Unlocking Growth: How Nigeria is Attracting ‘Patient Capital’ with Key Reforms

The Federal Government of Nigeria is making strategic moves to entice ‘patient capital’ – long-term, committed investments crucial for sustainable economic development. This isn’t just about fleeting foreign direct investment; it’s about attracting funds that are willing to stay, grow, and contribute significantly to job creation and fundamental structural economic expansion.

What is ‘Patient Capital’ and Why is it Important?

Unlike speculative or short-term investments that chase quick returns, ‘patient capital’ is characterized by its long-term horizon. It’s the kind of investment that builds factories, develops infrastructure, funds innovation, and establishes enduring enterprises. For a developing economy like Nigeria, attracting such capital is paramount because it underpins:

• Sustainable job creation across various sectors.
• Diversification of the economy beyond oil.
• Development of critical infrastructure (power, roads, ports).
• Transfer of technology and skills.
• Enhanced productivity and competitiveness.

Government’s Dual Strategy: CGT Reviews & Infrastructure Concessions

To make Nigeria a more attractive destination for these invaluable investments, the government is focusing on two key policy areas:

1. Capital Gains Tax (CGT) Reviews:

The government is considering reviewing its Capital Gains Tax framework. This signals a potential move towards making the tax environment more favorable for long-term investors. By potentially adjusting CGT rates or offering specific exemptions for reinvested capital or certain types of long-term assets, Nigeria aims to incentivize investors to commit for the long haul rather than seeking short-term exits. A stable and predictable tax regime, perceived as fair and encouraging to growth, is a powerful magnet for patient capital.

2. Infrastructure Concessions:

Recognizing the massive infrastructure deficit as a key impediment to growth, the government is increasingly looking towards Public-Private Partnerships (PPPs) and offering infrastructure concessions. This means private entities will be encouraged to invest in, build, operate, and maintain crucial infrastructure projects like roads, railways, ports, and power plants. In return, they would gain the right to collect tolls, user fees, or other revenues for an agreed period. This strategy not only mobilizes private sector efficiency and capital but also frees up government resources for other essential services.

The Road Ahead: A Promise of Economic Transformation

These policy initiatives underscore the government’s commitment to creating an enabling environment for robust economic growth. By actively wooing patient capital through considered tax reforms and opening up significant infrastructure opportunities, Nigeria is laying the groundwork for a more resilient, diversified, and prosperous future. The success of these efforts will ultimately be measured by the influx of investments, the number of jobs created, and the tangible improvements in the living standards of its citizens.

Source: Original Article