Nigeria must prioritise the mobilisation of domestic capital to address its mounting economic challenges, a development economist, Dr Temitope Laniran has said.
As the government searches globally for loans to revitalise the economy, Laniran, who sees Nigeria as a fragile state argued that harnessing domestic capital is the most effective strategy for driving growth and development in a country like Nigeria.
Laniran, speaking with The Guardian emphasised that while foreign loans and investments remain important, locally-sourced capital offers greater resilience, especially in countries like Nigeria with economic and governance challenges.
Laniran, whose doctoral research focused on the subject matter, is raising the concern at a time when Nigeria is struggling with a debt profile of over N121 trillion amid escalating poverty, insecurity, and economic instability.
In his work, Laniran outlined strategies to attract investments in fragile economies, which include sectoral and investor targeting.
He recommended directing investments to sectors with comparative advantages and promoting value chains to maximise economic impact.
Targeting investors experienced in operating within challenging environments could create lasting economic benefits, Laniran stated, while stressing that policy measures such as blended finance, export credit guarantees and political risk insurance are critical to mitigate the risks associated with investing in fragile states.
The economist stressed the need to promote responsible business conduct and foster linkages between local and foreign companies to build local capacities and promote sustainable economic growth.
Laniran painted a grim picture of Nigeria’s socio-political and economic trajectory, warning that the country is inching closer to state fragility.
He explained that poor governance, over-reliance on oil revenues, rising corruption, and socio-political disenfranchisement are driving the country towards instability.
Laniran noted: “Nigeria exemplifies the characteristics of a fragile state, with its institutional legitimacy, authority, and capacity dramatically weakened.”
State fragility, often associated with low-income economies, refers to nations that struggle to perform core state functions or provide essential services to citizens. Laniran emphasised that “Nigeria’s fragility has deepened even under democratic rule, with insurgencies, economic stagnation, and poor public service delivery eroding public trust and weakening state legitimacy.”
He said Nigeria’s economic woes are worsened by dependency on oil revenues, leaving other sectors underdeveloped and unemployment rates soaring.
The volatility of global oil prices has triggered economic stagnation and rising poverty. “The over-reliance on oil revenue has hampered the development of other critical sectors, leading to economic imbalance,” Laniran said.
He lamented that the country has seen significant capital flight in recent years, with both foreign direct investment (FDI) and local investments declining across oil and non-oil sectors, adding that the exodus reflects deeper economic vulnerabilities and the need for urgent reforms.
Laniran highlighted Nigeria’s governance deficiencies as a significant driver of fragility. He noted, “Poor governance practices and lack of accountability have resulted in inadequate public services, alienating citizens and undermining the state’s legitimacy.”
Laniran emphasised that Nigeria’s path to recovery requires comprehensive reforms to improve governance, diversify the economy, and tackle corruption.
“Transitioning out of fragility is neither simple nor rapid,” he stated, adding that institutional reforms, sound legal frameworks, and resilient economic policies are essential to prevent further decline.
To escape the ‘fragility trap’, Laniran said Nigeria must build strong institutions that foster accountability and citizen engagement.
According to him, without decisive action, Nigeria’s socio-political and economic challenges will deepen, driving the nation further toward instability.
