Kemi Adeosun, minister of finance, says Nigeria is hungry for infrastructure that can drive growth —not iPhones and expensive suits — which can only raise consumption.
Speaking at the World Bank Headquarters in Washington on Wednesday night, Adeosun said Nigeria was on a journey of transition aimed at driving short, long, and medium-term growth in Africa.
“We have just started a journey of transition, which will take us from an economy that was really dependent on oil, primary commodity, to a more productive economy, and we recognise that the differentiator will be infrastructure,” Adeosun said.
“We have come from spending 90 percent of our budget on recurrent and only 10 percent of capital. We are trying to move to 70:30, which is not enough.
“From the numbers that we have done, the infrastructure gap that we face, even if we devote our budget [to capital]for the next three years, it is not enough. So we’ve got to look for creative ways to mobilise additional capital.”
Adeosun, who was the only African minister on the high-level panel, said Nigeria —and Africa as a whole — is the new infrastructure and investment destination, adding that there is nothing left in the west.
“We are hungry for infrastructure. We have got 170 million people who don’t have power in sufficient quantities. We don’t have a rail system; we don’t have a road structure. We believe that if we solve those infrastructure challenges, the entire productivity, agriculture, solid minerals, manufacturing, our unemployment problems could all be solve.
“It seems very simple, in terms of what needs to be done. We are quite excited about negative interest rates. We like that you’re not earning any money. We are happy to take your money and give you very small positive interest rate.
“We think that the time has come; everyone is thinking out of the west. There is nothing left in the west, everybody has to now come to Africa, but we don’t want investors to come to Africa to sell us iPhones and many expensive suits.
“We want to become productive, and so we want this investment to come into infrastructure, that will enable us to compete and really enable Africans to stay in Africa.”
“We think the narrative around who pays for infrastructure is a very important one in Africa. I think there is a sense of expectation from the people that the government will deliver infrastructure, but we believe that the user pays.
“I say that because at the moment, if you don’t have the infrastructure, you’re paying anyway. The public pays; If you spend six hours on a journey that should take you an hour, you’ve paid.
“So how do we convert that payment, which is currently informal and very painful, into a formal payment and a therefore revenue stream that could attract investors is the challenge that we are working on now.”
Adeosun said Nigeria would not wait for investors to lead in infrastructure, but that the country was already taking a lead that investors can follow.
“As I have said, we are leading with our own money. We are looking at regulatory framework, that would enable investors to come in. We know it’s a new market and we are going to de-risk it.
“So what we are starting with are just infrastructure bonds that we guarantee, and then hopefully, when investors get an appetite for what the Nigerian infrastructure framework can provide them in terms of returns, we believe we will be able to remove some of the safeguards needed at the moment.
“Our population is young; we have to provide a standard of living that keeps young vibrant Africans in Africa because we think that is very important for eliminating poverty.”