In 2007, Ben Akabueze, the Senior Special Adviser to President Mohammed Buhari on Budget and Economic Planning who was Lagos Commissioner for Economic Planning and Budget, said in a media report that Lagos monthly Internally Generated Revenue (IGR) was N500 million in 1999, and has exponentially grown to over N34 billion with a projection to meet the N50 billion target.
However, in spite of Lagos’ achievements in generating substantial revenue, Lagos’ capacity to provide basic employment for its huge population and infrastructure deficit in the state is still at ebb compare to major cities like Kigali, Nairobi and Jo’burg in Africa.
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According to the Nigerian Bureau of Statistics, (NBS), Lagos is still among the top four states with the highest unemployment rates in Nigeria with figure standing at 1,088,352 after Rivers (1,673,991), Akwa Ibom (1,357,754) and Kano (1,257,130) respectively.
To provide employment and infrastructure for inclusive growth in the state, stakeholders and institutions in the technology sector, especially in the financial space have displayed understanding of what Lagos should do to develop a thriving knowledge and technology-driven economy using Fintech.In a KPMG report titled Governments’ Role in Evolution of Fintech release in 2017, it stated that governments globally are recognizing the emergence of Fintech as a means to deliver social and economic outcome more effectively and efficiently.
The report mentioned that UK government supported Fintech sector through financial incentives such as grants and tax holiday, including £2 billion government investment in businesses that are conducting technology research and development.
KPMG stated that government support is necessary for the healthy development of the Fintech sector, which can potentially revolutionize financial services products, services and delivery mechanisms worldwide as well as bring social and economic outcomes more effectively and efficiently.
In Singapore, the government used its Monetary Authority known as Monetary Authority of Singapore (MAS) to establish a dedicated fintech office with funding from across government entities to drive the development and promotion of Singapore as a fintech hub, and announced the easing of regulations surrounding venture capital investment in early-stage startups.
Advisory Partner and Chief Economist, PwC Nigeria, Dr. Andrew Nevin said that Lagos should focus on innovation and technology generally, not specifically on Fintech alone.
“Nigerians needs EduTech, AgriTech, MediTech and CleanTech, to deliver services to the entire 200 million population in the country,” he said.
Nevin also pointed that Fintech is critical but what the state has focused on in the last 10 years is innovation and that the last government did many things to advance smartcity innovation.
The Senior Fellow, Information Systems, Lagos Business School, Dr. Yinka David-West had a divergent view. She said that “it is the mandate of any state to develop a private sector driven agenda such as technology”.
David-West said that the evolution of Lagos as a Fintech and IT hub has been organic; based on market availability, quality infrastructure, sweat equity, and venture capital, among others.
She stressed that what Lagos has failed to do is to capitalise on digital entrepreneurship opportunities that has grown in the state.
“By capitalising, I mean devising strategies that protect and grow the industry to enhance the quality of life and access to services.”
She cited protection example in the case of rents in Yaba otherwise known as ‘Silicon Savannah,’ that has caused many landlords to exponentially increase rents.
“Due to rental increases, ICT companies that previously domiciled in Yaba are gradually relocating to other environs”
This trend, she said, negates the infrastructure investments made in Yaba area, knowing that the industry is nascent.
“Could the state not have considered rent control and management under an arrangement with Yaba landlords?” she asked
Corroborating David-West’s view on Yaba, founder and CEO, Electronic Settlement Limited, Olaoluwa Awojoodu said that people should not believe the notion that Yaba is like Silicon Valley.
“People keep saying Yaba is like Silicon Valley that is not true. There are investors and startups in Silicon Valley but no investors in Yaba, we only have startups here”,
“We have about three or four higher institutions in Yaba, that’s good, but how can the institutions be used to provide knowledge infrastructure for the ecosystem”
Awojoodu urged the new government to look into how to get investors to support startups to position Yaba as a tech hub like Silicon Valley.
He asked the government to come up with substantial funding that will support initiatives that Fintech startups are embarking on that will add value to the economic development of the state.
“It does not make any sense if startups can’t get a substantial fund that will make them to focus on their endeavour without being worried where the next funding will come from. You are not really helping the startup if he won’t get a substantial fund to start the enterprise because he will be running on generator all days, pay all government taxes, staff salaries”, he pointed
Nevin wants the new administration of Babajide Sanwo-Olu of Lagos to focus on innovation, but more broadly than Fintech because the development of Fintech is so well understood, it can take care of itself.
“Lagos has a thriving and growing innovation community with an increasing number of active innovation hubs – like Co-creation hub [CcHUB] – are fantastic incubators are really helping to build many new innovative companies”, he said.
David-West urged the government to focus on the entire digital and ICT economy space to position the state as a leading and innovative technology city.
“These digital products and services are complementary to the development of the economy as a whole. So, there should be a concerted roadmap to digitise the economy and society.”
David-West, who is also a digital financial services specialist said that fintech does not happen in isolation, as there are other dependencies and complementaries that require an ecosystem approach that is ultimately good for business and society.
“For instance, in the payments sector, digitising the payments will reduce industry tensions and ultimately reduce transaction cycles”, she said.