by Collins Nweze
The economy needs N35 trillion investment annually for the next 10 years to achieve desired economic growth, Association of Issuing Houses of Nigeria (AIHN) has said.
In a statement at the end of its first bi-annual business lunch in Lagos, the AIHN President, Chuka Eseka, said Nigeria is a N140 trillion economy, adding that to reverse the negative trends in unemployment, poverty and experience real growth, the country needs capital investment of N35 trillion per annum consistently for the next 10 years and the capital market if properly incentivised, can facilitate this.
He explained that to deliver economic growth, revenue generation must be a priority for the government. “We must stimulate productive activities within the economy that will generate revenue. Private sector efficiency is critical in harnessing the potential infrastructure development. Increased efforts must be made to galvanise Foreign Direct Investment (FDI) as well as domestic investment,” he said.
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He added: “For the power sector to thrive, the government must create an enabling environment and address existing governance, legal, regulatory, funding and pricing issues.”
According to Eseka, this is the time for the capital market to invest in intellectual capital and develop solutions for funding key national priority sectors such as power, transportation and telecommunications to achieve the transformational and catalytic economic benefits.
“While recognising the desired supporting role of government, the private sector and capital market need to put themself in the driving seat. The government must, however, be decisive and close out on key policy issues affecting the functioning of the economy to create the right framework for the market to thrive. Focus must be on policy reforms that promote market economics,” he said.
According to the group, Nigeria is out of recession, but growth is anaemic at approximately two per cent. Inflation has moderated from 18 per cent to 11 per cent, but remains sticky above the Central Bank of Nigeria’s target of six to nine per cent.
“Revenue improved by an estimated 41.2 per cent, but underperformed by an estimated 47.6 per cent relative to budget in 2018, the fiscal deficit remains elevated but reduced to 2.6per cent of Gross Domestic Product (GDP) in 2018. There is also a lack of fiscal buffers as the Excess Crude Account has reduced to $249 million as at February 2019 from $2.3 billion as at October 2018,” it said.
Continuing, it said: “The capital market is the barometer for measuring the health of the economy. Since the global financial crisis of 2008–2009, Nigeria’s capital market has been constrained in fulfilling its mandate to drive the growth and development of the biggest economy in Africa. The capital market provides a good platform for addressing many of Nigeria’s economic challenges. The AIHN must take the initiative to influence the new administration’s implementation strategy of its Economic Recovery Growth Plan (ERGP) by pointing out areas where funding can be more easily accessed from the capital markets if appropriate reforms are introduced.”
The group said for the capital market to deliver on its role as a catalyst of economic growth, market operators have to be put in the position to operate optimally. Pricing for our services has to be market driven and policies put in place that would allow operators intermediate properly in the financial markets and develop local capabilities so that Nigeria can develop its own global firms and rely less on foreign expertise to execute major projects.