Investment: Aganga’s Tough Challenges

In Nigeria, the masses of the people are poor and live most of their lives in debt. And most of the power elite, contractors, and their cronies who have large resources are obsessed with conspicuous consumption-taking fat salaries, driving big cars, dressing expensively, living in palatial homes, and jollying and junketing all over the world-saving little or nothing for investment in the country.

In the face of the deficiency of private saving and investment in the country, the burden of raising the requisite funds to finance the nation’s socio-economic development therefore rests squarely on government. But despite the country’s enormous natural resources, no administration has been able to rise to this challenge.

On the African continent, Nigeria has the most envious economic profile. It has an area of over 923,773 square kilometers, the largest single geographical unit along the West Coast of Africa and a population of about 140,000,000 based on the 2006 census, the largest in Africa. It has friendly climate and fertile land, the sine qua non for agricultural production. Nigeria is about the 6th largest producer of crude oil and gas in the world. It is also a leading world producer of coal, tin, and columbite.

In his speech on Nigeria’s 51st Independence Anniversary, President Goodluck Ebele Jonathan said : “… Our GDP is today one of the fastest growing in Africa. We are currently growing the economy at 7.8 per cent. We expect to sustain an 8 per cent growth rate and a better GDP in the medium term, on our journey towards realising our Vision 20: 2020 goal”.

But the pertinent questions are: What is our Gross National Saving? What is the Gross Domestic Investment as per centage of the Gross Domestic Product (GDP)? And what socio-economic benefits or opportunities have accrued to the people from the fast growing GDP?

The truth is that not much of the national income can be saved for future investment in the face of the country’s socio-economic quagmire. Why? Because it is difficult to cut down on the country’s current expenditure; and it is also difficult to persuade the poor masses to pay more taxes.

Yes, the long arm of government has reached out to every sphere of life in the country – notably roads, public health, water, education, security, and electric power supply – but the persistent decay of our infrastructure, insecurity, corruption, and poor regulatory environment have continued to drain both private and public savings in Nigeria. And over the years, the willingness of the people to pay taxes has been eroded by their discontent at public stewardship resulting from the corrupt and directionless disposition of some government functionaries.

With the low level of public and private domestic savings and investment and the failure of public sector reforms including privatisation and commercialisation of government  enterprises to enhance the country’s economic expansion, Nigerian government has been focusing on policies that would attract foreign investors. For instance, the federal government has given approval for genuine foreign investors coming to Nigeria to receive their visas on arrival and promised to remove any barrier that will impede their effective and efficient operations in the country.

The federal government believes that with these efforts, its 20: 2020 dream by which the country is expected to invest N34 trillion in growth areas in the next four years will be realised. According to the Vision 20:2020 document, the federal government, state governments, and the private sector (both local and international) are expected to account for N10 trillion; N9 trillion, and N15 trillion investments respectively.

Apparently, with the enthusiasm of the Minister of Trade and Investment, Dr. Olusegun Aganga, to brighten up the investment climate of the country, Nigerians are looking forward to solutions to the intractable problems of unemployment, poverty, and other dispiriting situations which investments are supposed to tackle.

But for Dr. Aganga to actualise his mandate to lead the nation’s investment drive, he must be prepared to face the country’s developmental challenges some of which are insecurity, poverty, corruption, and poor infrastructural facilities, especially electric power supply.

With the power supply crisis becoming chronic, the problem is not only that many organisations are reducing their operations but that establishments which are very strategic to the development of the nation are relocating to other countries. Nigeria requires 10,000 mega watts (MW) to sustain its economy. But the 6,000 MW of electricity target which was set to be achieved by the end of 2009 is still a mirage.

Indeed, the investment challenges facing the nation are complex and tough and must be confronted on serval fronts. The federal government has to maintain a consistent policy on investment, and deal decisively with the nagging problem of infrastructure in the country.

There is also the urgent need for Dr. Aganga to consult widely with stakeholders across the various sectors of the economy and create motivation for saving and investment. This should involve eliciting from the haves in our soceity the consciousness of diverting resources from current consumption needs and investing them in capital formation.

Savings channels in Nigeria include, commercial banks, the National Provident Fund, and premium bonds. Dr. Aganga must work in collaboration with these channels to reduce, if not eliminate, the red tape which characterises savings administration in the country.

Dr. Aganga’s vision for investment in the country looks supercilious but whether or not he would be able to animate it in the face of tough developmental challenges which have encumbered the nation’s economy only time will tell.