President Bola Ahmed Tinubu’s government is being vilified for its plan to relocate the Federal Airport Authority of Nigeria (FAAN) and key departments of the Central Bank of Nigeria (CBN) from Abuja to Lagos. However, economics – not sentiments – shows that it is the right decision.
The CBN is moving its Banking Supervision, Other Financial Institutions Supervision, Consumer Protection, Payment System Management, and Financial Policy Regulations departments from Abuja to Lagos.
The decision was targeted at increasing staff productivity, cutting costs, and decongesting Abuja headquarters.
The administration has also relocated FAAN to Nigeria’s economic capital, Lagos, to cut costs. In a statement issued on January 13, 2024, FAAN’s Director of Public Affairs and Consumer Protection, Ms Obiageli Orah, said the agency “was ill-advised in the first place to move the headquarters to Abuja when there was no single FAAN building in Abuja to accommodate all of them at once.”
Ms Orah explained that over 60 percent of FAAN’s activities were taking place in Lagos as the commercial city commanded huge passenger volume.
The issue has generated a lot of fuss, with Senator Ali Ndume claiming that President Tinubu was being misled by “Lagos boys.”
But addressing some of the issues and disenchantments expressed by politicians from the northern part of Nigeria, one of President Tinubu’s spokespersons, Mr Bayo Onanuga, explained on January 24, 2024, that FAAN had been based in Lagos before moving to Abuja during the administration of former President Muhammadu Buhari.
He pointed out that Lagos is the hub of aviation business in Nigeria and the relocation of FAAN to the state was an administrative decision meant to align FAAN with the industry.
On the CBN, Mr Onanuga said the relocation of key departments to Lagos was also a strategic decision, stressing that the departments dealt with commercial banks which were all headquartered in Lagos.
He noted that the proximity of the regulator to the businesses it oversaw was essential.
The issues
Besides politics and noise, dispassionate analyses show that Lagos is the most suitable place for the CBN departments and the FAAN.
Two of the key CBN departments that are moving to Lagos include: The Banking Supervision and the Other Financial Institutions Supervision.
Analysts believe that it makes little or no sense for the departments to remain in Abuja while the headquarters of banks and other financial institutions – which they supervise – are in Lagos.
To clearly understand activities of banks and financial institutions, the departments should be in Lagos, experts argue. This is because of several developments in Nigerian banks in the last 8 years.
For quite some time, Economy Post has been reporting several activities of banks that are hurting the Nigerian economy, including their reluctance to disburse the apex bank’s intervention funds, loan discrimination, loss of loans granted to ex-directors, among others.
Similarly, some of the frauds, kidnaps and stealing of public funds happening across Nigeria take place through the banks. Economy Post was told how a kidnap victim’s family paid a ransom via a bank. The kidnappers withdrew the money successfully without being trapped.
The recent reports by the CBN Investigator, Mr Jim Obazee, exposed why banks must be monitored very closely. The report had alleged how former CBN Governor, Mr Godwin Emefiele, colluded with some bank chiefs to acquire financial institutions and defraud Nigeria.
More so, two CBN staff members who spoke with Economy Post in camera said the apex bank staff “travel to Lagos more than any other city within Nigeria.”
One of the staff members said, “It costs a lot of money to travel to Lagos, and sometimes CBN staff on duty stay in Lagos for weeks to carry out the oversight functions.”
The CBN staff member said though it was a tough decision, it was a necessary one.
An Abuja-based economist, Dr Yusuf Hassan, said the relocation would cut costs for the CBN and also enable the apex bank to perform its oversight roles better.
“I understand the sentiments, but coming down to Lagos helps the CBN to monitor financial institutions closely. They will hear local stories, feel the pulse of the banks and customers, while also understanding appropriate policies to prescribe.”
Consumer protection
The CBN’s Consumer Protection Department, the Payment System Management Department, and Financial Policy Regulations Department will also be moved to Lagos.
Lagos, with a gross domestic product (GDP) of $133 million, has over 20 million consumers – the highest in Nigeria. This represents 10 percent of the Nigerian population. Some of these consumers use payment platforms to buy and sell.
The April 2020 Nigerian Inter-Bank Settlement System (NIBSS) report said that Lagos State had continued to dominate the e-payment market in Africa’s most populous nation, with 30 percent of total transactions initiated by residents.
The Federal Capital Territory (FCT) accounted for 7 percent, while Ogun and Rivers contributed 6 percent each. Oyo State had 5 percent within the period.
In terms of transaction volumes in Lagos, the number moved from 339 million in 2019 to 561.51 million in 2020. The report showed that Lagos had controlled 30 percent of the market for over 4 years.
“It is a no brainer. Lagos is Nigeria’s economic capital, and the headquarters of regulators of economic institutions should be here. No part of the country must be ignored in the process of doing so, though” said a Lagos-based consumer protection advocate, Ms Enang Amah.
Lagos, an aviation hub
Lagos is Nigeria’s aviation hub. About 16 million travellers were airlifted in and out of the country in 2022, but 5 airports contributed 90 percent, according to a report by the Nigerian Civil Aviation Authority (NCAA).
Murtala Muhammed International Airport (MMIA), Lagos, was highest with 6,526,023 travellers, representing 40 percent of the total volume.
Nnamdi Azikiwe International Airport, Abuja, had 5,985,596 passengers, representing 37 percent of the total. The Port Harcourt International Airport (PHIA), sited in Omagwa, had 915,247 travellers, representing 5.7 percent of the total.
Mallam Aminu Kano International Airport (MAKIA) commanded 545,749 travellers within the period, indicating 3.4 percent of the total.
Akanu Ibiam International Airport (AIIA), Enugu, was the 5th busiest, with 513,045 travellers, representing 3.2 percent.
“Local numbers in recent times are much more in Lagos’ favour. While no part of Nigeria must be neglected, Lagos remains an important economy, which should always be given a priority,” said Dr Hassan, earlier cited.
Focus on issues
Dr Hassan advised politicians to focus on issues, wondering why several public commentators were not discussing possible economic benefits of the policy.
“We are at a time when the inflation rate is nearly 30 percent. Multi-dimensional poverty is at 63 percent. Yet, what we are discussing is moving a department in and out of Abuja.
“If the Lagos State economy doubles, the entire country will feel it because you will see more activities in transportation, trade, banking, insurance and other sectors.
“But it won’t be the same for Abuja due to its comparatively lower population and even economic infrastructures. I would like us to pay attention to economics than politics. Shifting attention from economics to politics today is why we have high poverty rates in the North than the South. Every issue is viewed with sentimental lens which does not bode well for us. Mind you, I am also from the North,” he added.
*This article was originally published in Economy Post. It is republished here with the author’s permission.
