Keynes, Roosevelt, and Tinubu: In search of the multiplier effect

Governments aiming for growth during tough economic times often use public works as a key strategy. This approach, refined by John Maynard Keynes and Franklin D. Roosevelt, is now being skillfully used by Nigeria’s President, Bola Ahmed Tinubu, through his ambitious Renewed Hope Infrastructure Development Fund (RHIDF). This blueprint is not just a plan but a promise to catalyse economic growth by pumping demand through expansive infrastructure projects—a venerable strategy with a robust pedigree.

Keynes advised the British Treasury during the Great Depression, promoting public investments to help the economy. His “multiplier effect” theory suggested that such spending would stimulate more economic activity, effectively paying for itself by boosting the overall economy. Similarly, Roosevelt’s New Deal supported the U.S. economy, and Dwight D. Eisenhower’s Interstate Highway System led to decades of economic growth in America.

President Tinubu’s RHIDF aims to replicate these successes by improving Nigeria’s infrastructure. By enhancing key logistics and reducing energy costs, this plan will lower business expenses, boost productivity, and strengthen the private sector.

While some may doubt, history shows the multiplier effect works. The RHIDF plans to inject funds that will generate more economic activity, create jobs, and increase demand. Better infrastructure leads to lower costs and more opportunities for trade and investment. This isn’t just spending—it’s investing in Nigeria’s global economic standing.

For the RHIDF to succeed, it must work well with monetary policy. The Central Bank of Nigeria’s role in controlling inflation and stabilising the currency is crucial. Together, fiscal and monetary policies can enhance the positive effects of public investment, helping Nigeria achieve economic stability and growth.

Public works face challenges like corruption, inefficiency, and bureaucratic hurdles. However, the potential benefits far outweigh these risks. If managed well, the RHIDF can reshape Nigeria’s economic landscape, creating a solid foundation for future prosperity.

Following the successful strategies of Keynesian economics, Roosevelt’s resolve, and Eisenhower’s infrastructure legacy, Tinubu’s RHIDF is set to lead Nigeria into a new era of economic growth. This is a careful and strategic use of proven economic tools, tailored to Nigeria’s specific needs. The RHIDF is more than a fiscal stimulus—it’s a bold move for sustainable economic development. This is a risk worth taking for the economy, the people, and Nigeria’s future.

Uwajumogu is a special adviser to the President on Industry, Trade and Investment.