Nigeria can solve its foreign exchange and investment scarcity challenges by investing in its private sector, according to Akindele Akintoye, chairman, Platform Capital.
Acknowledging that Nigeria has the much-needed capital to grow its private sector, Akintoye said at the ongoing African Business Convention 2022 that if 1 percent (c.$1.4bn) of the local capital of over $138.6 billion is mobilised to VC, Nigeria can fund over four times of the total VC funding that came into the country in 2020.
“In essence, our FX and capital scarcity problem for investments can be solved by us,” Akintoye said.
According to Akintoye, if more of the country’s locally generated and mobilised capital could be channelled towards investing in start-ups and early-stage businesses, Africa’s largest economy would own and retain more of its companies, assets, value and by extension, the future.
“When you mention some of the tech companies that have recently raised funds like Paystack and Flutterwave, you find out who made money from the investment, it is mostly foreigners, not Nigerians,” he said.
Some of the channels Nigeria can explore to invest its savings to boost economic growth while solving FX and investment challenges include SPACs, angel networks and VC partnerships, and joint ventures and syndicates.
Nigeria’s challenges also come to the fore in the dead capital it has trapped in real estate.
Kingsley Moghalu, former deputy governor, Central Bank of Nigeria, and founder/CEO, Sogato Strategies LLC, said if Nigeria doesn’t unlock the potential in its property industry, resolve the Land Use Act, its wealth creation opportunity will remain untapped.
Acknowledging that there were reasons why the Land Use Act was established, Moghalu, who also spoke at the BusinessDay 2022 Africa Business Convention, said the “era has passed.
“I call for the constitutional abrogation of the Land Use Act because it creates unnecessary bureaucracy and it limits what use people can put to land.”
Access to affordable housing in Nigeria is crippled by, among other factors, the country’s 44-year old Land Use Act.
Difficulties in acquiring land for real estate development could mean – less inventory in the market or the available products will come at a higher cost as access to land is the foundation of any real estate project.
The latter is the case for Nigeria, a country that requires an estimated N170 trillion to N200 trillion to bridge its housing deficit of more than 20 million units.
“We have issues of property rights and the Land Use Act in Nigeria for example vest the right to land in the government. This is a major obstacle to wealth creation in this country,” he said.
Unlocking the potentials in Nigeria’s real estate sector would mean more revenue from the 70 to 80 percent dead capital, affordable housing for over 23 million Nigerians, lower unemployment rate, and higher economic growth, according to industry players.
“There is a difference between when you own land in freehold and you can do whatever you want and when you simply have a certificate of occupancy, you are simply a tenant of the government and that is not very good for the creation of prosperity,” Moghalu said.
