Private sector is the future of Nigeria

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It has been estimated, and even the government affirmed it in its Economic Recovery and Growth Plan (ERGP) that for Nigeria to close its infrastructure gap and bring itself up to the international benchmark for infrastructure stock, it needs to spend as much as $3 trillion in the next 30 years and majority of this money is expected to come from the private sector.

As in many other growth and development indices, Nigeria lags behind many countries of the world in its infrastructure stock. The international benchmark for infrastructure stock as a percentage of GDP is 70 percent, but Nigeria currently stands at below 30 percent.

This realisation that both the government and the private sector must contribute their quota towards building Nigeria’s infrastructure is now mainstream and all progressive governments are designing policies to ensure a robust public-private partnership where the private sector can invest massively in infrastructure. But not so with the Nigerian government.

This is a country where the president came out to say matters-of-factly that he does not trust individuals in the private sector. In his words: “We are averse to an economic team with private sector members” because such persons “frequently steer government policy to suit their narrow interests rather than the overall national interest”. Buttressing the president’s position further, the media adviser to the vice president, Laolu Akande further explained that the presidency considers economic management as purely “a government affairs”.

The position of the presidency is not surprising. In a way, it reflects the president’s ideological position which is yet to change since 1985 when he was removed from power. The president is a staunch believer in a state-controlled economy and a closed state-centric policy process. His aversion for the private sector is classic and he considers private sector players as greedy, selfish, and inherently incapable of working with the government towards the development of the state. We recall that since 2003 when  Buhari began his quest for public office, he has always voiced his opposition to the surrendering of the “commanding heights of the economy” to the private sector and specifically, the privatisation of the largely inefficient and wasteful State Owned Enterprises that became established conduits for the siphoning of public revenues. This can be seen in how the president talks about the privatised SOEs in very nostalgic tones and never fails to excoriate past administrations for mortgaging Nigeria’s common patrimony to private and selfish individuals.

That explains the president’s push, on coming to power, to claw back the economy from the private sector, re-establish state dominance and control over the economy and position the state as the largest player in the Nigerian economy.

Despite the huge cost of subsidising imported petrol – about $3.9 yearly – and despite the fact that government is facing a severe revenue crisis and cash crunch, it has still refused to deregulate the downstream sector of the oil industry and allow market forces to determine the price of the product.

This thinking by the president is deleterious to the Nigerian economy and will set the country back several decades if nothing is done to convince the president to abandon his outdated socialist ideology and allow the private sector to dictate the pace of the economy, albeit with government providing solid regulation to prevent the manipulation and abuse of the market by greedy forces. The reality now is that government alone does not have the resources to provide the scale of infrastructure required by a 21st century society.

 

But rather than develop a comprehensive PPP model to ensure the smooth participation of the private sector, the government, rather prefers to go borrowing, at exorbitant interest rates, to provide some infrastructure. But no amount of borrowing can plug the infrastructure hole in the country.

There is just no running away from the reality that the government must partner the private sector to provide modern and world class infrastructure. We urge the president and his minders to rethink its strategy. Private capital has alternative uses and many countries are competing for them.  The sooner we cosy up to the private sector, develop an attractive PPP model to convince willing investors to want to invest in the country, the better for us.

 

 

 

 

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