Private Capital as the Engine of Growth
Professor Doyin Salami, a former Chief Economic Adviser to the President, has declared that private capital will be the primary driver of Nigeria's next phase of economic growth. Speaking at a business forum in Lagos, Salami argued that the era of government-led growth is over and that sustainable development depends on attracting and mobilizing private investment.
Why Government Spending Cannot Lead
Salami explained that Nigeria's fiscal constraints, including high debt service costs and limited revenue, make it impossible for the government to fund large-scale economic expansion. He noted that public debt servicing consumes over 90% of government revenue, leaving little room for capital expenditure. Therefore, the private sector must step in to fill the gap.
Key Conditions for Attracting Private Capital
The economist outlined three critical factors for attracting private investment: policy consistency, macroeconomic stability, and infrastructure development. He emphasized that investors need predictability to commit long-term capital. 'Policy reversals and uncertainty are the biggest enemies of investment,' Salami stated. 'We must create an environment where investors can plan with confidence.'
The Role of Infrastructure
Salami highlighted that inadequate infrastructure, particularly in power and transportation, remains a major bottleneck. He called for public-private partnerships to address these gaps, noting that the government should focus on creating an enabling environment rather than direct intervention. 'Private capital can build and operate infrastructure if the regulatory framework is right,' he said.
Macroeconomic Stability Matters
Stable exchange rates and low inflation are also essential, according to Salami. He pointed out that currency volatility and high inflation erode investor returns and discourage capital inflows. The Central Bank of Nigeria's recent efforts to unify the exchange rate and tighten monetary policy are positive steps, but more needs to be done to restore confidence.
Sectors Poised for Growth
Salami identified technology, agriculture, and manufacturing as sectors with high potential for private capital-led growth. He noted that Nigeria's young population and growing digital economy offer significant opportunities for tech startups and agribusinesses. However, he warned that without a supportive policy environment, these sectors will not reach their full potential.
Call for Policy Consistency
The former adviser urged the government to stick with its reform agenda, including the removal of fuel subsidies and the unification of exchange rates. He acknowledged that these reforms are painful in the short term but necessary for long-term stability. 'We need to stay the course,' Salami said. 'There is no shortcut to economic transformation.'
Conclusion
In summary, Doyin Salami's message is clear: Nigeria's economic future depends on private capital. The government's role should shift from being a primary investor to an enabler, creating a stable and predictable environment for business. If successful, this approach could unlock significant investment and drive sustainable growth.
