Since our increasingly hapless looking President Buhari or “Baba go slow” as amiable named by Bloomberg has refused to appoint ministers or special advisers, I have decided to step into such shoes and suggest a fiscal and job creating economic direction for Nigeria.
Forget about austerity and go for a big stimulus package, that will be the signature legacy of the Daura General. People think four years is a long time, but then you blink and it’s already there with political campaigns and all that distractions. This government has started on a wrong footing and i believe it is probably doomed from here.
That is why the country needs a finance Minister like yesterday.
The North East needs a kind of Marshall plan, while the SS/SE need more federal investments in roads and bridges. Lagos and perhaps Kano probably need to be declared special economic zones and again will need Federal money channeled to these cities to help with infrastructure that the state governments cannot handle.
A solid finance Minister such as i would have figured out how much we need (10% of GDP?), how much we can afford to borrow at what interest rates…10% of GDP is $50 billion and from where (Chinese/Eurobonds/Adb etc).
I would even suggest we sell off a 6 percent stake (down to 49% from 55% now) in all 5 JVs with IOCs and get maybe $30 billion for them, then combine that with a mix of loans, grants and Eurobonds to raise circa $50 – $60 billion and light this country on fire…infrastructure wise.
Buharis only claim to fame is his clean and incorruptible nature. So his only leverage is to make sure this money is spent judiciously.
First of all what is the absorptive capacity of capex in Nigeria (most FG capital expenditure have amounted to N1.2 trillion a year or between $5 billion and $6 billion and in any case only about half of that is actually released).
Get the major construction and infrastructure companies to Abuja and award contracts directly to them. The Julius Bergers, CCECC, GE, etc. I am sure with that we can easily spend $15 billion a year over a 4 year period to total $60 billion.
The East West road, New Niger bridge, Lagos Badagry/ Lagos Ibadan roads, perhaps a 10 % equity stake in Eko Atlantic (and investment of $1 billion in the project for quick completion of infrastructure there), new airports in Lagos and Abuja (with private sector participation), intervention in ABA roads, new 10,000 MW power plants contracts awarded to GE (General Electric) with gas pipelines ( money paid upfront and deadlines given), railways to crisscross North and South…some money ($2 billion perhaps for our military for equipment), roads in the North, etc.
This is how you change a country.
As you invest you also open up opportunity for the Private sector by co-investing with them. That way you can even leverage our initial $60 billion to become $120 billion if the private sector can be made to put money via PPPs to become 50 – 60 percent equity partners in some projects like Airports, Seaports and some toll roads and even railways.
However all i have listed above will not happen without a vision or Finance Minister. And frankly it seems our Buhari does not have the time for all this economic theories now. $50 – $60 billion in new borrowing will only lift our total Debt to GDP ratio to around 30 percent well below peers.