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DE RUEHOS #0179/01 0981512
ZNR UUUUU ZZH
R 081512Z APR 09
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0684
INFO RUEHUJA/AMEMBASSY ABUJA 0288
RUEHOR/AMEMBASSY GABORONE 0073
RUEHZK/ECOWAS COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE USD WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAUSA/DEPT OF EDUCATION WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 04 LAGOS 000179 
 
SENSITIVE 
SIPDIS 
 
FOR GABORONE PASS PDROUIN 
STATE PASS OPIC FOR DERB, ZHAN, MSTUCKART, JEDWARDS 
STATE PASS TDA FOR LFITTS, PMARIN 
STATE PASS USAID FOR NFREEMAN, GBERTOLIN 
STATE PASS EXIM FOR JRICHTER, KJACKSON 
DOC FOR 3317/ITA/OA/KBURRESS 
DOC FOR 3310/USFC/OIO/ANESA/DHARRIS 
DOC FOR USPTO-PAUL SALMON 
DOJ FOR MARIE-FLORE KOUAME 
TREASURY FOR RHALL, DPETERS, RABDULRAZAK 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KDEM NI
 
SUBJECT: NIGERIA: LAGOS STATE ECONOMIC REPORT CARD 
 
Ref: A.) Lagos 97 
B.) 08 Lagos 489 
C.) 08 Lagos 486 
D.) 08 Lagos 381 
E.) 08 Lagos 240 
 
¶1. (SBU) Summary: Post looked at five criteria, infrastructure, 
economic activities and growth, public services delivery, government 
leadership and capacity issues in order to give Lagos State Governor 
Fashola a "report card" on his performance. Governor Fashola has 
undertaken massive infrastructure development projects, most notably 
with road construction and rehabilitation, to great accolades and 
success. Public services delivery on health and education is 
improving speedily.  Given its non-dependence on federal allocation 
for state budget as it gets 70 percent of its income from internally 
generated revenue (IGR), Lagos State is pushing aggressively ahead 
on infrastructure projects despite the financial crisis and economic 
slow down. Governor Fashola is immensely popular among Lagosians and 
is considered a shoo-in for re-election for the 2011 gubernatorial 
election. This report card does not attempt to gloss over the 
massive problems confronting Lagos State Government and its 16 
million population, including dilapidating infrastructure, housing 
shortage, and congested ports. However, it is intended to document 
the progresses that have brought hope to Lagosians. End summary. 
 
-------------------------- 
Infrastructure Development 
-------------------------- 
 
Lagos Gets a Face-Lift to Attract Investment 
-------------------------------------------- 
¶2. (U) Lagos State Government's (LASG) infrastructure 
"beautification project" has transformed Ikoyi and Victoria Islands, 
the state's commercial centers, giving it a newer and softer image. 
The successful rehabilitation of two major roads on Ikoyi Island was 
completed at the end of 2008 with well-lit street lights and flower 
pots.  Solar-powered intersection lights have been placed at key 
road intersections on these two islands.  The recently completed 
Falomo Clover Leaf Park, a key focal point of the city situated 
underneath the traffic-logged Falomo Bridge, a major thoroughfare 
connecting Ikoyi and Victoria Islands, is the pride and joy of LASG. 
(Comment: Since its commissioning about three months ago, the fenced 
park is not yet open to the public, and it is unclear if it is 
intended to be. The face-lift, while a welcome development, cannot 
mask major issues still undercutting quality of life and thwarting 
economic development, namely unstable power supply and dilapidating 
building and bridges, even on the two islands. Dredging is still 
ongoing behind the Consul General Residence as well as many other 
places in Lagos despite numerous protests with LASG. End Comment) 
 
Lagos State Plans Major Development Projects 
-------------------------------------------- 
 
¶3. (U) Despite widespread skepticism, many of Lagos' major 
development projects have progressed.  Dredging for the USD 2.7 
billion Eko Atlantic residential and commercial estate project, 
which requires the reclamation of eight square meters of land from 
the Atlantic Ocean, has begun. Eko Atlantic is envisioned as the new 
business center for Victoria Island, with the goal of becoming the 
Dubai of Nigeria. LASG commissioned in December 2008 a commercial 
ferry service from Victoria Island to Lekki by the private 
concessionaire City Link Group. LASG is employing a Canadian-based 
railway company to consult on two light rail projects for the city. 
The first rail line will run from Badagary, Nigeria's border town 
with Benin Republic, to Lagos Central Business District on the Lagos 
Island's marina, an approximately two hour journey by car between 
the two points. The second line will run from Lagos to neighboring 
Ogun State. Plans are also in the pipeline for the construction of 
private monorails for Lagos Island's marina and on Victoria and 
Ikoyi islands. 
 
LAGOS 00000179  002 OF 004 
 
 
 
¶4. (U) The most visible transportation accomplishment to date is the 
ongoing rehabilitation of 49.5 kilometer of the Ozumba Mbadiwe 
Expressway, popularly known as the Lekki Express Way, linking Lekki 
to Victoria Island. Once completed, the four lane dual carriageway 
will be expanded to six lanes with a toll plaza.  The public private 
partnership (PPP) project is sponsored by the African Development 
Bank, Stanbic IBTC Bank, and Lagos-based Asset and Resource 
Management Company under a 30 year concession. (Comment: The 
construction is moving along at a breakneck speed that is highly 
unusual for Nigeria, lending further credence to the PPP model for 
infrastructure development and restoring confidence in the LASG's 
ability to successfully oversee such a project. End Comment) LASG 
also has fulfilled its promise to complete the rehabilitation of the 
Third Mainland Bridge, that connects the three islands to the 
mainland where the international airport is located, on time, which 
is almost unheard of for a major infrastructure project in Nigeria. 
In addition, to date there has not been reports of corruption 
relating to the project. 
 
------------------------------ 
Economic Activities and Growth 
------------------------------ 
 
Lagos Economic Base Solid in Times of Uncertainty 
--------------------------------------------- ---- 
 
¶5. (U) Lagos State confidently plows ahead with its ambitious 
development plan while other states hunker down in the midst of the 
global credit crunch and economic slow down (Ref B). With a 
commercially-based economy, Lagos State is considered the only 
fiscally independent state for its non-dependence on oil derivation 
and federal allocation for its budget expenditure. Lagos has a solid 
internally generated revenue (IGR) base, largely deriving from 
personal income tax collection and value added tax (VAT) and sales 
tax collections on companies based in the state (Ref D). In 2007, 
Lagos generated on average Naira 10 billion (USD 65 million) 
monthly; and IGR constituted around 70 percent of the state's total 
revenue. 
 
Hospitality 
----------- 
 
¶6. (U) For now, the expansion of hotel and hotel business shows no 
signs of slowing down in the heart of Lagos State, namely Victoria 
and Ikoyi islands and the Lekki Peninsula. The Radisson and 
Intercontinental Hotels on Victoria Island are near completion after 
at least three years of being under construction, while construction 
of other hotels is springing up along the Lekki Expressway and on 
Ikoyi Island.  EconOff has counted at least four other ongoing major 
hotel projects. Lagos has also attracted a number of new high-end 
hospitality businesses in the last year, from an American upscale 
spa to a Nigerian-run luxury cruise boat to a South African-operated 
yatch hotel. While the hospitality business has catered primarily to 
business travelers, investors hope that LASG's investment in 
infrastructure and beautification projects will increase the 
domestic traveler base and attract travelers from the West African 
region. (Comment: The cheapest rate for a room at a decent hotel on 
Ikoyi or Victoria Island starts around $350 per night. However, the 
growth of the hospitality industry is not sustainable without the 
development of a service culture, particularly improving the 
capacity of hotel service at the personnel level. The current 
economic slow down is also posing serious concerns as demand for 
hotels and other hospitality services might decline sooner or later. 
End comment) 
 
------------------------ 
Public Services Delivery 
------------------------ 
 
 
LAGOS 00000179  003 OF 004 
 
 
Health 
------ 
 
¶7. (U) Governor Fashola has instituted major reforms and committed 
financial resources in the healthand education sectors. The 
government unfolded an integrated four-year plan for health care in 
¶2007. LASG has built five new 100 bed hospitals, several maternal 
health facilities, a 104-bed Pediatric Center, and a modern medical 
facility at the Lagos State University Teaching Hospital since 2007. 
It also initiated an e-health project to ensure that patients' 
medical histories are easily accessible. Governor Fashola has also 
advised local government chairmen to build and improve primary 
health care centers and facilities in their councils in order to 
sustain the State's health care delivery system.  In 2008, the 
Government shut down 200 private hospitals, clinics and 
laboratories, allegedly for their failure to meet basic standards of 
hygiene. 
 
Education 
--------- 
 
¶8. (U) The Fashola Administration has initiated massive 
infrastructure projects in the state's public school system. In 
2008, the state distributed six million naira (USD 40,000) worth of 
free textbooks to students in primary, junior and senior secondary 
school. The government constructed 2,500 new prototype classrooms 
and rehabilitated 1,000 others.  Since 2007, 2,000 public school 
teachers have been trained on instructional usage; 1,099 on 
childhood care and development education; 2,400 on leadership skill; 
and 5,000 on family health education. The Government also 
re-equipped science laboratories in public schools, and procured 
equipment for training in new technologies for secondary schools. 
 
Utility 
------- 
 
¶9. (U) According to the Lagos State Commissioner for Environment 
Muiz Banire at a presentation to Lagos businesses in 2008, Lagos 
State plans to improve investment and services in solid waste 
management, sewage, highway sanitation, and drainage.  Lagos State 
has signed four Public Private Partnership agreements for sewage 
treatment plants, including one joint venture between a Nigerian and 
U.S. company. The state also plans to build three integrated waste 
management facilities while boosting investment in "waste to wealth" 
programs that convert waste into valuable resources, such as 
fertilizer. (Note: EarthCare Nigeria Ltd. (ENL), a U.S. joint 
venture, operates a solid waste-to-organic fertilizers treatment 
plant with a Bank Guarantee provided by LASG.  ENL was under dispute 
with LASG on its failure to honor the Bank Guarantee that would 
allow the company to sell its products to farm cooperatives. LASG 
finally released ENL from the contract, allowing the company to sell 
to the general public. (Ref A) End note) 
 
---------------------------------- 
Government Leadership and Capacity 
---------------------------------- 
 
Governor Fashola as Agent of Change 
----------------------------------- 
 
¶10. (SBU) Governor Fashola, a member of the Action Congress Party, 
is immensely popular among Lagosians for the transformational 
changes he has brought to the state.  People describe him as a 
highly competent technocrat and an agent of change. (Comment: It is 
common knowledge that former Governor Tinubu runs the political show 
behind the scene.  Governor Fashola, hand-picked by Tinubu to run in 
the 2007 election, purportedly is content with leaving the politics 
to his benefactor while focusing on actualizing real changes. End 
comment) In a conversation with EconOff on November 25, 2008, Ben 
Akabueze, Commissioner for Budget and Economic Planning, said Lagos 
 
LAGOS 00000179  004 OF 004 
 
 
State Government is the only state with a sitting Commissioner, 
namely himself, who was not born in the state. Akabueze said 
Governor Fashola's appointment of a non-Lagosian to a key position 
exemplifies his prioritization of skill and competency over ethnic 
and tribal affiliation. For these reasons, Fashola is instilling a 
great deal of confidence among his populace and is considered a 
shoo-in for re-election in the 2011 gubernatorial election. 
 
Local Government is the Weakest Link 
------------------------------------ 
 
¶11. (U) Olayemi Cardoso, Chairman of Hermes Capital Ltd. as well as 
of an NGO working in local government capacity building issues, told 
EconOff March 2 that local government management is the weakest link 
in Lagos State Government. While this problem is not unique to Lagos 
State, the lack of human and technical capacity at the local 
government level presents a real challenge for the state.  In his 
work with capacity building at the local government level, Cardoso 
noted that most local government leaders were handpicked by the AC 
party from the local community, receiving very little training and 
support from the state-level party cadre. 
 
¶12. (U) Comment: While Lagos State has always enjoyed the unique 
advantage being a littoral state and the commercial hub of Nigeria, 
the stellar performance of Governor Fashola and his administration 
cannot be discounted. Infrastructure and social services have 
undoubtedly improved, and Lagos State's major face lift has made the 
state more people and business friendly. Lagosians are marveling at 
the newly rehabilitated roads and relative decrease in traffic 
congestion brought about by an increasingly rationalized road 
structure.  However, the enormous tasks and challenges of rebuilding 
dilapidated infrastructure, providing housing and social services to 
the state's estimated 16 million populace, and building capacity at 
the local government level remain as real today for the Fashola 
Administration as its has for previous Lagos administrations.  End 
comment. 
 
¶13. (U) This cable was cleared with Embassy Abuja. 
 
Blair