Presidency, SEC Unveil Fresh Push to Unlock Nigeria’s Domestic Savings for $1trn Economy

The Federal Government is working to expand Nigeria’s pool of domestic savings into investment as the Presidency and Securities and Exchange Commission (SEC) unveil measures to fund the country’s $1 trillion aspiration.

The new drive seeks to boost the contribution of household and institutional savings through improved channels to foster a deeper and wider capital market.

The idea, according to officials, is that a strong national saving culture anchored on financial and capital market instruments will help translate Nigeria’s huge pool of savings into investments to fuel economic growth.

Growing the Economy Through Domestic Investment

Nigeria has a huge amount of savings in the form of individuals, businesses and institutions’ deposits with commercial banks and other financial institutions.

The Presidency and capital market regulators are seeking ways to monetise a bigger chunk of these savings to fund projects that will drive economic growth.

While boosting levels of overall savings is important, the emphasis is on harnessing a larger portion of Nigeria’s domestic savings for investment purposes.

That way, there will be a reduction in the reliance on foreign capital to finance infrastructural projects and other key areas of economic growth.

For the SEC, catalysing the capital market to facilitate the channelisation of savings into investments is critical to achieving this aspiration.

A deep and liquid capital market is ideal for providing an exit avenue for investments, as well as a source of funds for businesses to finance their operations and expand their operations.

Tax Incentives Will Stimulate Saving Culture

One of the ideas being considered to boost the saving culture of Nigerians is the use of tax incentives to stimulate its growth.

Once properly implemented, it will create a greater pool of domestic savings and investments for the country’s growing number of businesses needing funds to support their growth plans.

The success of the idea will depend, however, on the level of trust savers and investors will have in the system, the type of investment products that would be available, and the financial literacy level of Nigerians.

Bridging the Saving-Investment Gap

The drive aligns with President Bola Ahmed Tinubu’s goal of building a $1 trillion economy by 2023.

It would require an aggressive push to generate more investments to support the huge capital required by infrastructural projects in housing, transportation, power, and manufacturing, among others.

Although the domestic savings culture has been described as wanting, a deeper capital market can contribute significantly to meeting the huge appetite for investments.

Without doubt, there is no doubt that local investment will play a major role in supplementing bank credit, foreign direct investment, and budgetary provision for capital projects.

Moreover, it will provide an alternative source of funds for viable projects, spurring economic growth and development.

Key to Building a $1 Trillion Economy

The capital market has been identified as one of the most potent tools for mobilising savings for investments in the shortest time possible.

For businesses, it provides access to long-term funds through the issuance of various instruments, a reliable avenue for raising capital to expand their operations to meet the needs of the growing economy.

In terms of the savers’ perspective, it offers a wide range of investment options to choose from, including equities, fixed income, and derivative instruments.

The Presidency and SEC’s drive to mobilise domestic savings for investment purposes will therefore play a critical role in supporting Nigeria’s quest to become a $1 trillion economy.

The challenge now is how the proposed policies will be implemented to create an enabling environment for Nigerians to invest their savings in profitable ventures.

That way, the huge amount of Nigeria’s domestic savings that has been lying dormant will be deployed to generate returns, increase business profits, and contribute to the overall growth of the economy.