Ogun State: Nigeria's New Industrial Hub

Ogun State: Nigeria's New Industrial Hub

Thursday, August 14, 2014 5:18 pm

Funsho Balogun

A former governor of Ogun State once described Lagos State as being attached to the belly of Ogun State. This description is reasonably apt, considering that Ogun is geographically the only or closest neighbour to Lagos, with both states conjoined through a vast borderline. The closeness of the major metropolis of Lagos to Ogun State has rubbed off positively on the latter, which is fast becoming the country’s new major industrial hub.

The symbiotic commercial relationship between Lagos and Ogun states can be likened to what exists between the heavily populated New York and the adjoining New Jersey, in the United States, with the latter taking full advantage of its location to a major market to grow its indusrial capacity over time. New York shares the same relationship with Delaware. However, while Lagos is undoubtedly ahead as the main station in terms of profusion of service industry establishments, where the headquarters of banks, major business concerns and also the Stock Exchange are located, Ogun has also been accelerating towards emerging as the centre of industrial activities.

Presently, investors in the manufacturing sector actually consider Ogun State a more alluring and conducive site for their activities. These investors have been drifting into the state at an unprecedented rate in the last three years, from the Sango Ota axis to Agbara, Ewekoro, Ibese, Ifo, Ibafo, Magboro and Sagamu, where, altogether, not less than 50 major manufacturing firms have registered their presence.

Governor Amosun

Governor Amosun

While some of these firms are new entrants, others consist of manufacturing concerns which have decided to start producing from Ogun in facilities sprouting in all directions in the state. In 2012, Procter and Gamble, one of the world’s leading manufacturers of consumer goods, chose Agbara, Ogun State, as the appropriate site to build a $300 million plant. The industry, which was commissioned last year, has consequently stepped up levels of production of its popular brands of products, like Ariel, Vicks, Pampers, Always and Duracell, among others. The industry, now on Ogun soil, is regarded as one of the biggest non-oil investments in the country.

Nestle, another big-time player, has a huge plant around the Papalanto section of the Lagos-Sagamu interchange. Other firms, which are by no means minnows, that have stationed their big plants to produce from Sango Ota, which is home to a cluster of industries in Ogun State, are Drugfield, Kolorkote, Fidson, Intercontinental Distillers, Pure Chemicals, Fine Chemicals, Farmex Mayer, Shonghai Packaging, Eagle Packaging, Leady Pharma, May and Baker, Nycil Ltd., Honda Nigeria Plc, and Assometal. Others include Nigeria Foundry Ltd., Dufil Indomie, Federated Steel Mills, Tower Aluminium, Nigerian Breweries, Nigerian German Chemical and Obasanjo Farms.

It has been a win-win development for both the industrialists and the Ogun State Government. While the manufacturers have enjoyed seamless production in the state, courtesy of advantages being located in the state guarantees, the state government has also witnessed a boost in its Internally Generated Revenue, IGR, that has reached an unprecedented high of N4 billion monthly in the last two years.

Before 2011, the state could only muster an average of N730 million on a monthly basis as IGR. Since 2012, Governor Ibikunle Amosun has been having the commissioning of manufacturing plants as a constant programme swelling his schedule of activities. These include the commissioning of Dangote Cement Plant, WEMPCO Steel Mills, and the multi-billion naira AADL ethanol manufacturing plant at Igbesa, Ogun State. These particularly big events, underline the magnitude of the investments that have been attracted into the state recently.

The ethanol plant, constructed by Allied Atlantic Distilleries Ltd., has since started the production of ethanol, which is a major component in the making of wines and spirits, with cassava being the raw material that is available in huge quantities in Ogun State. Earlier, in January 2014, at the P&G plant commissioning ceremony, the governor, in an upbeat mood, announced that despite the massive project being the 43rd since the inception of his administration, 20 others were already on the waiting list. The optimistic governor’s target is to commission 100 industries in the state before May, 2015.

Chief among the attractions that have informed the pull of industries into Ogun State apppears to be the almost-boundless availability of land and the ease of its aqcuisition for investment purposes. In this regard, the state is generous enough to offer 70 per cent rebate on cost of land, making the documentation of such properties easy and prompt by the removal of the hitherto frustrating administrative roadblocks. The state has also been working with the Bank of Industry, BOI, to make credit facilities accessible to investors.

Wale Adegbite, chairman, Eagle Packaging who doubles as the vice-chairman of the Manufacturing Association of Nigeria, Ogun State branch, ascribes the Ogun allure for industrialists mainly to the location. “We all know that Lagos is the biggest market for any product in Nigeria and Ogun State is the closest to Lagos. Then of course there is the issue of the availability of the land as well,” Adegbite said. According to the industrialist, the cost of doing business is relatively cheaper in Ogun than in Lagos and because of the bigger size of Ogun, it offers cheaper land than Lagos.

Omobolaji Irewole, Assistant Human Resources Manager at President Paints, along the Atan Ota-Idi-iroko road, told TheNEWS that the paint-making company has capitalised on maximising the vast expanse of land on which the firm’s factory is located to aid seamless production and sales, translating to less cost of operation. Hitherto, the firm had its only factory located at the Idi-Iroko road, with the administrative department being at its headquarters in the Ahmadiyah area in Lagos. But the company restrategised by building another administrative block beside the factory, since the land was readily available.

Before the relocation to the factory site of President Paints, the company expended much as transportation costs in moving its products from the factory to the store at the headquarters and other points where buyers got their goods. But the purchase and delivery processes are now more streamlined, with less transportation complications, as buyers now get their goods directly from the factory now situated next to the administrative building.
Another attraction for investors mentioned by Adegbite is that Ogun State sits on a gas pipeline. “Although Lagos State also has gas pipelines in some parts, Ogun has pipelines in Agbara and Ota, which are two big industrial areas, and if you don’t want to rely on privatised Power Holding Company of Nigeria, PHCN’s electricity, you can rely on that,” he said. Manufacturers in Ogun State, with plants situated close to the available independent power suppliers thriving on their proximity to gas pipelines, have the choice of being powered by such IPPs.

This alternative to the power supply from Ibadan Electricity Distribution Company for Ogun State translates to a more reliable source of electricity, and seamless manufacturing process, drawing more industrial firms to the state. Such off-grid power producers in Ogun State include Coronation Power and Gas Limited with a 20MW facility, situated in Sango Ota and Tower Power Utility Ltd., which also generates 20MW and operates at Sango Ota. Ewekoro Power Ltd, with an off-grid generation capacity of 12.5MW, is also sited in Ewekoro, Ogun State.

In May 2014, Honeywell Group revealed that the company has forged a partnership with the United States Trade Development Agency, USTDA, by signing a Grant Agreement for a feasibility study on Honeywell’s N31 billion Sagamu Independent Power Plant project. The project, to be done in phases over the next five to seven years, has the potential of supplying about 140MW of power. The power plant, when it is eventually put on ground, is expected to meet the power demands of industries in the south-western region of the country, with emphasis on Sagamu, Abeokuta and the Lagos-Ibadan Expressway industrial clusters. Honeywell’s projection is undoubtedly to ensure adequate power supply to support its move of further expansion into Ogun State.

The company has disclosed plans to build a 66-hectare Flour-gate Estate in Sagamu. And Honeywell’s decision to relocate was premised on space constraint, having fully utilised the space allotted to it at the Tin Can Island Port in Apapa, Lagos.

Bimbo Ashiru, Ogun State Commissioner for Commerce and Industry, told this magazine that towards maintaining its position as the largest industrial estate in Nigeria, the state has introduced many incentives for investors, including a one-stop shop which has reduced bureaucratic bottlenecks in seeking the permit to do business in the state. At a recent summit, Governor Amosun said the state was commitment to the process that would soon lead to launch of the state’s metro city project, which will be the rail connection between Lagos and Ogun states, to cement the administration’s urban and industrial sector development programmes.

With mineral resources in the state including bitumen, phosphate, kaolin, tar, sand and clay, and especially limestone, some of which the government claims can be mined for the next 500 years, the influx of more industrial firms into Ogun State is likely to be sustained. “Ogun has the largest concentration of limestone in the country for instance. And of the 28.6 million metric tonnes of cement produced locally in Nigeria, 14 million metric tonnes of this comes from Ogun State,” Ashiru claimed.

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