Nov. 27 (Bloomberg) -- Nigeria’s government must spend less on itself and invest more in the economy if it wants to attract long-term investment in the capital market, Central Bank of Nigeria Governor Lamido Sanusi said.
“You cannot have in the long term a capital market or even a banking system that grows and thrives on a sustainable basis until you build the real economy on which they thrive,” he said at a conference today in the southeastern city of Warri. “Otherwise, all the money that you raise in the system remains in the financial system and you just create bubbles.”
Finance Minister Ngozi Okonjo-Iweala reversed the government’s expansionary stance after she took office in August, Sanusi said. The state must continue to cut recurrent spending and invest more to fix power supplies, build roads and other infrastructure to allow the private industry to grow, he said.
President Goodluck Jonathan pledged on Oct. 10 to reduce recurrent spending, which includes salaries, to 69 percent of the total budget of 4.92 trillion naira ($31 billion) in 2013, from 72 percent this year in his proposal to Parliament.
“Any society where the government spends 70 percent of its money on its employees so that they can use the 30 percent for the rest of the country, has a problem,” Sanusi said. “It’s unsustainable.”
While agriculture is the biggest contributor to the gross domestic product, only three agricultural companies are listed on the Nigerian Stock Exchange, Sanusi said.
“The reason they’re not there is because the policies, until recently, haven’t been policies that aim at building agriculture,” he said.