BCG Projects Infrastructural Devt, Others To Aid Nigeria’s Post-COVID Recovery
The Boston Consulting Group (BCG), a global management consultancy firm, has proposed the promotion of financial inclusion, equitable distribution of resources, infrastructural development and formulation of requisite fiscal policies as initiatives that will drive Nigeria’s post-Covid economic recovery.
The measures according to Tolu Oyekan, a Partner at the firm, in a recent BCG report titled “How to Forge an Inclusive Post-Covid Recovery in Nigeria” stated that the initiatives, which form part of Nigeria’s sustainability plan, are critical in staving off the Covid-19 induced economic contraction from further compounding the poverty situation in the country.
The 2021 World Bank projections say Sub-Saharan Africa will experience a severe economic slump with grave impact on the poor in Nigeria, being the continent’s largest economy and most populous country. It projects further that with an estimated 83 million or 40 per cent of the population already under the poverty line, a steep drop in per capita income could lead to an increase in the number of vulnerable Nigerians.
Oyekan, however, posits that a financial inclusion drives through infrastructural intervention projects, will reduce Nigeria’s poverty population and also have a positive multiplier effect on the Nigerian economy. He listed the electrification of rural households through a pay-as-you-go solar service and cashless transactions via telco induced mobile money platforms, as examples of such infrastructural intervention projects.
The Nigerian government has a target of installing new home solar power systems and mini-grids for over 5 million low-income households by the end of 2023. Many of these households either have no source of power or rely on small, inefficient generators for electricity. These families will need to use PAYGo, an instalment financing option offered with mobile money bank accounts, to purchase the installation kits for these systems. Customers who have an existing mobile money account have a higher chance of accessing the facility than others who don’t.
Speaking on the impact of the project, Oyekan said: “Our analysis shows that a PAYGo loan would make solar kits affordable for about half of the 31 million households that do not have reliable electricity and may also be considered to be in a low-income bracket. What’s more, we found that 3.2 million out of 17 million households currently using kerosene and candles as their lighting source could afford the monthly PAYGo payments based on their current spending on lighting, plus about 10 per cent of their nonfood budget.”
He highlighted a recent USAID research which estimates that between 15 to 30 per cent of PAYGo solar customers will create a credit history for the first time when they purchase a solar home system with a PAYGo plan.
Stressing the importance of having a credit history and financial footprint, he said: “That credit history could, in turn, lead to other loans for large expenses, such as school fees, which can consume up to 40 percent of a family’s annual income. Credit histories are also a critical driver of growth for small-business enterprises and first-time business entrepreneurs.”
The Boston Consulting Group a global management consultancy firm, partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG founded in 1963, was the pioneer in business strategy and today, the organisation helps clients with total transformation—inspiring complex change, enabling organisations to grow, building competitive advantage, and driving bottom-line impact.
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