Can Nigeria get the Economic, Fiscal and Financial Narratives back to Positive?


Monday, February 12, 2020 / 04:00PM / Economic Associates / Header Image Credit: Economic Associates


It is indeed very surprising how Nigeria's impressively positive economic narrative from 1999 to 2014 has given way to an unflattering post-2014 narrative in which the economic terrain is about recession, inflation, unemployment, poverty, restiveness, and insecurity; the financial terrain is about foreign exchange rationing, devaluation, multiple exchange rates, low loan-deposit ratio, and high interest rates; while the fiscal terrain is about low revenue, low capital spending, large deficits, high debt service, rising debt, and concerns about solvency/bankruptcy.


With huge windfalls from the commodity price surge from 1999 to 2014, Nigeria enjoyed economic expansion- growth accelerated and commercial services, led by telecommunications and information services, outgrew agriculture and oil- that saw Nigeria's rank rise phenomenally from the 52nd to 22nd economy in the world; financial expansion- deepening of banks, bonds and equity markets, as well as government revenue and spending; and stability- single digit inflation and interest rates, and a strong exchange rate; and, a marked reduction in misery- falling unemployment and poverty rates.


With shortfalls replacing windfalls since the crash of commodity prices in July 2014, Nigeria's economy has endured economic contraction- growth reversal, recession, and a sluggish recovery to now rank as 30th economy in the world; financial contraction- especially bank deposits, equity market capitalization, and foreign exchange supply, as well as government revenue and spending, and instability- the Naira lost about two thirds of its value against US dollar, while inflation and interest rates jumped into double digits; with the growing misery reflected in growing number of unemployed, poor, and disenchanted.


We present data that reveals that the common thread between the two eras is the quantum of external liquidity at the country's disposal. External liquidity surge from windfalls fuelled the era of expansion and stability, just as external liquidity shortages from shortfalls inflicted contraction and instability. We also show that unfolding global realities now mean that Nigeria could easily adopt policies to raise external liquidity thresholds enough to switch from contraction to expansion. Global liquidity glut has seen a doubling of long-term capital inflows to developing countries in the last decade and Nigeria is very well-placed to strategically reposition itself to get a fair share of that.


Despite negative external income shock, domestically, Nigeria remains prodigiously asset rich. Nigeria's large population spread in scores of urban centres and past oil booms combine to bequeath her with valuable public assets. However, while Nigeria's economic, fiscal and financial struggles resulting from the decline in income have been conspicuous in news headlines, the solutions that the value of assets owned by Nigeria could unleash have been less so. We draw attention to the hidden value in vast assets owned by Nigeria, make a case for unlocking massive domestic and external liquidity required to arrest the economic, fiscal and financial crisis from them, and articulate four ways of doing so.


We show that Nigeria could adopt the following options to raise domestic and external liquidity thresholds:

(i.)     Securitize equity holdings in NLNG and other oil and gas Joint Ventures to shore up foreign reserve threshold, while giving Nigerians at home and in diaspora opportunities to invest in the assets and earn some of the dividends.

(ii.)    Privatize to attract brownfield FDI by converting all wholly owned corporate assets to securitizable Joint Ventures stakes in which government owns up to 49 percent and foreign investors own up to 51 percent.

(iii.)    Liberalize to attract greenfield FDI by breaking government monopoly in all infrastructure sectors to encourage entry of foreign investors who could operate in parallel to the Joint Ventures.

(iv.)    Commercialize idle or under-utilized state-owned lands and built structures by relocating uneconomic activities from prime locations and repurposing them for leasing to open new streams of non-tax revenue.


Doing these will change Nigeria's economic, fiscal and financial narratives by unlocking the liquidity Nigeria needs to strengthen the Naira, rejuvenate fiscal, financial and foreign exchange streams, rebuild infrastructure, diversify and accelerate growth, eradicate poverty and unemployment, and lay the foundations for shared prosperity. Leading developing countries adopt different combinations of these four options to fuel their transformation.



Evolution of Developing Countries' and Nigeria's Shares of Exports, FDI, and Remittances

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As the Economic Associates "Nigeria Outlook Conference" moves to Lagos on February 19, 2020 from Abuja in Feburary 12, 2020 and then Port Harcourt on February 26, 2020; discussions of the outlook will focus on facts summarized in four sub-themes viz:


1.     Unfolding Global Realities

Coming to grips with the strategic implications of the widening divergence between downside risks to global growth and upside prospects of larger inward capital flows for countries and companies.


a.     Implications of Diverging Global Economic and Financial Paths for EMEs

i. Economic Downsides: Exports, GDP Growth, Demand

ii. Financial Upsides: Strong FDI and Remittance Flows


b.     Evolving EME Realities: Nigeria vs. Peers']

            i.    Exports

          ii.    FDI and Remittances


2.    National Impact-Points

Coming to terms with tight money, credit, equity, and forex conditions, that weaken and confine growth to a few sectors, and orchestrate double-digit inflation, interest rates, and multiple exchange rates.

  1. Headwinds: How Illiquidity Slows the Economy Down

                      i.       Tight Foreign Exchange Market

                    ii.       Volatile Exchange Rate, Inflation, Interest Rates, and Equity Prices

                  iii.       Tight Money, Credit, Bonds, and Equity Markets

                   iv.       Slow GDP Growth and Concentrated Sectoral Growth

  1. Confronting Headwinds: How Our Peers Overcome Illiquidity


3.    Main Policy Challenges

How to mitigate shortfalls, by closing budgeted and actual revenue gaps on the fiscal side and raising forex supply/domestic financing thresholds to levels required to underpin faster growth on the monetary side.

  1. Thresholds: How Liquid is Nigeria?

                        i.    Fiscal: Closing Budgeted vs. Actual Revenue Gaps

                      ii.    Monetary: Meeting Higher Domestic Liquidity Thresholds

                    iii.    Forex: Meeting Higher External Liquidity Thresholds

  1. Unlocking Liquidity: Four ways of overcoming post-boom liquidity stress


4.    Managing Risk Exposures

Strategic levers that can be pulled to seize big enough slices of increased inward capital flows to developing countries to compensate for the risks to growth and exports.

a.     Transiting from Windfalls to Shortfalls

                           i.      Income: Operating vs. Nin-Operating

                         ii.      Liabilities: Debt vs. Equity

                       iii.      Assets: Accumulation vs. Decumulation

b.     Capitalizing on Tailwinds: Global and Domestic Silver Linings

                        i.    Fallouts of the Global Liquidity Glut- Large FDI and Remittances Headroom

                      ii.    EME Race for Global Liquidity

                    iii.    Vast Stocks of Idle but Valuable Domestic Public Wealth


Please note that this event is by prior reservation only; and all reservations are subject to confirmation by EA. Please visit to complete the online reservation form. For more information, please call Maryjane on 08166871208, or e-mail; or register online - Abuja, Lagos, Port Harcourt; or download a reservation form, or download the conference brochure.

More Insights from Dr. Ayo Teriba HERE



Pictures from the Conference in Abuja on February 12, 2020



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Some of the Directors from the Bureau for Public Enterprises with DBN and EA Staff at the Abuja Conference



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Olorunshola Abdulazeez of Nigeria Governor's Forum with Maryjane Chigbo and Ayo Teriba of Economic Associate


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Akin Soetan - Senior Technical Assistant to the President on Economic Matters - Office of the Vice President, The Presidency, Nigeria


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