By Ayo Akinfe
(1) I have been wracking my brain endlessly since the presidential elections, trying to figure out how Nigeria addresses her $100bn annual infrastructure deficit and alas, I can only come up with one solution – Putinomics!
(2) Putinomics is basically what you could term forced local direct investment (FLDI). It involves the president telling Russia’s wealthy citizens, who we know as the oligarchs, that they must invest in the country’s infrastructure
(3) Vladimir Putin makes no pretences when he wants these oligarchs to invest in Russia. He calls them to a meeting in the Kremlin and reads them the riot act. He will tell them for instance that Russia needs to invest $2bn in a new seaport and they must fund it. He will give them say three months to come up with the cash
(4) Because most of these oligarchs made their wealth by buying state assets at bargain basement prices, they know they are beholden to the state. They are also still dependent on state contracts and government patronage to survive, so are vulnerable to Putin’s sanctions
(5) Nigerian millionaires have an identical history. They mainly owe their wealth to oil blocks, government contracts, blatant corruption or the purchase of state assets at ridiculous prices. If the presidency withdraws its support for them, they are nothing. President Muhammadu Buhari needs to start using this leverage
(6) Nigeria has a national budget of less than $30bn but according to the African Development Bank, the country needs to invest $100bn in infrastructure annually. It is simply utopian to think that the Nigerian government can fund the construction of roads, housing estates, a railway network, power plants, hospitals, schools, etc from its meagre and party budget
(7) It is also delusional to think that foreign direct investment (FDI) can develop Nigeria’s infrastructure. Yes, Nigeria sees over $1trn in FDI annually but less than 10% of it is actual capital investment. The bulk of this is finance capital brought in by hedge funds and institutional investors seeking to cash in on Nigeria’s high interest rates. It is not going towards the much needed infrastructure
(8) Because Nigeria has interest rates that can be as high as 25%, it is easy money to invest cash in a Nigerian high interest savings account for a year. Many offshore funds do this but hey, the country benefits very little from it as they do not build factories, employ many people, invest in infrastructure or in many cases, even have offices in Nigeria. What we need is industrial capital that will invest in fixed assets, not this highly mobile finance capital that is very short term
(9) Now, if say Nigeria needs to invest $30bn in a rail network, $20bn in power plants, $10bn in port development, $10bn on roads, $10bn in low-cost housing estates, $10bn in hospitals and $10bn in urban regeneration, where is the capital going to come from? I think President Buhari should give Nigeria’s oligarchs like Dangote, Otedola, Ubah, Alakija, Adenuga, etc annual investment targets. Those who fail to meet their targets should no longer get government patronage. By the time Buhari pulls the plug on two or three of their businesses as Putin regularly does, they will get the message
(10) Our religious oligarchs like Adeboye, Oyedepo, Joshua, Ashimolowo, Okotie, Oritsejafor, etc, should also be given strict FLDI targets. Anyone who fails to meet them should face noise pollution charges, their churches taxed as businesses and erring branches closed down. It is time to force the pace of development!
I await a better suggestion but for now, Putinomics is the only solution I see in the horizon. It is FLDI or death!