‘Investment, not borrowing is way out of recession’
Management experts have said that what Nigeria needs to quickly exit current economic recession are policies that will encourage massive local and foreign direct investments (FDIs), and not borrowing from external finance institutions.
For there to be a complete rebound and turnaround in the fortunes of the nation’s economy in the nearest future, they estimated that Nigeria required a minimum of $50 billion non-export foreign financial inflows yearly.
So far, the Federal Government has been keen on external borrowings to develop ailing infrastructure sector, in a bid to jump-start economic activities though massive spending and jobs creation
But experts who gathered at the Corporate Members’ Forum organised by the Nigerian Institute of Management (NIM) Chartered, noted that with oil prices above $50/barrel, Government needs to create business friendly policies to boost FDIs between now and 2020, when it plans to be among the top 20 economies of the world.
Specifically, an economist and Faculty member, Lagos Business School, Dr Bongo Adi, bemoaned government’s borrowing plan, which he said would rather increase the economic woes.
“Borrowing is not an option; it won’t give that much, and it will become a burden. Investment is the only option; you can get more than that, and you won’t need to repay it. Investors should be allowed to come and use their money to bring something out of nothing. Such investment opportunities abound in rail transportation and energy infrastructure,” he said.
According to him, “Nigeria used to attract more FDIs than India, South Korea, South Africa, and the United Arab Emirates, UAE. One after the other, they have all overtaken us! How could we let that happen,” he queried.
“We must correct that now, by opening the vents and let investment flood in. We must break all government monopolies as we did in telecoms. Government should also fill all important vacancies in federal regulatory agencies and MDAs,” he added.
President of the Institute, Prof. Munzali Jibril, agreed that the Federal Government is working hard to mitigate the prevailing economic situation, especially through the recent interventions by the Central Bank of Nigeria (CBN).
He noted that the interventions are attempts to address the supply side of the foreign exchange market, but added that more needs to be done to bring the needed reprieve and ease the negatives.
He argued that businesses thrive when the economy they operate in is in a good shape, adding that when the environment is harsh, businesses will totter.
Adi also urged government to launch a new economic reform programme to signal a bold commitment to investor-friendly economic direction based on attracting private capital from domestic and international investors.