Teriba: Donor Funds Can’t End Nigeria’s Fiscal Crisis

  • Recommends policies to attract FDIs, remittances
  • Advocates sales of under-utilised public assets

Gboyega Akinsanmi

The Vice-Chairman, Technical Committee of the National Council on Privatisation, Dr. Ayo Teriba has advised the federal government against reliance on the Official Development Assistance (ODA), Foreign Portfolio Investment (FPI) or other donor funds to pull Nigeria out of fiscal doldrums.

Rather, Teriba, who is also the Chief Executive Officer, Economic Associates (EA), urged the federal government to come up with policies to attract more foreign direct investments (FDIs) and diaspora remittances, noting that donor funds cannot bring Nigeria out of its fiscal crisis.

He made these recommendations in his article, Nigeria’s Post Covid-19 Economic Outlook published by a US-based Social Science Research Network, a repository for preprints and international journal.

In the 16-page research paper, the economist observed that Nigeria had been in search of ways of stemming the economic decline before Covid-19 forced the country, like most other countries across the world, into a lockdown that brought the economy to a halt since March 2020.

He argued that the unfolding global realities “now give Nigeria a chance to leverage its vast public assets to raise external liquidity thresholds enough to switch from contraction to expansion by adopting securitisation privatisation, liberalisation, commercialisation policies.”

Teriba situated his argument within the context of the increasing global liquidity glut, which he contended, had seen capital inflows to developing countries double in the last decade and Nigeria is well-placed to get a share of the liquidity glut if it created investor-friendly environment and policies.

Despite negative external income shock, he observed that Nigeria “remains asset domestically rich. Nigeria’s history of oil booms combines favourably with her large population, over half of which are spread in hundreds of urban centres, to bequeath her with huge stocks of valuable public assets.

“While Nigeria’s economic, fiscal, and financial struggles resulting from the decline in income have been conspicuous in news headlines and policy discussions, the solutions that the value of assets owned by Nigeria could unleash have been less so.

“It is time to broaden the conversation to include the differences that the value buried in vast assets owned by Nigeria could bring to the narratives, evaluate the case for unlocking domestic and external liquidity from them, and explore ways of doing so.”

On this note, the economist urged that the federal government to articulate clear enough visions of our future by coming up with credible external liquidity and infrastructure roadmaps that our diaspora and foreign investors can invest in, like India, Saudi Arabia, and lately Egypt do.

He noted that African continental single market and West African single currency were conceived in a global environment in which net-exports dominated net capital inflows, which he suggested, should be realigned for optimise investment opportunities.

The economist recommended that both the continental single market and sub-regional single currency “must now be realigned with a new global reality in which net capital inflows dominate net-exports.”

Besides, Teriba equally suggested that Nigeria, like other African states should realign with the evolving reality that surging FDIs and Diaspora Remittances are more reliable sources of external liquidity than meagre donor funds.

Rather than opting for Official Development Assistance (ODA) or volatile Foreign Portfolio Investment (FPI), Teriba asked the federal government to work out policies that could attract more FDIs and diaspora remittances.

In general terms, the economist encouraged Nigeria and Africa to align their policies with unfolding global realities by repositioning themselves through effective investment friendly policies to obtain a fair share of the financial green shoots needed to promote growth and stability.

Teriba argued that such policies should be designed in such a way it would attract large FDIs or Diaspora Remittances inflows as their main sources of external liquidity.

He, strongly, advised that funds realised from FDIs and Diaspora Remittances should be deployed nto transport and energy infrastructure to boost production and trade.

In more specific terms, the economist urged Nigeria and other African states “to identify the corporate assets they are willing to sell to equity investors to attract Brownfield FDI inflows as well as the intangible assets they are willing to license to foreign investors to attract Greenfield FDI inflows.

He equally asked Nigeria and other African states to identify the financial assets they can securitise to attract remittances and the under-utilised lands and built structures they can repurpose, redevelop and commercialise for lease or sale.

Beyond identifying the assets, he explained the reasons the countries should proactively make the investment opportunities clear “to the global investing community, rather than passively waiting for investors to come.”

He, also, suggested that African countries should provide the foreign investors “with incentives once they are in the country. It is common knowledge that, unaware of the specific opportunities, investors never enter the country with large enough funds to make impact.”

He outlined equity investment opportunities, which according to him, the foreign investors would readily go for if the governments create the right environment.

He suggested that Nigeria, like other African states, securitise financial assets by issuing foreign currency bonds based on JV equity stakes; privatise corporate assets by selling up to 51 percent of all wholly owned SOEs.

He recommended that governments could also choose to liberalise intangible assets by breaking government monopoly infrastructure sectors and commercialise non-financial assets by optimising under-utilised lands and buildings.

He, also, recommended that Nigeria and Africa “should articulate clear visions of the future with national and continental plans that they can engage diaspora and foreign investors with, like India, Saudi Arabia, and Egypt do.

“They need to optimise under-utilised public assets to open non-tax, non-oil revenue streams that can compensate for lower commodity export and tax revenue, while issuing large-scale equity to replace debt”, he added.

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