve as judges and magistrates. Fourth, the process of filing court processes and payment of filing fees to the Lagos State Judiciary should be made electronically. Fifth, Wifi-Internet access should be available in all court premises to allow judicial officers, lawyers and clients to take advantage of online legal resources amongst others. Sixth, electronic copies of rulings and judgments of judicial officers should be made available for download on subscription basis.

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Finally, the privilege given to lawyers of the rank of Senior Advocates of Nigeria to sit at the front of the bar and mention their cases first should be abolished. In an era of equality before the law and globalization, these privileges paint a picture of privileged access to justice by those with more money. The above recommendations are not conclusive but can serve as a guide towards improving access to justice thus enabling Lagos to become a top financial center.

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The Lagos Way: Unleashing Dead Capital (Part 8) President Yar'Adua recently sent a Bill to the National Assembly for the amendment of the Land Use Act, a 1978 law which transferred ownership of all lands in Nigeria to Governors of States. The amendments seek to reduce the powers of Governors over land transactions and dealings confining the requirement for Governor’s Consent to issues relating only to assignment of land. The Land Use Act has had more profound impact on Nigerians than any other law promulgated in the history of Nigeria as it literally took their ownership rights over lands, transforming them into tenants. Even as such tenants, Nigerians were required to obtain the consents of Governors prior to transacting in any respect with lands which in some instances had been family owned for generations. The Land Use Act was promulgated by the military government of then Head of State, General Obasanjo and was embedded in both the 1979 and 1999 Constitutions thus cementing the landless rights of Nigerians in their ‘supposedly’ own constitution. Although ownership rights over land were transferred to Governors, Nigerians retained possessory rights even if they did not have Statutory Rights of Occupancy or Customary Rights of Occupancy, the only proof of title recognized by the Land Use Act. This has meant that Governors requiring land supposedly for overriding public purposes have had to resort to compulsory acquisitions of land from Nigerians for which compensation has to be paid under the Land Use Act. Conditions were then imposed on those seeking land allocations from State Governments and on those seeking statutory documents of title over lands they had been in their possession for generations. Vast majorities of Nigerians especially in rural areas simply chose to ignore the provisions of the Land Use Act since they could utilize their lands either for agricultural or habitation purposes and pass such rights to their heirs. The implication has been that less than 10% of land title rights are captured in the official title registries of State Governments in Nigeria effectively creating a two tier system of land rights, i.e. the legal and extra-legal sectors. While Governors of States have ownership rights which they cannot possess except through compulsory acquisitions, Nigerians have possessory rights without recognized title documents. 19

This means that Nigerians are sitting on vast amounts of dead capital as they possess lands from which no surplus or additional value can be obtained beyond the primary purposes of agriculture and habitation. Our past and current attitude to land utilization and ownership issues in Nigeria is no different from our attitude towards oil and gas, which are explored and exported in their natural state with no value added. The same oil and gas is processed into value added products by other nations and imported into Nigeria at great costs resulting in massive foreign exchange loss to Nigeria in addition to generating employment in the value adding nations. In developed nations, 70% of new businesses are financed by people using the title documents of their landed assets as collateral to finance new businesses in property markets that have various layers of economic rights and interests that are documented. While the amendments proposed by President Yar'Adua to the Land Use Act are commendable, a lot more is needed to unleash the dead capital on which the vast majority of Nigerians are sitting. With the fall in oil and gas prices following the global economic crisis, regularizing the possessory rights of Nigerians over land and documenting their interests is a principal way of putting capital in the hands of Nigerians. Having title documents over land will allow Nigerians approach banks for loans to finance business ideas using their legal interests as collaterals and in turn allow the Central Bank of Nigeria to inject more funds into the finance sector. This way CBN will be printing more Naira backed up by assets in the hands of Nigerians which will be injected into the economy to drive business opportunities and generate employment opportunities for the over 40 million unemployed Nigerian youths. State Governors need not wait for the proposed amendments to the Land Use Act to set the ball rolling especially as they are facing sever shortfall in funding as a result of the fall in oil and gas prices. They can start by removing the various conditions that have prevented Nigerians from realizing the potential contained in their possessory land rights to enable them document their interests and unleash otherwise dead capital. They can also take steps to simplify the documentation process and adopt the use of electronic registers thus making it easier to track the various surplus or additional values and interests that will be created over land.

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It is important that State Governments recognize that funding for their capital and recurrent expenses will come from taxing the economic activities of Nigerians rather than collecting licensing and registration fees. Regularizing title documents of Nigerians over land will also attract foreign capital for investment purposes allowing the sector to be driven by the private sector with the role of governments restricted to regulation.

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The Lagos Way: A Season of Equalization (Part 9) Years back when Dr. Noel Woodroffe, a Blackman from Trinidad, formed the first Apostolic Network of Churches, i.e. Congress-WBN, which had some white pastors, prophets and teachers there was uproar in the spiritual world. In the Evangelical and Pentecostal Church worlds it was the norm for spiritual leadership and guidance to come from America and other developed White nations but CongressWBN was bucking the trend. Today, an African, not an African-American as many would have us believe, sits as the leader of the free world by virtue of being the president of the most powerful nation with the biggest economy in the world, i.e. the United States of America. Barack Obama is a Kenyan of the Luo tribe with American citizenship by virtue of his mother being an American citizen and his being born in the United States of America, and this has significant implications for the developing world. The positioning of the Blackman in top positions in both the spiritual and political worlds, and in a season when the developed nations of the world are experiencing the greatest economic crisis since the 1900s heralds the start of a new season. Literally, trillions of US Dollars have grown wings and disappeared from bank vaults while stocks traded in global exchanges have plunged in value as transnational corporations battle to stem bankruptcies and keep creditors at bay. Governments of developed nations are announcing various stimulus packages in seemingly vain efforts to jump start stalling economies that have already defied all economic theories and principles that have been tried thus far. The problem is that you can not stimulate a car with a worn out engine simply by increasing the amount of engine oil in the engine, changing the spark plugs and putting more gasoline in the fuel tank as this will not change the fact that the engine is worn out. Used to years of stratospheric economic growth and easy access to cheap credits, whole generations of people in the developed nations have mindsets which will not allow either for complete overhauls or radical changes in economies. This explains why management of global banks whose decisions brought about the present economic crisis that have left their banks in the red are the ones still managing the billions of US Dollars being handed out as bailout funds. More important is the futility in trying to stimulate economies that are maxed out and attempting to go back to a reality of cheap credit, high property values, high commodity prices, expanding industrial utilization and production.

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The era of global flow of international finance into financial products having exotic names that resulted in banks, hedge funds and investors making trillions of US Dollars simply by trading in these exotic securities is over. The only nations whose economies are still in their infancy, where basic provisions of life such as housing, water, good roads, mass transportation, quality education for all, reliable power supply, etc are lacking are in the nations of the developing world. Majority of these nations are in Africa, especially sub-Saharan Africa, while others are in Asia and Eastern Europe, all characterized by poverty even when they are commodity rich and where life expectancy levels are comparable to 18th Century Europe. These nations have been bit players in a global economy, bringing raw materials to markets while others are bringing processed and manufactured products, unable even to add value to their commodities and dependent on aid handed out by developed nations. These nations are also corruption rich, with the gap between the rich and the poor almost as wide as the distance between the Earth and the Moon, and where progress in life is predominantly determined by factors other than one's abilities and efforts. Similar to how World Wars 1 and 11 reshaped and equalized the political and economic structures of the nations of the earth so also is the potential of the present global economic crisis to reshape the political and economic realities in a 21st Century world. If the developed nations believe and work towards it, the undeveloped and underdeveloped economies of the developing nations constitute the new engines that can be coupled to drive the economic growth of all nations of the earth in the 21st Century. This goes beyond efforts at stimulation as the 21st Century can be a world of availability of global health care, education, housing, public infrastructure, good governance and improvement in the quality of life for peoples in all nations. The distinction between developed and undeveloped nations can be confined to the dustbin of history in a 21st Century equalized world and as it becomes apparent that nations of the developing world constitute the next frontier. As Dr. Woodroffe and Barack Obama had to work to attain top positions in the spiritual and political worlds, developing nations and states have their work cut out for them to join the ranks of developed nations.

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The Lagos Way: Liberal or Conservative? (Part 10) We are indeed in tumultous times as a global economic crisis ravages both developed and developing nations. The Federal Reserve Bank has just announced that it will be pumping a trillion US Dollars into the US banking system. This is inaddition to the $789 billion and $700 billion earlier packaged by the Obama and Bush administrations as stimulus packages. The Chinese had previously announced a stimulus package of over $600 billion to ensure the economic crisis does not result in civil unrest. From Asia to Europe to Oceania to Africa and the Middle East, nations are announcing stimulus packages of grangrantum proportions. These stimulus packages are in an effort to stimulate economies that have gone comatose, plunging rich and poor nations into social upheavals. To stimulate is to make active while a stimulus means to rouse, both implying that the status quo is inactive and undesirable. To be certain they get out of their inactive economy, Americans elected as president a man who will probably be the most liberal president ever. Barack Obama has not disappointed Americans in this regard starting with his $789 billion stimulus package. He is also proposing spending $3.4 trillion over the next few years in order to reposition the American economy. With plans to rely on alternative energy and wean Americans over their dependence on foreign oil, education and health care will also receive major attention. There are also plans to cut down on military spending, end the wars in Iraq and Afganistan, and promote peace and reconciliation in troubled regions of the world. Aging infrastructure will be revived with massive injection of funds while new infrastructure will be developed. The finance sector will be subjected to new regulations expected to reign in finance sub-sectors that were previously unregulated. The jury is still out on whether Barack Obama will succeed in accomplishing his liberal agenda for the United States and the rest of the world. But in putting forth his plans and taking the campaign directly to the American people, Barack Obama is prepared to fight for his beliefs. This may not be unconnected with his understanding that the times and seasons require such bold and liberal actions. For a man who 4 years ago was a member of the Illinois Congress and then burst into national prominence at the 2004 Democratic Congress his rise is metoric.

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During that period he got elected to the Senate of the US Congress and after 2 years decided to contest for the US presidency. Today he is president of the United States of America deliverying in a time of global economic crisis on a liberal agenda. Republicans and big corporations who are the defenders of the status quo have been up in arms against the liberal agenda of Barack Obama. They believe that a regime of tax cuts in favour of businesses will suffice to stimulate the American economy as a result of which wealth will trickle down to all Americans. Although this policy was implemented with limited success during the 8 years of the George Bush administration, it is the only policy on offer by the Republicans. This confrontation between Liberals and Conservatives is playing out dramatically across other nations of the world. In Madagascar, a former DJ and Mayor has unseated a democratically elected president assited by the people and the military. One of the complaints against the former president of Madagacar was that he bought a $60 million jet plane while the people were wallowing in poverty. Scenes similar to Madagascar may be witnessed in many other nations as the people rise in anger to take their destinies into their hands. The problem with the conservatives is that they have lost touch with the realities in the lives of the majority of peoples. Their minds are unable to grasp the challenges faced by the mass of peoples and so they are unable to emphatize. In America over 45 million people are outside the coverage of the health care system and yet the Republicans want the status quo maintained. In Nigeria 50% of the people do not have access to portable drinking water while much less have access to quality health care, education, housing and power. So there is a growing anger seething in the hearts of the people who when given the opportunity will rise to take their destinies into their hands. This is not the season to be small minded and to fight to preserve the status quo but a season to be broad minded and liberal in addressing challenges. It is a season Barack Obama has identified as one in which the rising tide must lift all boats not just in America but in all nations of the earth. This really is the challenge facing the Babatunde Fashola administration as it strives to improve the lot of Lagos and Lagosians.

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THE AUTHOR Kingsley Omose is the Managing Partner of Reliance Partners, a firm of legal practitioners based in Apapa, Lagos and is committed to writing in order to enhance a common way of viewing, interpreting and relating to issues.

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