Encourage domestic investment – Punch Newspapers


Investments remain the means by which individuals, groups or countries can survive in a sustainable way. Every savings should result in an investment and eventually an income or income. This is why banks are always keen to lend money to borrowers instead of keeping savings in their safe. Lending is one of their investment choices as they earn a lot of income from interest rates. Customers, who keep money in banks in the form of savings, only help banks make profits. The same is true for a country that keeps all of its reserves in foreign currencies only. There are close funds or short-term financial instruments that individuals or a country can invest funds that can be called back in the short term, just as there are longer-term financial instruments.

Of course, when you look at your account and see a huge sum there, the tendency to buy goods on impulse, whether desirable or not, is always very high. When officials or officials look at their agency’s account and find a huge fund, the tendency to help themselves reduce the volume of the fund for personal enlargement can be very tempting. Thus, it is always good to think of “investing” rather than saving. Wise governments invest in their people to reap the multiplier effects of human capital development. The reverse is also true. Let’s take the above as a free tutorial or unsolicited advice.

More often than not, developing countries in particular are interested in rapid growth in foreign direct investment. The view is that these investments are sources of capital inflows to bridge the gap created by the shortage of domestic savings and investment. The vital benefits of such foreign investment or capital inflows have been demonstrated in the case of countries such as Japan, Malaysia, Singapore, Taiwan and other countries in Asia since the 1970s and in Latin America more recently. This is not only in terms of rapid industrialization, but also in terms of adoption, adaptation and technology transfer in general.

Rapid and lasting benefits did not follow foreign direct investment in Africa as evidenced elsewhere, not only because it was not a massive movement as was the case with other continents, but also because FDI in Africa is not directed towards the manufacturing sector but adapted to the exploitation of natural resources. resources that are narrow in scope, physically demanding and capital intensive, with little room for job creation. Even then the small drop would have led to some transfer of technology, but most African countries have large masses of illiterate or unskilled labor or, when skilled, in trade rather than science and technology.

Lately and as explained about eight weeks ago, there has been a decline in foreign direct investment in Africa in general, including in Nigeria. EY’s 11th Africa Attractiveness Report shows that foreign direct investment in Africa fell by 50% in 2020 as the continent suffered its worst recession in 50 years due to COVID-19. The services sector, including technology, financial services and consumption, attracted 72% of the continent’s FDI, around 4% for the extractive sector and much less for the manufacturing sector which is expected to generate the most jobs. This situation should compel African countries to encourage more domestic investment as the situation is not expected to change anytime soon.

The unfortunate aspect is that most African governments, including those of a country like Nigeria which prides itself on being Africa’s giant or the continent’s largest economy, are guilty of the underdevelopment of the continent. ‘Africa. Citizens are transferring much-needed funds through illicit capital outflows or in plain language, by stealing, to other continents, depriving their countries of investable funds. The qualities of education and health, supposed to promote productivity, have declined. Skilled citizens are encouraged to migrate overseas to maintain labor-scarce factories in Europe, America, Canada and as far away as Australia in the hope of bringing in foreign currency in the form of remittances that invariably return to the banks of these foreign lands in a second round of illicit flows or back and forth.

Infrastructure deficiencies and the need to rebuild them create two levels of incongruity. First, it makes domestic production expensive, resulting in citizens’ preference for cheaper foreign products, so that Nigeria imports food and finished goods worth billions of dollars every year and, second, it creates jobs for foreigners, especially the Chinese, who bring their machinery and materials to build endless roads, railways and airports, leaving our experienced local engineers in limbo because they don’t have the funds and the equipment. You have to rethink to do things differently. Why shouldn’t we give jobs only to foreign companies that can partner with Nigerian companies that have a proven track record of experience, competence and responsibility, and possibly listed on the Nigerian stock exchange? Why shouldn’t state governments partner with industrialists in certain industrial parts of the state to rebuild roads with tax breaks for them instead of the state awarding contracts and paying for a complete rebuild? Such joint efforts would be economical, quick and promote cooperation between the private and public sectors in the management of the economy.

For much of the 16 years the People’s Democratic Party has ruled this country, we have seen economic growth without jobs. The price of crude oil started rising in the international market during the first term of President Olusegun Obasanjo and reached a crescendo during the time of President Goodluck Jonathan. In fact, the country earned 51 trillion naira from crude oil under President Jonathan. Fortunately, Obasanjo had paid off the country’s debt and left about $60 billion in reserves and some $15 billion in sovereign funds. According to statistics from the National Bureau of Statistics, the volume of crude oil production in Nigeria between 1961 and 2014 was around 32.7 billion barrels valued at around 118.4 trillion naira! In fact, since the start of democracy in 1999, data indicates that crude oil production was valued at 116 trillion naira, or about 98% of total crude oil since 1960. Seen from another perspective, between 1999 and 2014, Nigeria earned N7.2 trillion. crude oil sales per year. There has been no sustained fund intervention for local industrial enterprises like Innosun and other vehicle assembly plants, some petrochemical enterprises and mechanized and agro-allied agricultural enterprises, etc. etc.

The revenue record under the incumbent President, Major General Muhammadu Buhari (Retired), cannot be compared to that of President Jonathan, but it was not as bad as we are led to believe. The OPEC record for July 2020 shows that Nigeria earned $206 billion from oil exports between 2015 and 2019. Details of the breakdown can be gleaned from the OPEC record. If we add all this income to “debt income” (?) and non-oil income, you can imagine the total amount. The question here is not so much about crude oil revenues alone and the so-called increase in non-oil revenues, but about the investments we can show for it. Currently, crude oil prices are on the rise and our revenues are rising again. Since 2014, Nigeria has experienced two recessions due in large part to global issues related to COVID-19 and in part to the economy’s debt management, rampant looting and pretense. And the federal government does not take the report of the Auditor General of the Federation seriously! Whether it’s APC or PDP, it’s business as usual.

Specialized banks such as Bank of Industry, Bank of Agriculture, Bank of Energy and Bank of Information and Technology are typical of development banks found in developing countries to help to the growth and development of engineering in the agricultural, industrial, energy, technological sectors, etc. They are called specialized not only because they deal with specific sectors of the production units but also because the personnel employed are technically competent in the fields of specialization of a bank. As catalysts, which is one of the theses of the banks, they are there to help the companies in their portfolio to develop. They need funds to finance private sector entrepreneurs in such ventures. Revenue from oil, non-oil and central bank sources should be channeled through these banks to support and develop these sectors rather than the CBN playing roles as if there is a lack of trust between management special banks and the central bank. The CBN would traditionally oversee the activities of special banks.

The promotion of local investments, especially in the industrial or manufacturing field, will not only generate massive jobs in industry, agriculture or extractive industry and the service sector, but will also strengthen the confidence of foreign investors to engage their funds into the local economy. Maybe our next president should be an entrepreneur and show how many national businesses he owns and how many jobs he has been able to create in the Nigerian economy over the years.


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