The federal government’s inability to deregulate some critical sectors of the economy like mining, rail transport and energy among others is hampering the sectors from attracting investors like the telecommunication sector.
The Chief Executive Officer of Economic Associates, Ayo Teriba, who stated this at the Nigeria-S/African Chamber of Commerce breakfast meeting in Lagos, pointed out that the telecommunications sector grew astronomically in 15 years to contribute from less than one percent to about 10 percent to the country’s $ 510 billion Gross Domestic Product (GDP). He spoke on ‘Beyond Oil- Nigeria’s attractiveness as an investment destination.’
The expert, who is a leading policy consultant with experiences spanning over a decade, wondered why government could not muster enough political will to de-regulate and reform various critical sectors even when it is acknowledged that such grip and control is stifling the inherent potentials including employment in those sectors. To this end, he said government needs to break its monopoly on certain sectors to loosen the economy for further local and foreign investments.
“Government needs to end its own monopoly to create more access for FDI in rail transport, gas pipelines and power transmission as it is the case in telecommunication,” he said.
Expressing his concern on government continued strong-hold on some sectors that would have grown the nation’s economy; the economist said federal government monopoly has constituted the biggest obstacle to the inflow of FDI into large network infrastructure sectors that could catalyse the growth of all other sectors in the Nigerian economy.
He emphasised that the bottlenecks constituted by rail and energy supply are contributing massively to why some sectors are stagnant.
Looking at Nigeria’s economic potential with other African countries, the expert stated that Nigeria currently offers the largest absolute growth and investment prospects in Africa, adding that the country should remain the continent’s most promising investment destination in the future if government can sufficiently stabilise the naira to liberalise capital flows.
Nigeria has over the time ranked low on the ease of doing business, ranking 169 out of 189 countries examined by World Bank in 2015 which was not pleasant to Teriba as he told his audience that Nigeria, in addition to its potentials would remain investment destination if the present government delivers on its promise to make business easier to do.
“Nigeria only needs to create more conducive environment to actualise evident growth prospects”, he said at the meeting sponsored by Coca Cola Nigeria. He believed that Nigeria is also well placed to attract more medium to long term investment from its citizens in Diaspora.
According to him, though oil which accounts for about 75 percent of government revenue is weak but Nigeria’s economy remains strong. “Nigeria has the largest non-oil economy”
In terms of priorities and sequencing, however, he said it is logical that successes in rail transport, gas and power transmission reforms are required to make agriculture, mining and manufacturing more competitive, and also induce further FDI into the sectors, just as a stable exchange rate and liberalised capital flow regime will encourage the return of foreign portfolio inflows (FPI) into Nigerian bonds and equity markets.
He reasoned that “Nigeria’s interests will be best served by largely irreversible long term foreign direct investment commitments in critical infrastructure and real activity sectors, not debt financing of government’s investments in infrastructure, or relying too much on easily reversible foreign portfolio inflows that are more sensitive to short term interest rate and foreign exchange risks”.