Investment in infrastructure, such as transportation (roads), electricity and water are intermediate inputs to production, this is because infrastructure services tend to raise productivity of other factors as it is often described as the ‘unpaid factor of production’
While the Nigerian Capital market has suffered monumental losses due to sustained decline in stock prices occasioned by the financial crisis, the country’s huge infrastructural deficit in power, housing, roads, healthcare, port services among others have contributed to a large extent in retarding the overall growth of the sector which is centre for capital formation.
Against the backdrop of the comatose state of the industry, stock market operators have agreed that the growth of investment in any nation largely depends on economic development calling on government to intensify efforts on infrastructural development to enhance citizens’ standard of living.
According to the chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, “Unless government begins to tackle the problem of infrastructure, we cannot expect a meaningful growth in the Nigerian capital market and the economy at large”.
Okezie noted that when adequate infrastructure are put in place, the economy would grow, quoted companies would record improved performance, declare profit which would impact positively on the market.
He said, “For the capital market to move forward, the drivers of the economy must put things right. If you do not develop infrastructure, you can not anticipate growth in the economy and this is having a multiplier effect on the market.”
The Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema while speaking early this year at a forum said the 2012 outlook showed that Nigeria had the capacity to grow the economy by over 7.5 per cent, with its large population (largely under 30), strong and profitable businesses (food and beverages and manufacturing).
Onyema listed other advantages to include the relaxed labour and investment laws; positive short term outlook in oil prices; huge mineral reserves as well as under-exploited manufacturing base.
He said a strong banking sector could help in developing the country’s infrastructure through the capital market.
He emphasised the need to effectively utilise the capital market, adding that it was the easiest way for the nation to develop.
He said, “The capital market gives opportunity for funding development and growth through tradable securities, determination of prices of tradable securities, facilitation of buyer and seller interaction, mechanism for issuers and investors to convert securities to cash, risks borne by those willing to bear them and vehicle for generating wealth.”
Also, the Chief Commercial Counsellor of the United State’s Mission in Nigeria, Mrs. Rebecca Armand, while speaking on “US-Nigeria relationship: a world of business opportunities,” said Nigeria must concentrate on infrastructural development to promote investment opportunity.
“Nigeria is around the ninth target market in the world. The government should focus on infrastructural development. They should declare it as a priority for both ministries and states,” she said.
According to the Managing Director Crane Securities Limited, Mr. Mike Eze “When the economy is growing, all other sectors will grow simultaneously, this probably accounts for the slow pace of growth in stock market. It is because the economy is not growing. It is the function of the growth in the economy that would determine what should be the living wage, how are people being paid, and what level of disposable income they have, from which they can invest on stocks.
“So, we are joining stakeholders like Manufacturers Association Nigeria (MAN), financial services sector, real sector and others to impress on the government that it is high time something drastic is done in the development of infrastructure that would propel the growth of our economy.
“More importantly, I am an advocate of improved lifestyle for the working populace of this nation. Where people could be seen to be earning a living wage that would leave enough disposable income for them to invest on stocks.
“When more people are employed, the demand for goods and services would increase. The belief is that Nigeria is one of the countries where people are poorly paid. Look at the extent we went on the minimum wage which translates to N600 a day. What can anyone do with that amount of money?”