Monday, March 29, 2021 / 10:00AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: Bola Oguntade
Fiscal authorities in Nigeria have been advised to deploy privatization as a macro-economic tool to stabilize the nation’s economy. Dr. Ayo Teriba an economist and CEO of Economic Associates made this point in a discussion on “Addressing the Constraints to An Investment-led Nigerian Economy”.
According to Teriba the boom and bust cycles have always defined the income of governments, which consists of income and the balance sheet. He noted that most governments are stranded on income statements and need to diversify their revenue streams to keep a healthy and stable polity.
Dr. Teriba stressed the fact that there is an issue when a government develops a tunnel vision on the income statement but has a peripheral view of its balance sheet. He said Nigeria’s revenue has been historically defined by developments in the global agric and commodities prices which has been characterized by booms and shocks.
The economist decried the fact that Nigeria had been transfixed on oil income since its discovery in 1958, and failed to leverage its rich balance sheet which is derived from the value of its non-oil assets. He cited Brazil as an example of a country that has diversified its revenue base beyond oil, to open up to new income frontiers to sustain its economy.
Speaking further he believed it was time for Nigeria to connect its local assets to global liquidity, to achieve economic value and boost its revenue. On the recent decision of the Federal Government to rehabilitate the Port Harcourt Refinery for $1.5bn, he said the approach should have been partial or full privatization.
He emphasized the need for Nigeria to give priority to listing its Assets in the equity markets and move away from the era of borrowing from the financial markets. Listing government assets and enterprises in the capital market according to him would improve corporate governance and enhance transparency and accountability.
The policy expert also called for conscious efforts by the government to achieve an effective valuation of its assets which are numerous but idle. Nigeria is richer than China and India in terms of assets and it is time for it to exploit them to raise funds to finance the economy, address its infrastructure deficits and meet its fiscal obligations”, He said.
He also added that the government needs to reform its policies in a way that could attract increased foreign direct investments, like China, India, and Brazil.
According to the world investment report for 2020, China attracted investment inflows of about $160bn surpassing the United States of America.