Friday, September 28, 2018 1.00PM / Proshare WebTV
Nigerian economist Dr Ayo Teriba says the nation is currently lagging behind in the race for global liquidity.
Dr Teriba shared this at the Q3 edition of the Economic Associates Nigerian economic outlook seminar at the Lagos Continental Hotel, Victoria Island, Lagos.
Teriba informed participants that the era of oil windfalls in Nigeria might have gone, which has led the country to experience volatility in the face of the global liquidity glut.
The economist noted that during the era of former Central Bank Governor Prof. Chukwuma Soludo (2004-2009), Nigeria experienced a surge of the naira, which was possible because it enjoyed oil windfalls during the period.
Speaking further Teriba opined that Nigeria faced a challenge of liquidity swings and not stability and growth.
He identified the following as the dimensions to the liquidity lag in the country, which include;
1. Recognition Lag
2. Decision Lag
3. Action Lag
4. Impact lag
According to him “We are about the only country that is not insulated from the external shocks, and are tossed to and fro by the shocks”.
He was of the view that Nigeria must be deliberate and proactive in fixing its liquidity issues and acknowledged the fact that domestic liquidity is shallow, and from analysis took 40 years to increase from 10% to 20%.
One area he identified is exchange rate stabilization, which he believed will boost the foreign reserves giving Nigeria a buffer during crisis or swings.
Teriba gave the example of Saudi Arabia and Indonesia an oil producing nation like Nigeria that have been insulated from liquidity shocks, because of its vast reserves.
“The reason why naira is weak is because we don’t have external liquidity, unless the naira is strong, we can’t have domestic financial liquidity”. He said
The economist shared that Nigeria must look into boosting its Foreign Direct Investments, Portfolio inflows and Diaspora remittances.
He emphasized the need for Nigeria to unlock its investment space and drive real-time FDIs like the 2001 telecommunications sector privatization.
Speaking further on the issue of FDI Teriba said “Nigeria used to attract more FDI than India, South Korea, South Africa and UAE. One after the other, they have all over taken us! How could we let that happen? We must correct that now, by opening the vents and lets investment flood in. We must break all government monopolies infrastructure Nigeria inflows single track globalization”.
He also made a strong case for the government to consider the privatization of key public enterprises alongside the sale of assets, which can be a major source of revenue.
The CEO of Economic Associates also stressed the fact that Nigeria’s current economic growth level(1.5%) is unstable, which explains why Nigeria must address the liquidity issues.
With more FDIs into the economy, Dr. Teriba believes this will open up the economy and to an extent address the issues of poverty and high unemployment in the country.