As Lagos becomes an oil-producing state

There is a lot to celebrate about last week’s announcement by the Lagos State governor, Akinwunmi Ambode, that the state is now officially an oil-producing one. The announcement makes Lagos the first oil-producing entity outside the states of the Niger Delta, and it means that Lagos can begin to look forward to a significant boost in internally-generated revenue. Also worthy of celebration is the entrepreneurial resilience that has made this a reality. It has taken 25 years of dogged prospecting (and an estimated $400 million) for the Yinka Folawiyo Petroleum Company to get to this point, and Governor Ambode was right to salute the company’s persistence and fortitude. And for those who place a premium on such things, it is also worth noting that the Yinka Folawiyo Petroleum Company is a 100 percent indigenous firm.

There is a bit of irony in the fact that it is Lagos State and not some other relatively impoverished state in the country that now stands on the cusp of amassing the windfall from oil revenue. This is because if there is one state that has shown that it can manage without the revenue from oil, it is Lagos. Africa’s seventh biggest economy according to several expert estimates. Under the tutelage of a succession of progressive governors since the return to civil rule in May 1999, Lagos has raised its game and established itself as a model for the collection and astute management of internally generated revenue. It has a large and dynamic population (between 18 and 25 million depending on your source), and continues to leverage its coastal status to the hilt. Lagos is Nigeria’s Uber-state, the land of opportunity which every Nigerian fights to call their home.

It shouldn’t be forgotten that Lagos state has achieved its undisputed economic preeminence without the pabulum of oil revenue. We say this because of history’s lesson that the blessing from oil’s windfall is often a dubious one. Nigeria is a telling example. As is commonly noted, the country was on its way to putting in place the structures of a diversified modern economy when the spike in oil revenues distracted, and eventually derailed, it. Today, Nigeria continues to struggle to wean itself off dependence on oil money, even as the political economy of oil places its federalism under severe strain.

This is the backdrop to our anxieties about Lagos’s newfangled status as an oil-producing state. Despite the inpouring of hundreds of billions of Naira, Nigeria’s oil-producing states remain economically backward, held back by a combination of elite larceny, primitive physical infrastructure and a seething youth demographic. As a cohort, these states illustrate the worst aspects of the ‘oil curse’ whereby oil-dependent economies are progressively drained of individual or institutional initiative. While being mindful not to be dragged into the kind of social morass in which the Niger Delta states have plunged themselves, Lagos can borrow the proverbial leaf from other societies (Norway and Botswana immediately come to mind) where natural resource, oil and diamond respectively, has been used to stimulate genuine socio-economic development.

In short, Lagos State can teach Nigeria and other oil-producing states that oil does not have to be a curse; that, on the contrary, it can be a prodigious blessing, used to create new opportunities for democratic participation and economic prosperity for all and sundry.