Tuesday,December 17, 2019   /06:30 PM  / By Adesola Borokinni,  Proshare Research / Header Image Credit: BRTNEWS

Dr.Ayo Teriba at a one day conference on the economy, noted that for the countryto navigate along a sustainable and stable track in 2020, it must improvefiscal liquidity. The conference was divided into four sessions with subjectmatters ranging from global risks, economic risks, policy risks andopportunities.

Riding The Global Liquidity Glut

Thefirst session, addressed issues or concerns regarding present global realities.Dr. Teriba observed that hinging economic growth on the export of primary commoditiesis a trend that is slowly disappearing. He emphasized that countries such asIndia, China, Saudi-Arabia and Egypt who are experiencing steady growth aretaking advantage of the global liquidity glut. For example, the Indian economyembarked on LPG (Liberalization, Privatization and Globalization) which hasmade its economy the most open economy in the world for foreign directinvestments (FDIs).  On the other hand, Egypt embarked on M.E.G.A (MakeEgypt Global Again) to encourage liquidity inflows into its economy.

Todrive capital inflows into Nigeria, Teriba recommended that policymakersconvert corporate assets to financial assets by partially privatizingmajority-owned or wholly-owned government enterprises to unlock brownfieldF.D.I. To open new spaces for foreign investors to unlock greenfield FDI likeIndia Nigeria needs to liberalize its business architecture further.

Reversing Slow Growth

Inthe second session, major economic constraints such as slow GDP growth, forexrestriction, volatile inflation, multiple exchange rates etc. were addressed.To solve Nigeria's economic challenge, Dr. Teriba recommended that policymakersfocus on non-tax revenue. He noted that increasing the domestic taxrate was likely to increase the level of poverty in the economy as recentdata has shown that a significant number of Nigerians have fallen below thepoverty line. He tied Nigeria's struggle with growth and exchange ratestability to the absence of adequate domestic and external liquidity. Therefore, he noted that solving Nigeria's exchange rate stability problemrequires an improvement in external liquidity, while economic growth will boostdomestic liquidity.

The Different Faces of Two Budgets

Inthe third session, Teriba addressed the need to bridge the gap between budgetedand actual revenues on the fiscal side, while increasing foreign exchangesupply, and domestic financing thresholds to levels required to underpin fastersectorial growth on the monetary side.  To boost fiscal sustainability andliquidity, he suggested that an inventory of assets owned by the government beprivatized. He insisted that once the government knows what the assets are, itshould value them and rationalize/optimize those with higher market values tounlock liquidity through the exploitation of the identified assets. Dr. Teribafaulted the central bank's monetary policy position saying that "Sacrificingeconomic recovery, growth and employment for reversible portfolio inflows thatmay never arrive is too much of a cost on the economy. CBN's policy stanceshould soften to give growth a chance".

Opportunities for Growth

Thefourth session dealt with opportunities available to the Nigerian economy.Teriba noted that despite the global slowdown in worldwide growth, there wasstill an upward trend in global liquidity, which serves as a huge opportunityfor the Nigerian economy. He noted that economies like China, India, Egypt andSaudi-Arabia had recognized the role of the Diaspora as catalysts of financialglobalization, with governments issuing diaspora bonds to attract record levelsof private-to-government remittances from non-resident citizens. China andIndia each attracted only US$ 7 billion more than Nigeria in 2006, but each nowattracts US$50 billion more than Nigeria.  Teriba noted thatprivatization, commercialization, liberalization and securitization of assetsare critical to Nigeria's unlocking its hidden liquidity wealth.

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