Press Releases

Fashola Advocates Creation Of Development Fund For Economic Growth

Jan 23, 2010 - Lagos State Governor, Mr. Babatunde Fashola (SAN), at the weekend advocated the creation of a development fund for the nation’s industrial sector as the most practical means to address the infrastructural decay in the country.

Governor Fashola, who spoke at the Oduduwa Hall, Southern Sun, Ikoyi Hotel venue of an interaction with the Bankers’ Committee, said in order to fast-track the growth of the nation’s economy, the banks must think of a way to create a development fund that would fast track the growth of the real sector.

“We must put on our thinking caps in 2010. All the creativity, the experiences of our business and financial schools is what I think should be brought to the table in 2010”, the Governor said and asked, “How can we create a development fund that does not take you out of business and that helps the real sector to grow?”.

Governor Fashola said the state of infrastructural decay in the country today is as a result of 40 years of neglect during which banks have declared huge profits amidst so much poverty in the country; when individuals have built their own homes in very poor environment and driven in very expensive cars on the worst roads.

According to the Governor, “We have tried to build our own power, boreholes and security but commonsense has shown that it won’t work. If you have water in your home, what about your cousin who is indigent?”.

Pointing out that a development fund is the only viable way to grow the nation’s economy, Governor Fashola declared, “I don’t think we do not have the mental and human acumen or capacity to do what is right. It is just to invite everyone to log on to a common purpose and understanding of why we are doing this”.

He warned, “What we are about to embark upon may affect your balance sheets in a not too pleasant way in the short term; but the reality is that if we don’t do it, there may be no balance sheet at all”, adding that the situation could get close to what currently prevails in Somalia, Darfur or Zimbabwe.

Governor Fashola said what the Lagos State Government decided to do the State was imposed on it by the desperate need to address the infrastructural gap brought about by more than three decades deficit adding, “We did not wish to, but we realized that it would not work if we did not address the infrastructural deficit”.

The Governor noted that after Tejuosho, Falomo and Adeniran Ogunsanya shopping complexes were built, no more modern markets were built resulting in traders spilling unto the roads across the city.

“There were manifestations of dwindling infrastructure. There was less water works. We felt that if we don’t address the desperation, the consequences of desperation will manifest itself in corruption, aggression, crime. That is why we are building and I am happy to report that we are mitigating the desperation”, the Governor said.

The Lagos State Government, Governor Fashola said, “is reacting to a programme where the United nations Population Agency characterized cities by size and classified cities with 10 million people and above as mega-cities”, adding that the status comes with its consequences when there are more people than the resources can satisfy.

One of the strategies adopted to achieve the objectives of the State Government, the Governor said, is to diversify the economy of the State by opening up the State’s Tourist Assets adding that that is why it is embarking on the construction of the Lagos-Badagry Expressway.

The objective, he explained, is to redistribute traffic across the State but particularly to enable the Government use the coastline in order to harness its tourism potentials, adding, “I have seen what water front beaches have done in other economies and tourism is about destination. If people cannot get there, there is no tourism and the assets will waste”.

He said the Expressway also provides enormous opportunities to expand regional trade from neighbouring African countries adding that there is no reason the rail track that will accompany the road could not go all the way to Ghana someday in the future.

In terms of commerce and manufacturing, the Governor who said his administration inherited from the last administration very ambitious projects with enormous potentials such as the Lagos Free Trade Zone, added that what will attract people to come and set up business in the area is essentially power, water supply and efficient transportation, among other infrastructure.

Re-emphasizing the need for creating the fund, the Governor told the bankers, “The foundation for any business growth is safe and secure environment and you know how far we have gone for the sake of reinforcing it. With your partnership, we set up a Trust Fund on which you put money and I put money and we manage it together and within two years or thereabouts, we significantly brought down the level of crime in Lagos”.

In his presentation on real sector financing opportunities, the Commissioner for Finance, Mr. Rotimi Oyekan spoke on infrastructural renewal and expansion in Lagos State in the areas of Transportation, Power, Agriculture, Waste Management and Housing among others.

He said the financial strategy of Lagos State is hinged on three broad platforms, Debt Issuance Programme, Multilateral Financing and Public-Private Partnership adding that the State Government will continue to adopt any or a combination of these financing options to meet the challenges of transforming Lagos into Africa’s Model Megacity.

Oyekan also listed as well as explained the various Near-term projects under execution by the State Government in Transportation, Power, Agriculture, Housing, Commerce and Industry and those under Medium and long term in Transportation, Water Supply, Urban Renewal and Housing.

Earlier, in his remarks, the Governor of the Central Bank of Nigeria (CBN), Mr. Lamido Sanusi expressed the willingness of the banking sector to work with the Lagos State Government in providing a conducive environment for business to thrive.

Sanusi who noted that Lagos is the economic capital of Nigeria just like Jakarta in Indonesia, Tokyo in Japan among others, declared, “We are presented with an opportunity to work with a government that is committed to the development of Lagos to provide movement, comfortable environment within our institutions”.

According to him, it will require the cooperation of different segments of the economy, the Ministry of Power, Infrastructure and others with “a hard working, implementation-focused technical team” to achieve the goal adding, “We, as Central Bank, will do all we could to support so that six months from now, we would not be where we are today”.

“I have taken it upon myself to play the role of a catalyst in Abuja by bringing all the parties together. I guarantee you that the banks are committed to this. I understand that we must shore up this economy based on the ability of the financial institutions to play their roles as the transmission channel of all the institutions within the economy”, the CBN boss said.

Re-emphasizing the need for the creation of a development fund, Sanusi further pledged, “Your Excellency, we do understand that the future of this economy rests on the ability of financial systems and once we can structure financial products such that depositors’ funds are not placed at undue risk, we would work towards that”.