Nigeria’s leading economist and public finance analyst, Dr. Ayo Teriba, has urged the federal government to explore the opportunities availed by the current liquidity glut globally occasioned by the COVID-19 pandemic to attract capital flows to the economy.
The option, he said, would help to stabilize the national currency exchange rate, increase domestic liquidity and
stimulate the nation’s economic growth on a sustainable basis
The economist canvassed these policy options at a virtual meeting with participants of the Senior Executive Course, SEC 42 (2020) of the National Institute for Policy ad Strategic Studies, NIPSS, Kuru, Jos, with the topic: ‘Nigeria’s Post Covid-19 Economic Outlook.’
While ruing the low exchange value of the Naira against other international currencies, Teriba pointed out that weakness of the currency had remained one of the major banes of attracting investments into the country.
Speaking on four key sub-headings in the paper, namely Global Realities, National Realities, Policy Challenges and Liquidity Tailwinds, the CEO of Economic Associates, a leading research and consulting firm, explained that Nigeria needed to diversify her economic base as a logical step towards ensuring sustainable, broad-based and people-focused economic growth.
He elaborated: “The global liquidity glut currently offers unprecedented opportunities for Nigeria to attract easy capital inflows to stabilize the Naira, deepen domestic liquidity and fuel growth. Annual inflows of Foreign Direct Investment (FDI) and Diaspora Remittances inflows into developing countries now exceed a trillion US dollars, but these are concentrated in short list of countries with investment-friendly policies.
“Nigeria’s shares of both types of inflow have been on a steep downward trajectory even as these flows have doubled globally over the past decade and a half. Nigeria saw a peak share of 7.53 percent of US$200 billion remittances to developing countries in 2005 as the fourth-largest recipient then (after China, India and Mexico), but that fell steadily to 4.59 percent of US$520 billion by 2018, with Nigeria dropping to be sixth recipient (overtaken by the Philippines and Egypt, our continental peer and emerging example of investment-friendly policies whose share rose from 2.58 in 2005 to 5.46 in 2018).
“Nigeria must join the race for massive private-to-government remittances from her non-resident citizens and narrow the gaps between her and China and India. Nigeria’s peak share of FDI Stock in developing countries was 1.98 percent of US$100 billion in 1994 but this dropped to 0.93 percent of US$500 billion by 2018.
“By contrast, India’s share rose from 0.33 percent (one-six of Nigeria’s share) in 1994 to 3.62 percent (four-times Nigeria’s share) in 2018. It is imperative that Nigeria joins the small list of developing countries that are getting increasing shares of both flows as those flows continue to surge. Unfolding global realities now mean that Nigeria could easily adopt policies that will raise external liquidity thresholds enough to switch from contraction to expansion”, Teriba added
