- Extra $70bn annual infrastructure spending needed by country
Chineme Okafor in Abuja
The United Kingdom’s Department for International Development (DFID) on Tuesday said Nigeria’s agro-processing sector stood the chance of launching a rebirth on the wings of the country’s weakened currency and low earnings from crude oil sales.
It said the economic downturn, the sector could become a means for it to rebuild her competitiveness in the global economy.
The DFID said Nigeria would need additional $70billion annual investment in her infrastructure to keep tab with economies that have left her behind in the development matrix, adding the government may not be able to raise this funds, but the private sector could once it gets the right signal from the country.
Vice President, Yemi Osinbajo had said Nigeria was keen on revitalising the country’s economy through increased spending in infrastructure development.
The DFID, which the UK government uses to administer overseas aids to promote sustainable development and eliminate world poverty advised Nigeria to emphasis less on the challenges its current economic recession has brought to it and concentrate more on rebirthing its agricultural sector which it said has the potential to make it become a major exporter of non-oil goods.
Its Senior Economist, Ben Mellor said in Abuja when Osinbajo launched a compendium of work done by the DFID funded Nigeria Infrastructure Advisory Facility (NIAF) in the country’s public sector space, that if Nigeria takes proactive decisions, it could witness a renaissance in its agro-processing sector.
Mellor also said the government would need to open up to private sector financing to raise the additional $70 billion infrastructure investment.
“High oil prices over the years and a strong naira has made it almost impossible for the non-oil sector to explore the market outside of Nigeria.
“With the recent weakening of the naira, we know there are a host of challenges associated with that, but what I don’t hear enough about is the opportunities that this weakening of the naira may present Nigeria to resume its place as a major exporter of non-oil goods and I believe there is an opportunity in the agric sector – there could be a renaissance in Nigeria’s agro-processing for the export market and we know Nigeria has the potential to export,” said Mellor.
He however said Nigeria will have to look internally and externally to identify the opportunities available to her in this regard, adding, “the international potential of what Nigeria can offer is vital.”
Mellor explained that beyond the currency and low oil price challenges of the country, she still had fundamental issues that have impaired her competitive edge.
According to him, “Beyond the exchange rate challenge, we know there is a fundamental competitiveness issue. For instance, if you ask firms what their biggest challenge to doing business is, top on their list is always infrastructure, this is why government’s performance in roads, power, railway and other infrastructure is critical to getting it right.”
He said the UK will remain committed to working with Nigeria on the long term to overcome these challenges, adding that the country’s power market reforms has shown the need for such long term planning to improve Nigeria’s competitiveness.
“If we want Nigeria to have the type of take-off that economies like South Korea, China and other economies achieved, we know that there needs to be a change in the kinds of investments that come into Nigeria. The capital stock in Nigeria is low in comparison to what other countries have.
“If Nigeria wants to keep pace with South Korea or Indonesia, it would need to invest an additional $70 billion a year more than it is already doing. We know that $70 billion is not a sustainable fund for government to borrow, so this cannot be achieved with public investment alone. The only practical way to reach this is to unleash the confidence of the private sector to invest, which will depend on how trusted the Nigerian government is on business environment and the positive signals that comes from Nigerian government,” Mellor stated.
He said the Nigeria Sovereign Investment Authority (NSIA) represents such opportunity for a government-private sector partnership in upgrading the country’s infrastructure.
Osibanjo who was joined by the Governor of Kaduna State, Malam Nasir El-rufai and Head Power Sector Team of NIAF, Prof. Chidi Onyia at the launch of the compendium said the shortage of critical infrastructure in the country was holding back the economic capacities of her citizens.
He explained the government understands this and has taken it up to accelerate infrastructure development of the country.
“Since taking office in May 2015, this administration has committed to a ‘change agenda’ that tackles these specific issues. One of our key areas of focus is on revitalising the national economy.
“The support that DFID, through the NIAF programme has provided towards this aim has been immeasurable. NIAF’s goal to enhance the management of Nigeria’s infrastructure development towards power sector reform, more impactful capital spending, transport roads, climate change, and urban planning and development is aligned with and invaluable to this administration,” said Osinbajo.
He further stated: “As we all know, infrastructure is critical to spurring economic growth, reducing poverty and improving life opportunities for millions of Nigerians. Improved infrastructure increases job creation, disposable income, and security through equipping Nigerians to tackle the constraints holding back the great entrepreneurial spirit of this country. It is completely clear to me that accelerated infrastructure development is critical to sustainable growth in Nigeria.”