Lucrative Businesses Don’t Create Jobs Commensurate to Their Profit, Says Osinbajo

Bennett Oghifo

Vice President Yemi Osinbajo has said there is huge inequality and poverty in Nigeria that was recipe for disaster and that lucrative businesses, such as oil and gas, banking and finance, do not create jobs commensurate to the profit they make.
The vice president made this grim observation in his virtual keynote address at the hybrid 4th Annual Convening on Impact Investing, organised by the Impact Investors Foundation (IIF) in Lagos.

He said, “Liberal economies assume that growth, including a decent standard of living for the people, will be driven largely by commercial entities motivated by profit, who create jobs and pay taxes. But, evidence suggest that even in the wealthier nations too many are left and inequities continue to grow. Of course, this is worse in societies such as ours where poverty is significantly higher, population growth rate consistently exceeds the capacity of the economy to produce sufficient jobs.

I think it is also quite evident that some of the most lucrative businesses in the economy- oil and gas, banking and finance simply do not produce jobs commensurate to the profit they make. Only a few, relative to the population, that is, benefit from the huge dividend that are declared.
Osinbajo, however, said these inequalities could be remedied by Impact Investing, which is made with the intention to generate measurable positive social or environmental impact alongside financial return.

According to Osinbajo, “Glaring inequality in wealth and opportunity in the face of poverty, misery and social alienation in any society is simply asking for trouble. Such a situation is neither sustainable nor wise.”

He said the sharp drop in the standard of living caused by the COVID-19-induced shocks to Nigeria’s economy and global economies, “has not only further deepened existing inequalities, but also pushed many more into extreme poverty.

“Neither government nor businesses can afford to ignore the huge social disparities and environmental deterioration for long, but because the logic of the profit motive has been a driver of innovation, the driver of wealth and growth is unassailable, the real question is how to ensure that it accommodates a moral compass. Or put differently, that a more sustainable business model is one where, intentionally, we build into the profit motive or the profit making objective, the means of attaining societies social and environmental goals. The notion of doing well, as they say, by doing good or harnessing the forces of innovation, entrepreneurship and private capital to achieve both profit and social and environmental good.”

The vice president said these inequalities could be balanced by Impact Investing, stating that “some of the current models of impact investing we are seeing point in the general direction that policy and regulation should go.”

Welcoming participants, the Chairperson, Nigerian National Advisory Board for Impact Investing, Ibukun Awosika, who chaired the 4th IIF Annual Convening, said, “Impact investing is not about government but with government, because it is investments that is after profits for investors but have that ability to have a more patient wait in return in a way that it changes lives and social systems, impacting the lives of people and communities.

“To do that, there are roles government will play and the role the private sector (both local and international) will play. All the things we need to fill the gaps of where our needs are as a country, we cannot afford them as a country.

“We need a combination of capital from outside that has good at heart intentions, which is not just about coming to make profit but to create positive change in the lives of our people and yet get value and old return for their money.”

The Chairman, Board of Trustees, IIF, Mr Afolabi Oladele, said every bit of policy that will make it easier to access financing and make infrastructure available for people to move, communicate and reduce cost of energy are key focus areas that need to be dealt with to ensure that impact investing thrives.

The Projects Lead/Head of Secretariat, IIF, Ms Etemore Glover, explained that the gathering had opened conversations across the public and private sectors to understand the importance of channeling investments to priority sectors of the economy for sustainable growth.

The UNDP Resident Representative, Mr Mohamed Yahya, spoke on catalysing Nigeria’s post COVID-19 recovery with impact capital, saying opportunities and challenges had highlighted the institutional bottlenecks, policy and regulatory environment inadequacies of impact investment.