Interview: Uche Orji
What is your assessment of the measures required to diversify Nigeria’s revenue base?
URCHE ORJI: Improving government revenue and diversifying sources of foreign exchange requires a three-pronged approach. First, diversification must be predicated on mass industrialisation to foster quality manufacturing standards. This entails providing financial support, an enabling fiscal regime and infrastructure, such as industrial zones. This will allow the country to specialise in certain areas and build on its competitive advantage.
Establishing specialised industrial parks, especially economic zones, is imperative to creating organised manufacturing infrastructure that is globally competitive, diversifying export revenue and meeting local consumer demand. While there has been a concerted effort to create such zones, we need a renewed national goal to engender a significant number of industrial clusters across the country. This could benefit from tax moratoria, quality infrastructure, zero-tariff regimes and targeted marketing to attract customers.
Second, we must boost human resource capacity by training people through direct training programmes and vocational education. The labour force should be equipped with the skills to support Nigeria’s export orientation. This will also empower the network of small businesses that constitute the lifeblood of developed economies such as the US.
Lastly, we must leverage monetary and fiscal policies to drive exports. For example, Japan offers low-interest loans and tax relief to firms that export a certain percentage of their products.
In what ways can public-private partnerships (PPPs) help the country meet development goals?
ORJI: PPPs are critical to realising the country’s developmental goals, as evidenced by several infrastructure projects such as the second Niger bridge. Delivering the project via government financing would not have been feasible given the limited budget allocation for capital projects. Hence, there was a need for PPP intervention to raise private financing and administer the project in a transparent manner, which led to funding from the US.
An additional example of the catalysing effect of the PPP model is in powering industrial clusters. In 2018 the NSIA entered into an arrangement with OCP Africa, a subsidiary of the OCP Group – a global provider of phosphate and its derivatives – to build a fertiliser plant in Nigeria powered by a local natural gas pipeline. Once completed, the plant will serve as the anchor tenant of the special economic zone in Akwa Ibom and will be powered, along with several other large projects such as the nearby methanol plant, by a 40-km pipeline.
These projects underscore private sector engagement, and they require the NSIA’s involvement to leverage government support and de-risk projects to mobilise private capital. Furthermore, a key function of the PPP model is to promote private sector interests that advance a public good, such as Google’s Equiano subsea cable.
How integral is a long-term horizon, financial prudence and sound corporate governance to effective sovereign fund management (SFM)?
ORJI: Establishing domestic and international credibility is indispensable to effective SFM, and there are three ways to achieve this goal. First, transparent accounting practices must be maintained, whereby accounts are periodically published and are subject to public scrutiny. Second, a credible organisation must be policy and process driven. These policies must be adhered to irrespective of the financial outcomes and correspond with the track record of key projects, from the second Niger bridge to the Lagos-Ibadan expressway. Lastly, an independent board must be established to ensure full accountability for management decisions. This is critical to safeguarding the long-term horizon approach and value of sovereign funds to attract sustainable capital to the country and advance development goals.