Why Nigeria's economy remains sluggish, underdeveloped: Obasanjo
Former President Olusegun Obasanjo has said that Nigeria has not been able to make progress because successive governments failed to continue with good policies put in place by their predecessors. Also, former Governor of the Central Bank of Nigeria, CBN, Prof. Chukwuma Soludo, said that about 40 per cent of Africa's non-land assets are held outside the continent, adding that Africans must repatriate such funds to form the fulcrum on which to build a large poll of international capital for the continent's infrastructure development needs.
This came as Acting President Yemi Osinbajo urged Africa Finance Corporation, AFC to do more in providing necessary leadership towards mobilizing private capital for infrastructure development in the country, noting , “We will be relying on AFCs, especially our own DFIs to do much more; we will be relying on them to show much more leadership and to take greater risks.”
They spoke, in Abuja, yesterday, at a panel discussion on the 10 years of AFC, operations at the Infrastructure Summit. Also speaking at the forum, Finance Minister, Mrs. Kemi Adeosun, said there was huge appetite globally to invest in Africa's infrastructure, adding: “We need to properly package and showcase the opportunities.”
In his remarks, former President Obasanjo, said that the continent has been unable to develop due to the penchant of its leaders to discontinue the few things that had been done right. He noted that AFC had a “rough” beginning because of lack of understanding by political leaders who succeeded him.
Obasanjo also relived his tour of Singapore in an effort to unravel the secrets of the Singaporean success, with a view to applying same to the continent. He said, “I remember taking 40 young and up-coming Africans to Singapore some years back. Lee Kuan Yew hadn't written his book “from Third World to First World,” and we wanted him to tell us how he did it. We wanted to know the magic and Yew told us there was no magic.
“He said: There is no magic. We did a few things right and we continue to do them right. We in Africa have done a few things right. Our problem is that we don't continue to do them right.
“Many things are wrong about Africa but a few are right. We should continue to do those things that are right.”
Prof. Soludo, on his part, said “The Sub-Saharan Africa is just the size of Belgium in economic terms. You can imagine Belgium being divided into 54 isolated countries. Second, several studies have shown that about 40 per cent of non-land private Africa's wealth happened to be outside of Africa and the missing link, really, is creating the kind of platform to unleash African capital to be able to move across borders, to mobilize African capital.
“Because in my view, it's only the African capital that can form the fulcrum. If African capital doesn't move, is it the domestic capital that will say to the foreign capital, here is the place to make money? “So AFC is to provide that kind of platform, to mobilize African capital to move across borders where African capitals infrastructure which has been the missing link, can begin to fill in the missing dots in terms of linking this small, if you like, these disarticulated Belgiums, as it were.”
Prof. Soludo's assessment of AFC was that the corporation has done well in the last 10 years but that “the road ahead is still long.” On his part, Acting President Osinbajo said: “There is no question at all that all of what we required, all of what is needed will not be provided just by government. As a matter of fact, it is very clear that governments cannot finance the huge infrastructure needs of most countries.”
Managing Director of AFC, Mr. Andrew Alli, revealed that the organisation has invested approximately $4bn in projects across Africa. One of the objectives of the summit, according to him, was to develop new solutions to increase deal flow and fast track commercial projects in Africa. According to him, by bringing financiers and investors alongside project developers and fund managers, AFC wanted to ensure that more capital, both African and international, could be deployed towards addressing Africa's pressing infrastructure needs.
A recent UN report said that of the total $2tn raised globally for infrastructure projects, only $59bn was received in Africa, representing three percent. Meanwhile, AFC and Boston Consulting Group, BCG, have said that Nigeria and other sub-Saharan Africa require a combination of solid legal frameworks, increased private-sector involvement and better fiscal incentives to plug annual infrastructure-funding gap of about $100 billion.
The report noted that governments in the region have insufficient strategic foresight, political will and policy certainty and numbers of adequately skilled people to improve delivery. The report added that financial systems need upgrading to be sound enough for projects, and nations must develop local capital and debt markets that provide lower financing costs. “Implementing projects takes twice as long as in other regions.
Private investors often must act as project developers, adding 10 percent to 15 percent to the project costs and lengthening the project life cycle. The region's nations lose as much as 2.1 percent of gross domestic product annually to inadequate infrastructure,” the organisations said.