Mr. Lai Omotola, the Group Managing Director of CFL Group, a purely indigenous infrastructure development company with a core interest in real estate, agriculture, oil & gas as well as entertainment, examined extensively the challenges facing Nigeria’s domestic economy and proposed what could be done to revive the troubled economy.
Omotola gave his opinions at the interactive session with journalists, at the 12th end-of-year media briefing on the state of the nation, held in his Maryland office on Tuesday.
He spoke on doing business in Nigeria in line with the real estate sector.
He highlighted the challenges in the real estate sector, Nigeria’s economy, and the way forward.
Doing business in Nigeria; What are the prospects and challenges?
Doing business in Nigeria can be quite challenging in spite of all the opportunities. Our location of business remains Lagos which is the commercial center of Nigeria. The business environment remains competitive with a bigger area of growth in most sections. Our flagship business is in real estate.
Real estate in Lagos has been on the increase despite setbacks. As you all know construction remains the fastest way of getting out of recession because of the large value chain to the economy towards creating jobs.
The business also has its challenges and one of them comes with the continuous delay in the registration of title and ownership of title such that you can never say when you will have a clear title.
The issue of ownership and disputes in ownership of land is on the increase in Lagos and also spread to other states.
Our view is this problem can be solved through the use of land information in the office of the Surveyor-General but again the land information is inadequate because it only tells you whether the government has an interest in the land or not.
Our view is that it is best to expand the information to include the actual owner or the family that owns the area. This will go a long way in curbing unhealthy practices.
The second problem in real estate is the registration of the title.
This continues to take a long time to process and is not good for business. One can spend between 6 months to 2 years in getting a registered title from the government but I hear the system is being automated which will make the process seamless.
The third challenge is building approval. This also takes time to process both on the side of the government and on the side of the developer.
Lagos state government has launched a service to get approval in 10 days, however, is it working is the question for another day.
The fourth challenge is the funding of projects.
Almost all the banks shy away from funding real estate because of the uncertain nature of the business. For example, you secure funding from the bank and you are unable to move to the site for a month, or during construction because of a land dispute or another form of delay. These are the factors affecting bank funding.
Another problem involves the Police. Most cases at the high divisions of police are now land matters despite the IG’s order that Police can not determine ownership of land but these cases still find their way into police stations under the disguise that there is likely going to be a breach of peace.
The fifth challenge is the judiciary, when you take land matters to court it takes nearly forever and if matters are in court construction will not go on.
However, in recent times we have seen the judiciary dispense land matters with speed and this should be encouraged.
Meanwhile, it is noteworthy that despite all challenges in the year 2021 we completed our prime Triangle Business Place at Lekki and have also commenced construction of the Alade market after 11 years.
Another sector of the economy we have a business interest is in logistics which is challenged by the state of our road and human capacity.
The roads reduce the efficiency of our vehicles, while the human capacity problem comes with the fact that the individuals in the industry hardly stay on one job.
Also this year, we made a foray into the entertainment industry and it’s paying off and we intend to invest more in the year 2022.
Our movie app “Longudu” is now on google app but we are faced with a major challenge installing on the Apple store. This is the reason we have not launched.
The state of the Nigerian economy and what to look out for in 2022.
The economy remains vital to our welfare and indeed affects all aspects of our lives. However, there are certain indices that tell you the state of the economy.
The vital signs of the current Nigerian economy are Inflation at 15.99%, the exchange rate at N575 to a dollar, GDP OF $440BILLION, then the budget size of 2022 is N16trillion with a deficit. N6.3 trillion.
Then out of the N16trn budgeted, recurrent expenditure takes N6.8trillion, personnel cost N4.11trillion, debt N38trillion.
Nigerian stock exchange capitalization is N28.2 trillion. Nigerian oil still provides 95% of the source of foreign exchange and 80% budgetary revenue. This means there has been no diversification for the past 60 years.
So it’s clear that the Nigerian economy is on shaky ground.
By 2023, Nigeria’s debt should be N50 trillion.
So anyone who cares about his name, should not be in a haste to take over this economy in 2023 because as the economy sits today, the best the most genius person can do to this economy is to make it remain like this for four years.
Already, the indices show that things might become more difficult next year. It’s no magic, when your borrowing is eating deep into your revenue and the revenue is not increasing, the result is already known.
So anybody that loves his name, should not be in a rush to take over such an economy. There must be adequate preparation.
The next leader must not be the regular kind of people we see every day. He must be an executioner of great ideas.
A man that tells you that the Niger Bridge will be ready by Oct 1, 2022, and so shall it be.
An executioner that will make the three refineries work. Until we find that executioner our journey will continue to be like this.
The growth of this economy is hinged on delivering infrastructure to aid the economy.
With all the efforts of the present government, the economy continues to be on the nosedive.
We can revive the economy by being pro-business. Nigeria knows nothing about business as evident in there is no single Nigeria company that is a global brand that is having a presence in 170 countries of the world except the church.
If the church can do this then Nigerian businesses can do the same but remains a tall order.
The government needs to be pro-business in order for them to generate more tax and business social amenities.
The size of the Nigerian stock exchange should be N280trillion and our budget for a year should be N180trillion. This will drive down inflation and bring the exchange rate to less than N50 to a dollar.
The socio-political environment of the Nigerian State: What Nigerians must do to effect change
The year 2022 is a political year and it will be more of politics than economics. In fact, it has commenced already. To every succeeding government, there will always be liability and assets.
In choosing our next leader we must first appraise our last decision to vote and weigh if it has been good for us or not. If the negative is the answer, we then ask ourselves, how did we get here? So many answers but no concessor.
One thing we must also note is that we concentrate a lot on the strength of an aspirant without paying attention to the weakness.
We need to understand the weakness and ask ourselves, can we live with this weakness?
Because when he gets there. that which we are complaining about that he can’t do is the person’s weakness.
So we fight him that he has not done this or that but we don’t understand that it is his weakness. This means we need to find someone that can complement the weakness so we can have a balanced government.
How can Nigeria get out of debt?
Borrowing money is never a good way. The speed at which government borrows money is a lazy man’s approach. We need to stop borrowing for 20 years and develop ideas to generate income. Legislation should be passed that we can’t borrow for another 20 years. All the money borrowed is already in people’s houses, locked up in their tanks, banks.
The money in Nigeria can feed the whole of Africa. We need to do deep thinking and find our own solutions outside borrowing.
If we cannot do critical thinking, we will forever be slaves to nations that think.