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Weak currency discouraging foreign investment in Nigeria’s economy, Says Expert

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Weak currency discouraging foreign investment in Nigeria’s economy, Says Expert

currencyBy Marie-Therese Nanlong

The federal government has been asked to take advantage of the global liquidity glut being experienced during the COVID-19 period to attract capital inflows to stabilize the nation’s currency, deepen domestic liquidity and ensure economic growth for the well-being of the citizens.

An economist, Dr. Ayo Teriba gave the advice 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 on the topic: Nigeria’s Post Covid-19 Economic Outlook where he  lamented the weakness of the nation’s currency insisting that no business would want to invest or save in a nation whose currency is as weak and the Naira.

He pointed out four sub-headings tagged: Global Realities, National Realities, Policy Challenges and Liquidity Tailwinds where he explained that Nigeria needs to diverge its economic and financial paths if it hopes to ensure a healthy economy.

According to him, “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).

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“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.”

Earlier, the Director-General of NIPSS, Professor Habu Galadima urged the participants to take advantage of the meetings and engage the various speakers at the different sessions so that they can learn from them and add value to the theme of their set which is population growth and human capital development in Nigeria.

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