Friday,July 19, 2019   /  02.50PM /  Ottoabasi Abasiekong forProshare WebTV 

If Nigeria is to achieve sustainable economic growth and stabilityin its economy, unlocking liquidity must be given top priority.

Dr. Ayo Teriba, an economist and CEO, Economic Associates, madeexplained this point at the Q2, 2019 one-day quarterly conference on Nigeria’seconomic outlook in Lagos.

He decried the fact that Nigeria was at the low end of theliquidity ladder in Africa, arguing that the situation had to be addressedurgently.

Liquidity he pointed out was critical to increasing the nation’sexternal reserves that serve as a buffer against shocks in commodity prices.

One of the ways he believed Nigeria could improve its liquidity,is by attracting capital inflows, which was important considering the revenuechallenges of the government.

In the evolving race for global liquidity, Teriba made a strongcase for the alignment of policies to strengthen liquidity.

According to him, “The Federal Government is focused on growth,while the Central Bank of Nigeria is concerned about stability. There is noexpress concern about liquidity”.

He was of the view that liquid markets are about making sure thatthere are buffers against shocks, and for Nigeria, having more capital inflowswas important than outflows.

Speaking further Teriba identified the various options forunlocking liquidity in the economy, which include;

• Privatization: Which implies partially selling its equity across all State-Owned Enterprises, SOEs to retain a minority stake. (Brownfield Foreign Direct Investment Inflow)
• Liberalization: This implies the development of idle land and building and unbundled infrastructure projects. (Greenfield Foreign Direct Investment Inflow).
• Commercialization: Getting rental income from wholesale leasing of idle lands and buildings.
• Securitization: This suggests securitization of future income streams from all financial and non-financial assets

Teribacalled for a strategic reform of revenue generation in the federation andacross all tiers of government.

Theeconomist stressed the need for Nigeria to move beyond exports, taxes and debtstowards rental income and equity. He stressed that Nigeria had a lot to gainfrom securitizing its assets.

Someof the assets he identified for the government to consider are the following;

• Corporate Assets: Which are government wholly-owned or majority equity holdings in State-Owned Enterprises, SOEs.
• Financial Assets: Which represent the government’s  minority equity holdings in Joint Ventures and other companies
• Tangible Non-Financial Assets: Taking the steps of commercializing and securitizing idle lands and buildings, amongst other assets.

Givingfurther insight on capital flows, he identified foreign direct investment, FDIand Remittances as the major types that Nigeria should utilize.

Hegave an example of Saudi Arabia that has developed a privatization plan worth $100bn, which will bolster the liquidity of the Gulf nation.

Dr.Teriba also referenced the Liberalization and  Privatization plans ofIndia, that has positioned the densely populated nation, as one of the leadersin FDI.

TheCEO of Economic Associates was of the strong view that Nigeria needs a robuststrategy to attract more foreign investments to compensate for lost exportrevenues.

Inan interactive session with participants, he called on Nigeria to explore howit can leverage the Diaspora remittances, noting Africa was one region that hada challenging environment for remittances. currently has a foreign reserve of approximately $45bn which can triple withina year, if it prioritizes unlocking liquidity through the various capitalinflow options available.

          Nigeria Foreign Direct Investment Inflows(2016 – 2019)

  Source: Trading Economics, CBN

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