Eko Atlantic City – a magic on steroid or reality on delay -E E OKPA II
If beautiful graphics and digitalized imagery were all it took, Eko Atlantic would have earned a reputation as the 8th wonders of the world, as a development within a city – Lagos, Nigeria. Lagos, which CNN once dubbed one of the greatest slums in the world, is destination for this mage-graphic development. But it takes more, and I am afraid Eko Atlantic may be a pipe dream since oil money that encouraged and fueled its conception is now almost vapor.
When in 2012, I visited the site, there was strong excitement that some of the oil companies operating in Nigeria were going to snap up sites for their gleaming skyscrapers. But since the drastic drop in oil prices, there have been few groundbreaking; Nigeria equivalent of foundation laying ceremony for new construction.
The excitement was so strong that in 2013, President Bill Clinton and President Goodluck Jonathan few years ago attended a ceremony on the site; partly to show what is happening under Jonathan: – http://www.ekoatlantic.com/press-clipping/clinton-eko-atlantic-city-destination-for-global-investment. But just like Whitewater project the Clinton were involved in Arkansas, Eko Atlantic City looks like a white elephant project.
CNN Africa has been paid handsomely to keep the story alive but very few credible responses by reputable foreign developers have materialized. Eko Atlantic plan is impressive but given that real estate is about Location-Location-Location, the development is having difficulty getting pass the reputation of Nigeria; location, as a not-to-be-trusted-nation, when it comes to serious investments in the non-oil sector. The only reason Nigeria was attractive was the world needed its oil and as a result, did what it had to. But since US has waned itself buying Nigeria oil and coupled with slumping global oil price, Nigeria is no longer swimming in its imagined sense of wealth anchored on quicksand.
Nigeria is having difficult in the non-oil sectors apart from vulture investors that want to grab whatever is available and skip town. Without enough and seasoned local capacity in terms of ability to deliver and finance the project, the faith of Eko Atlantic lies in attracting low long term capital cost from those who can look beyond Nigeria’s damaged reputation as a nation of fraudsters. It is hard to do but not impossible.
Were the local players able to place their money where their mouth is, by taking the initial equity risk; granted that is already evidenced in the site preparation, some foreign debts may attach. But since Nigeria has never built a project of this magnitude by a private sector, and lacking effective private-public partnership structure is unheard of, the sun may first rise from the west before Eko Atlantic rises from its reclaimed dirt.
In 2015, apart from a single high-rise, Eko Atlantic that can literally transform the skyline of Lagos and usher bold steps towards addressing decay and lagging modern ways of delivering projects with great amenities, may languish becoming an eyesore as opposed becoming great eye sight.
Lagos State government, a proud host state of the project does not have the resources whether financially and legally to add a boost to getting the project delivered. With a flat state budget in 2015 same as 2014, and inability to structure legally sound alternative financing mechanism to attract capital to aid and boost development, private developers only get photo-ops with the Governor.
Nigeria is very green in legal structures that enable effective private-public partnerships for certain projects that add to their economic base. With the government officials on cash-and-carry basis, looking for short terms benefits, it is hard to sell projects whose survivability depends on long term outlook.
Eko Atlantic City is behind in all its projections given selling price of Nigeria main foreign exchange earn – crude oil, and timid local support. Lagos State resources are barely enough to meet its needs so it has had no hand in attracting measurable financial backing for the project. And given that Nigeria lacks seasoned developers with global reputation, the cash-and-carry funding style majority of the developers use, is not what will save Eko Atlantic City. At the pace and rate, Eko Atlantic City may just be a magic on steroid and reality delayed.
The project was conceived in 2009 and Dangote Group, owned by Africa's richest man is an investor or silent partner. One would have expected as a show of confidence, Dangote Group would have built its corporate headquarters on the site since it has none to speak off as of today. It is not yet part of the endorsement.
E E OKPA II
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