Attracting Quality Capital To Nigeria
The International Monetary Funds (IMF) in a recent comment on the global impacts of the Covid-19 pandemic suggested that China may face some kind of emotional and economic backlash as a result of the pandemic considering the global anger about the way they initially handled information concerning the virus which reportedly emanated from Wuhan in China. Again, it is generally believed that African economies are less devastated by the pandemic and therefore will emerge a less risky economic block post pandemic.
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The combined implication of these two factors is that investors’ capital flow (both Direct and Portfolio capital) would most likely favour African economies. And Nigeria is still currently the biggest economy in African by GDP size. So, this presents another opportunity for Nigeria to reposition her economy in order to attract more capital – especially the Foreign Direct Investments (FDIs). Key areas of opportunities include: agriculture (particularly processing and post-harvest technology), manufacturing of various kinds of goods which hitherto were handled mostly by China, infrastructure development (using the public private partnership, PPP model), power and energy sectors, information and communication technology (ICT), among a few others.
To attract reasonable and sustained interest of global investors, Nigeria must urgently look into some crucial policy reforms that are badly needed or expected by investors, including: removing the multiple pricing system in the foreign exchange market while also ensuring transparency in foreign exchange allocations and management; ensuring market discipline in the money market; strengthening regulations in the financial markets generally; resolving the persistent insecurity and terrorist attacks on Nigerian cities; and enthroning good governance and policy consistency in public institutions.
Putting MSMEs on the Driving Seat of Job Creation
Nigeria’s government’s longstanding approach of driving job creation through government institutions is precarious, unrealistic, unsustainable, and a continual pain point for the economy. It has over time led to the multiplicity of government agencies or parastatals – with many of them doing nearly the same thing. Several ministries, departments, and agencies (MDAs) of governments are also unnecessarily over-staffed – promoting redundancies and inefficient use of human capital. And with Covid-19 impact on Nigeria’s budget revenue – with possible outcome of unpaid salaries – the situation is more than worrisome for job creation and human capital development.
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Most developed economies depend hugely on small and medium businesses to generate high employment numbers. When the environment is right for businesses to thrive, MSMEs generate much more impressive employment numbers than any government can produce, and the multiplier effects are enormous. And with MSMEs, economic growth is more inclusive and more likely to bring improvement in living standards; that is, eradicating poverty.
Nigerian policymakers must utilize the Covid-19 lessons to give a renewed push to creating a very easy environment for businesses to thrive. From business registration, operating environment, infrastructure, multiple tariffs, unwieldy tax system, property rights, all the way to access to affordable credits, everything must be done to improve the ease of doing business as well as remove obstacles to the growth of MSMEs. The policy shift towards this must not only involve the private sector giants but must also be aggressive and goal-oriented.
Market Opportunities for Individuals and Firms To Invest
During crisis periods like this, many markets – particularly the real estate and the stock markets – experience some form of downturn which may be protracted. Prices of houses and company shares tend to decline – particularly at the point the economy moves fully into a recessive mode. And there is no doubt that the Nigerian economy would gradually contract into a negative territory post Covid-19 pandemic.
So, it is possible that prospective investors who hold cash at this point or period may be able to move into these markets at cheaper prices not possible before the pandemic. For a fact, the real estate and the stock markets remain the most potent avenues to create lasting wealth or passive income for business professionals as they plan for their retirement. However, proper knowledge of the markets as well as sound advice from real estate experts and stockbrokers are very crucial in any attempt to enter these markets both in normal and crisis periods.
Featured Image Source: Voice of Nigeria
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