Experts predict huge private sector-led investments under new govt

The successful change of government, which climaxed with the inauguration of President Muhammadu Buhari, has been assessed as a renewal of optimism over economic progress in the country and new opportunities for the private sector, particularly in infrastructure development, consumer and financial services sectors.

Besides, the Nigerian delegation at the just concluded World Economic Forum 2015, in Cape Town, South Africa, discussed the economic outlook for the country under its new government at a breakfast hosted by RMB Nigeria.

The Deputy Group Managing Director of TGI Group, Christian Wessels, said he is confident that a more entrenched democracy has been established in Nigeria, saying there would be greatest opportunities in providing appropriate goods and services to a population of 175 million people.

“There are numerous opportunities for private sector producers to cater for different price points, tastes and regional preferences. We hope the new government will act against smuggling, which will help local producers. The new president needs to increase government efficiency and diversify the economy away from its reliance on oil,” he said.

According to him, the future creation of jobs rests on three sectors- agriculture; consumer; and financial services.

“We have enough land to create a strong agricultural sector, while the consumer market is currently underserviced and underpriced offering numerous opportunities for job creation. Financial services is also underserviced with only 30 per cent to 35 per cent of Nigerians having bank accounts,” he said.

But the Managing Director and Chief Executive Officer of Nigeria Sovereign Investment Authority, Uche Orji, added: “Government has limited financial resources so would be open to private sector participation particularly in infrastructure projects. Also, many Nigerian assets do not have a strong cash flow and would welcome private sector participation, such as a stock exchange listing, to get them going again.”

Orji, who manages the Nigerian sovereign wealth fund, noted that in the longer-term, small and medium enterprises, which will grow as government addresses the power issues, as well as a strengthening democratic system, will in turn, strengthen development institutions such as the Development Bank of Nigeria, facilitating easier investment into the country.

The Chief Executive Officer of Africa Finance Corporation, Andrew Alli, pointed out that one of the biggest challenges the new government will face is diversifying its economy away from its significant reliance on oil to support its fiscal and recurrent expenditure.

“There has been a lot of talk about lifting the oil subsidy and what happens next will be a litmus test as to what the new government plans to do. I believe an immediate abolition with a six-month window would be the best thing to do. The new government is not much different ideologically to the previous one, but the difference will come in how they execute things and what they prioritise.

“One of the keys to success for the Nigerian economy is the ability to create jobs particularly for the 70 per cent of the population who are under 30. Just to remain at an unemployment rate of around six per cent and under-employment of about 25 per cent, we need to create millions of jobs yearly.

“Another factor to watch for the longer term is how to use technological innovation to leapfrog the infrastructure, which we don’t already have,” he said.

But the RMB Regional Head, West Africa and Chief Executive Officer, RMB Nigeria, Michael Larbie, raised optimism that the financial services sector is also expected to experience improvements as the Central Bank of Nigeria introduces international banking standards such as Basel II and III.

“We see an embracing of change in the sector. Changes are also taking place to address potential increases in the industry’s Non-Performing Loans (NPLs). With the strict adherence to five per cent NPLs ratio, opportunities will arise in repackaging and selling off any troubled assets to willing buyers,” he said. 

Larbie expressed hope that a more diversified economy and improved power supply will increase productivity and prices and that “if we take care of security in the northern part of the country, it will open up other sectors within the economy such as mining.”