By Victor Ogiemwonyi
Nigeria’s current Gross Domestic Product (GDP) should be multiples of its current print. To achieve our potential and lift millions out of poverty, our growth rate must reach at least 7% annually for the next decade.
I recently read a piece by Dr. Ndubisi Ekekwe, who noted that 90% of our existing companies are structurally incapable of delivering the scalable growth needed for our economy. Our obstacles include weak foundations and the outdated assumptions of legacy businesses. We need new thinking and new models, supported by smart policies, to energize the economy and achieve our desired goals.
Breaking the Cycle of Stagnation
Apart from the perennial problems of poor electricity, inconsistent policies, and a persistent leadership crisis in both the private and public sectors, we need a fundamental “restart” driven by fresh perspectives.
Lessons from the Banking Revolution
The Nigerian banking sector of today was revolutionized under the administration of Ibrahim Babangida (IBB) and the powerful economic leadership of Chief Olu Falae—who served first as Secretary to the Government and later as Finance Minister. This era was guided by brilliant technocrats: Dr. Chu Okongwu, a Harvard-educated economist, and Dr. Kalu Idika Kalu, a former World Bank economist with experience in South Korea during its transformation years. With these men in the “engine room” of government, they dismantled the three old monopolistic government banks (First Bank, Union Bank, and UBA) that served almost no one effectively. Those were the “Tally Number” days. You would go to a bank to withdraw your money and be given a tally number, only to wait all day while they processed the request. If you were lucky, you received payment by the end of the day; often, you had to return the next morning. These banks did not finance real businesses; they functioned like any other government ministry of the day.
The Power of Privatization and Competition
That economic team knew the best course of action was to privatize these institutions and allow new private entrants. That decision transformed Nigerian banking. The success stories of GTBank and Zenith Bank are the products of that era, creating thousands of jobs and embracing new technologies that have changed our lives.
The telecom revolution followed a similar path, jumping from only 600,000 unreliable phone lines to over 100 million lines today. We are now enjoying high-quality telephony solutions. This is the kind of transformation we need today to reach our full potential.
Human Capital and the Value-Added Economy
Despite having a workforce availability of 65%, the national story is still one of large-scale unemployment and underemployment. This trend creates poverty and erases the middle class. We must encourage large-scale industries to employ our people and stop “exporting” our workforce abroad.
Simply concentrating on processing our raw commodities and materials to add value before exporting them would significantly increase local productivity. Value addition will decrease our imports and increase our foreign exchange (FX) earnings. The capacity to do this exists; what is missing is the political will and the consistent policies to drive it.
Rethinking Public-Private Partnerships
There is also a pressing need for Public-Private Partnerships (PPPs) that truly enhance outcomes, rather than the corrupt arrangements that often harm the public interest.
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Take the Nigeria LNG (NLNG) project as an example of the partnership model required. It features Nigerian equity ownership and local oversight combined with international experts who provide the necessary technology and know-how. The next logical step is to divest part of our holdings and use the proceeds to invest in other large-infrastructure projects.
Owning 100% of an asset is no longer fashionable or efficient. There was a time when governments owned 100% of electricity generation and distribution because it was thought to be the only way. Today, multiple electricity companies can exist in the same city, and competition improves the service. Divesting from mature, successful projects to reinvest in new areas is standard practice for Private Equity and Venture Capital firms; the government should be no different.
As Dr. Ekekwe concluded, Nigeria must move from “money” to “capital” to trigger growth comparable to South Africa. Despite having less than 50% of our population, South Africa manages a $100 billion budget and has a stock market valuation of $1.6 trillion.
Let me summarise his conclusion:
“ money is a subset of Capital, Nations which allow money to dominate their thinking inevitably underperform. Nigeria’s excessive focus on money, will continue to undermine our development, until Nigeria policy making, reorient our priorities towards Capital formation, we will continue to struggle, because without Capital, money only scale poverty “
We have a long way to go, and we must start now. This administration’s two key policies have started us on that road, but we must move fast to regain lost ground. We need a growth rate that ensures our economy provides every Nigerian with a decent life.
Victor Ogiemwonyi is a retired Investment Banker and writes from Ikoyi, Lagos.
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