Nations rise when pioneering entrepreneurs emerge. Without those pioneers, the capacity to combine factors of production to redesign economic structures and fix market frictions stall for all entrepreneurs. 

Before the American steel industry, Carnegie had to emerge. Before the US energy sector, Rockefeller existed. From JP Morgan to Mellon, men were ahead of the government in setting the ordinance of  US banking.  And in this era, Jeff Bezos, Elon Musk and Richard Branson are unlocking broad space tourism, as pioneers, with tons of goodies coming from the government, to make it possible.

When you look deeper, governments are handing over money to these pioneers via tax waivers, incentives, etc. As I write, CHIPS for America has awarded over $19 billion of the over $36 billion in proposed incentives funding allocated to date. Simply, the US government is giving out grants and monetary incentives to companies in the semiconductor industry because it wants to re-develop its local semiconductor industry.

As I wrote in my book (The Dangote System: Techniques for Building Conglomerates), nations sometimes have to offer enormous benefits to category-king companies to do things the governments are unable to do. In other words, as Nigeria has struggled to build and maintain a refinery, giving goodies to pioneering entrepreneurs to build refineries is fair game.

Good People, even in China, that is how it is done. South Korea does the same thing.  Nigeria cannot have it the other way around: the government has never led anything and we cannot expect everything to be anchored by bureaucrats. The challenge for Nigeria is that we do not have many pioneers, and because of that, we see everything as favouring the few playing at that level. Dangote was bullied away from Dangote Steel because think tanks were offended by a do-tank entrepreneur is going to solve our steel problem!

Like Nollywood, Nigeria’s movie industry, which emerged without any memo to the government, our pioneering innovators must do the same in other sectors. Sure, when you do it, they will come with a tax bill. And that is the beauty of it. 

Africa needs PIONEERING entrepreneurs – they are the high priests to shared prosperity and future abundance in nations. They redesign economies and unlock latent opportunities, driving optimist exuberance for national political leaders because they build things!

The EV purchase tax credit scheme was created to help Tesla, the no-sales tax collection was for Amazon, etc; if such should happen in Nigeria, editorials will rant of cronyism. But in America, the government does what it has to do!

Africa’s debt crisis has reached a critical juncture, with countries on the continent projected to spend $74 billion in 2024 to service their debt obligations, a dramatic rise from $17 billion in 2010.

This sobering revelation was made by Prof. Kevin Urama, Chief Economist and Vice President of Economic Governance and Knowledge Management at the African Development Bank (AfDB), during the launch of the Debt Management Forum for Africa (DeMFA) in Abuja on Monday.

The event, themed “Making Debt Work for Africa: Policies, Practices, and Options,” provided a platform to address the mounting challenges surrounding Africa’s debt sustainability.

Urama highlighted that 54% of the 2024 debt service obligation, or $40 billion, is owed to private creditors. However, he cautioned that the actual burden could be higher when factoring in hidden debts and contingent liabilities.

“Twenty African countries are in debt distress or at high risk of debt distress,” Urama warned, pointing to the increasing refinancing risks for nations with substantial bullet redemptions.

The scale of Africa’s debt burden reveals a stark disparity between developed and developing countries. Developed economies, Urama explained, can sustain higher debt levels due to lower servicing burdens, while African nations are channeling significant fiscal resources into servicing public debt at the expense of developmental needs.

The AfDB Chief Economist noted that annual debt refinancing needs are projected to reach $10 billion between 2025 and 2033. The situation is worsened by skyrocketing African Eurobond yields, which surged to 15% in 2023, more than double their 2019 rate.

“These high yields are driven by a combination of domestic and external factors, as well as unfair risk perceptions,” Urama said, further stressing the urgent need for reform.

The “Africa Risk Premium” and Global Inequalities

Urama drew attention to a systemic bias in global financial systems, referencing the United Nations Development Programme (UNDP) estimate that Africa incurs an “Africa Risk Premium” of $24 billion annually in excess interest due to inflated sovereign risk perceptions.

“This deprives the region of critical resources for development,” he stated, calling for Africa-led solutions to reimagine borrowing models and prioritize productive investments.

Despite the urgency of the crisis, existing debt relief and restructuring mechanisms remain inadequate, slow, and unsustainable. Urama criticized these measures for failing to tackle the structural issues underpinning Africa’s debt sustainability challenges.

Ms. Allison Holland, Assistant Director of the Strategy, Policy, and Review Department at the International Monetary Fund (IMF), added to the discourse, emphasizing the importance of engaging private creditors first in debt resolution efforts.

“The big challenge here is, why don’t we move forward with the private sector first? Wouldn’t this be faster?” she asked, stressing that IMF interventions depend on the readiness of official creditors to engage.

Climate Shocks and Rising Borrowing Needs

The increasing frequency of climate shocks has further compounded Africa’s debt challenges. Dr. Anthony Simpasa, Director of the Macroeconomic Policy, Forecasting, and Research Department at the AfDB, explained that many African nations have been forced to borrow heavily to finance climate-related projects.

“Many countries, particularly those vulnerable to climate shocks, have been forced to borrow heavily to finance climate-related projects. These projects, aimed at adaptation and mitigation, constitute the largest share of instruments used for climate financing on the continent,” he noted.

A Call for Action

Addressing Africa’s debt crisis requires a multifaceted approach that goes beyond traditional debt relief measures. Urama and other experts at the forum advocated for rethinking borrowing models and exploring Africa-led solutions that prioritize productive investments and address systemic inequalities in global financial systems.

They note that the challenges, while formidable, also present an opportunity for African nations to push for a more equitable global financial architecture—one that recognizes and addresses the continent’s unique vulnerabilities while fostering sustainable development.

In a bid to address the persistent decline of the Naira, the Nigerian Senate has introduced a bill aimed at banning the use of foreign currencies for payments and other financial transactions within the country.

The bill, titled “A Bill for an Act to Alter the Central Bank of Nigeria Act, 2007, No. 7, to Prohibit the Use of Foreign Currencies for Remuneration and for Other Related Matters,” is sponsored by Senator Ned Munir Nwoko, Chairman of the Senate Committee on Reparations and Repatriation.

The legislation seeks to enforce the exclusive use of the Naira for all payments, including salaries, and to end what the Senator described as a “colonial relic” — the widespread use of foreign currencies in domestic transactions.

Key Provisions of the Bill

The bill proposes that:

• All payments, including salaries and wages, must be conducted exclusively in Naira.
• Exports, including crude oil, must be sold in Naira to drive demand for the local currency.
• Informal currency markets, which contribute to unethical practices like currency round-tripping by banks, should be abolished to stabilize the formal economy.

According to Senator Nwoko, the proposed law is a critical step toward strengthening confidence in the Naira and reclaiming Nigeria’s financial independence.

He said the continued use of foreign currencies in our financial system is a colonial relic that undermines the Naira and hinders our economic sovereignty, and this bill seeks to put an end to discriminatory practices against our currency and reinforce its value.

The Senator also argued that requiring crude oil exports to be sold in Naira would compel international buyers to purchase the currency, potentially driving up its demand and value in global markets.

Beating About the Bush

Despite its intentions, the bill has been met with skepticism from financial experts and economic analysts who argue that it merely scratches the surface of the issues causing the Naira’s free fall. The initiative has been described as a form of “beating about the bush,” pointing out that the fundamental factors driving the currency’s weakness remain unaddressed.

Experts have noted that the problem with the Naira isn’t just how it is used or circulated but also the productivity of the economy. They stressed that until Nigeria boosts domestic production, diversifies exports, and addresses structural inefficiencies, no legislative or monetary intervention will deliver lasting results.

“The strength of Naira does not come from the Central Bank of Nigeria (CBN) but from warehouses and factories (the modern and the old). Until Nigeria leaves financial engineering and focuses on what anchors Naira, Naira will continue to fade. Every apex bank has two core missions: strengthen currency by managing inflation and boost employment through interest rates management,” Prof. Ndubuisi Ekekwe, Lead Faculty of Tekedia Institute, and Chairman of Tekedia Capital, said.

The country’s oil sector, which should be a significant source of foreign exchange, continues to struggle with low production due to theft, underinvestment, and inefficiencies. Industry players have repeatedly called for reforms to address these challenges and ensure that oil output meets its potential.

Economists have long advocated for policies that prioritize economic diversification, increased exports, and improved oil production as sustainable ways to stabilize the Naira. Nigeria’s heavy reliance on oil exports, which account for over 90% of foreign exchange earnings, leaves the economy vulnerable to external shocks when global oil prices fluctuate.

Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), has emphasized the importance of expanding non-oil exports and strengthening local production. He said there is need for industrialization in driving economic growth, as seen in Europe and North America, and stressed the need for a thriving manufacturing sector supported by innovation, infrastructure, and strong economic policies.

Others have emphasized that Nigeria needs to move beyond its mono-product economy, explaining that increased exports of goods and services, particularly in agriculture, manufacturing, and technology, will create demand for the Naira on global markets and ultimately shore up its value.

While the proposed bill underscores the urgency of addressing Nigeria’s currency crisis, experts warn that without addressing these root causes, legislative fixes may provide only temporary relief, leaving the Naira’s vulnerabilities intact. This means that the success of the legislation will depend on how well it is integrated with broader economic reforms aimed at tackling the structural challenges facing the economy.