Prominent economist and Chief Executive Officer of Economic Associates (EA),Dr Ayo Teriba has sad that increased foreign direct investments (FDIs) is required to plug domestic capital formation gaps.
Soeaking at the conference with the theme “Nigeria’s Economic Outlook: Evaluating New Opportunities and Threats”, Teriba reiterated the need for the country to take an asset-centric rather than an income-centric approach to fiscal governance and growth.
He noted that Nigeria was facing the challenge of illiquidity, which has led to volatile exchange rates, high inflation, low reserves, and several other socio-economic challenges.
“Nigeria needs to apply urgency as national issues start with liquidity. The challenge in the world is that there has been a transition to liquidity. Only countries that understand this challenge and align with measures to boost liquidity will witness a stable economy”, he said
He decried the federal government’s failure to leverage the capital market to unlock value from its enterprises and assets. He stated that no government-owned enterprise in the country is currently listed on the domestic stock exchange.
“It is time for the country to know what it owns, place value through it, and securitize its assets. Nigeria must be asset-centric, learning from the United States, which has a robust model for managing government-owned real estate and other related assets,” he added.
He cited the examples of China, India, Brazil and Saudi Arabia as countries that keyed into the asset-centric model, turning to assets to unlock liquidity and attract FDIs. He noted that these economies have boosted their reserves to absorb external shocks and achieve stability.
Teriba noted that the 2001 telecommunications industry liberalisation is a success story that Nigeria should replicate in other critical sectors of the economy. He also described the Nigeria Liquefied Natural Gas Company, NLNG, venture as a testament to how public-private partnerships can attract investments.
Acknowledging the Ministry of Finance Incorporated’s (MOFI’s) role in optimising Nigeria’s assets and enterprises, he stressed the need for an investment hatchery and platform that transparently processes the financialisation of state-owned companies and assets.
He also highlighted transportation and energy as critical sectors Nigeria must prioritise for investments to boost the services sector, unlock economic opportunities and attract more investments into the economy.
He said, “All modes of transportation need to be developed simultaneously with investments in rail lines, linkage roads, aviation and waterways. Also, pipelines, fibre optics and transmission nodes support a connected economy. This will improve logistics and the services industry.”
Giving further insights, he projected that FDI stocks could continue their stellar growth trajectory and surge in performance to $87trn by 2029 from $49trn in 2023. He pointed out that country balance sheets will continue to be more prominent sources of wealth than income statements in the foreseeable future.
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