So much has been said about the new trade and investment ministry. How is it different from the old commerce and industry ministry?
The Ministry of Commerce and Industry has been expanded, refocused and re-branded so that it can play its proper role in the economy, so that it can be the key driver of the economy. If you look at the economy and you want to talk about economic growth, it is all about industry. It is about trade; it is about investment. And when you look at the key drivers of any economy in terms of spending, there are only four of them. There is government spending, which finance takes care of; there is private sector spending; there is consumer spending and of course, there is export. Those are the four main drivers of spending in any economy.
The last three obviously are areas this ministry is responsible for. That tells you how important Mr. President sees this ministry and that is why I have been assigned to come and cover it. There are going to be many changes; the expectations are quite high. But if we are going to achieve our transformation agenda, that is, economic transformation, it is critical that we all work together to make sure that this ministry succeeds. If you look at Mr. President‚Äôs transformation agenda, the country is targeting N35trillion investment in growth areas in the next four years. Of this, N10trillion is supposed to come from the Federal Government, N9trillion from state governments and N15trillion from the private sector (both local and international). So, to start with, the private sector should account for the largest investment.
How does the government intend to pool such huge investments?
If you look at our budget today, you will see that the maximum amount we have there for capital budget is about N1trillion. This means that we have to proactively make sure that we unlock capital, go out and make sure that we get investments into the country. And there is no reason we should not succeed. That shows you that this ministry will play a key role as regards how we grow our economy and create jobs for Nigerians, going forward.
Japan has the same model. The Ministry of Economy, Trade and Investment of Japan is one of the most important arms of government there. Malaysia has done the same thing, Indonesia too. So, a lot of developing countries have adopted this model. In a country like Nigeria, where we have great potential, we have all the reasons investors should be in this country. Now, we have to proactively go out, leverage this and get investments into the country.
What will be your ministry‚Äôs main strategy of bringing in investment?
We are going to cover seven main areas, broadly. There will be about five priorities for us on the investment side. The first thing is to create a conducive environment for investment in the country, meaning that our laws and policies have to be investor-friendly. We have commenced a review of all the laws and policies. However, most of our laws are friendly, just that investors are not even aware of these laws and policies. We want to make sure that we do not just review them but that we have them in a form that is easily accessible to both local and international investors.
The second one, and these are very quick wins, is to look at where the money is and where the money is coming from. There is a lot of capital even within Nigeria and also with Nigerians outside the country. One area we will be looking at is the Sovereign Wealth Fund. The ministry will operationalise it and market to investors because one of the areas it is targeting is investment. We will also be looking at pension funds. We are sitting on about N2trillion. Of course, you have to make sure that the assets are safe and that the money is available to pay back pensioners in the future, but one of the reasons they have such funds in other countries is to be able to put it back in the economy. In Nigeria, we have been very cautious about that in the past and that was the right thing to do. But perhaps the time has come for us to say, how can we unlock it in a safe way, in a responsible way, such that it will still be available in the future to pay back pensioners. Pension funds all over the world are the biggest investors. If you go to the United States, the United Kingdom, most parts of the world, it is the same. And it is sticky money, long-term money. In this country, we‚Äôre looking for sticky, long-term money. Since we are looking at investing in infrastructure, it means we are looking for long-term money. And pension fund is sticky and long-term. So, we must find a way of unlocking that.
Apart from pension funds, are there other sources of funds?
Yes, we have so many Nigerians in the Diaspora. The economies of many countries were built based on investments from people living abroad. We are in the process of structuring a fund, which we hope to put in place sometime in September when all the approvals are in place. That fund will be targetting the Diaspora. They come in, bring their money and invest. According to the World Bank, in 2009, about $18.6billion was remitted to this country by Nigerians in the Diaspora. If we take half of that, and channel it the right way into the economy, we will have capital to invest in this country. That is just focusing only on what you already have. The second area is foreign investment. We will make sure that investors have the information that they need to have on time and in an easy way.
We have significant advantages, which we have not exploited in the past. For instance, I once asked a Chinese investor, who has been in this country for long: why have you been here over the years? Why have you not gone to China? And he said, for any investor to succeed, there are only four ingredients you‚Äôre looking for. You are looking for capital, technology, raw materials and market. Capital and technology can come from anywhere in the world. The two most important things are the raw material and the market for it, and Nigeria has those two things in abundance.
But there are structural changes we need to put in place. We have to make sure that we have a strategy for growing the middle class; we must make sure that we don‚Äôt just develop the supply side of the market, that the demand is healthy as well.
What will you be doing in the area of trade?
In the area of trade, we are going to be focusing on trade imbalance between Nigeria and other countries. We will reactive our export and free trade zones. We have many of them but they are not working the way they should. We will also be developing a healthy, strong small and medium enterprise sector. We started the process already; I actually started it when I was in the Ministry of Finance. And that is why we are collaborating with the Lagos Business School. They have a very strong model for helping entrepreneurs start and run their businesses. The idea is for the Lagos Business School to work with 23 enterprise centres in the country and help develop that sector. Already, we have signed an agreement with them and some funds have been made available to them. We have spoken to the banks to find out the exact reasons they are not lending to this sector; we have also spoken to some SMEs.
There are three reasons; one is access to capital. We made available $500m at single-digit interest rate. I did that before I left the Ministry of Finance, so that is going to help. The second one has to do with having bankable projects and the third reason is high cost of operations.
What is the investment ministry planning to do to solve these problems?
We have to reduce their cost of operation. That is where we are going to reactivate the clusters and make it easier for them to operate. We should make sure that they have power and all that they need to make them succeed. The industry is a main area of focus for us also. The whole objective is about increased, enhanced productivity. Already, we have talked to the Manufacturers Association of Nigeria; I did this when I was finance minister. We asked them to go and put together an industrial strategy, and they have been working on it. I understand that within a week or two, it will be ready for us. Once we have it, we will look at it and see what we need to do and what they also need to do.
We are also going to be looking at the import substitution programme. There are a lot of things we produce here, which we still import. We have the raw materials here, but we just export them and bring in the finished products. For instance, we have crude oil here and we are still importing petroleum products and it is making us spend a lot of money. We have rice here, there is no reason why we can‚Äôt be self-sufficient in rice production; still, we import rice. These are the areas we need to focus on and make sure that we reverse that trend.
We will also be looking at the backward integration programme. We have had a success story with cement for example and we are going to leverage on that to improve other sub-sectors. We are going to be looking at skills development, to make sure that we have the right skills for development. We also have to talk about the consumer. This is where we have the difference between the Japanese economy and the US economy. It is important that we have a healthy demand strategy also. It‚Äôs not enough to produce, we need to talk about demand. So, one of the schemes we are looking at is the credit guarantee scheme that will make it easier for consumers to buy made-in-Nigeria products. So, these are the core areas we are going to focus on going forward.
How do you intend to sustain the confidence of investors in the Nigerian economy?
Investors, as I have said, know that Nigeria has the right kind of market that they need, so they should want to bring in their money. They, however, need to be assured of policy consistency, which is necessary for long-term planning, to be able to make investment decisions.
What are you going to be taking away from the finance ministry?
The finance minister is the chief finance officer of the country. That is the primary job of the minister, so I have nothing to do with that. I‚Äôm not taking that away. Of course, you also talk about budgeting, which also belongs to the finance territory. One thing I would like to remind you of though, is that last year was an unusual year for virtually everyone. I was playing two major roles at that time. I was finance minister, and if you recall, I was the Chairman of the Economic Management Team. There were some things I did wearing the hat of the Chairman of the Economic Management Team and there were some things I did wearing the hat of the finance minister.
Going forward, however, this is where the work is now. For instance, if we are executing an industrial management plan, it has to be done by this ministry. If you‚Äôre talking about industrial processes, it is this ministry. If you‚Äôre talking about investments in the country across the board, it is the ministry. So, finance remains finance; trade and investment remains trade and investment. We just took the old commerce and industry, rebranded it, extended it and made it far more relevant to the economy than it was.