Connect with us
Advertise With Us

BUSINESS

FG Rekindles Hopes Of FDI At IMF, World Bank Meetings In Indonesia

Published

on

Hajiya Zainab Ahmed

BAYO AMODU who was in Bali, Indonesia writes that the Nigerian delegation to the just concluded Annual Meetings of the International Monetary Fund (IMF) and the World Bank got global audience and investors’ attention at the meetings as they presented to them the immense opportunities in investing in the country.

One of the major highlights of the just concluded Annual Meetings of the just concluded IMF/World Bank, which commenced on Monday October 8th in Bali, Indonesia was its reducing global growth forecasts. In its latest global economic outlook released earlier in the week, the Bretton Woods Institutions cited trade tensions between the U.S. and trading partners as a major risk to global economy. But the Nigerian delegation to the meetings which ended today (October 14) used the opportunity of the Annual Meetings of the Bretton Woods Institutions to present the nation’s investment potentials to the world.

The good news is that foreign investors may soon start trooping to the country. Foreign portfolio investors have been pulling out billions of naira out of the Nigerian economy especially the nation’s stock market in recent months amid bearish sentiments, primarily due to the approaching elections. Speaking with journalists on the sidelines of the meetings on Friday, the Minister of Finance, Hajiya Zainab Ahmed, who led the Nigerian delegation to the Meetings, said they met international investors and persuaded them to come and invest in the Nigeria. She said the investors were enthusiastic about coming to invest in Nigeria, especially given the high comparative advantage by doing so.

Ahmed said she was working with the Minister of Budget and National Planning, Director-Generals of Debt Management Office and the Securities and Exchange Commission, holding meetings with prospective foreign investors. The minister also said “we have been telling prospective investors the Nigerian story and making it clear to them that Nigeria is a very good place to do business and about the returns they will get from Nigeria.

“We made it clear to them that if an investor takes his resources to invest in the U.S., he gets a four per cent return, but in Nigeria, you can get up to 13 to 14 per cent returns. So far, our message was well received. There was a lot of interest and because of that, there was confidence that the next Eurobond we were trying to raise would be oversubscribed.”

Similarly, at a well-attended session by foreign delegates, the Minister of Budget and National Planning, Senator Udoma Udo Udoma told a global audience that the implementation of the Economic Recovery and Growth Plan (ERGP 2017 – 2020), is moving Nigeria’s economy in a positive direction. Senator Udoma, who was speaking at the presentation of the International Monetary Fund (IMF) Regional Economic Outlook Report for Sub-Africa, said actions taken since the launch of the Plan in early 2017 have helped to build buffers and appropriate measures to safeguard the economy from any external shocks.

He recalled that following the collapse of crude oil prices from 2014, which culminated in the country’s economy sliding into recession in 2016, government developed a robust Medium-Term Plan – the ERGP, which was launched in early 2017, which focuses on five strategic areas: Macroeconomic Stability, Economic Diversification and Growth Drivers, Competitiveness, Social Inclusion and Jobs, as well as Governance and other Enablers. The Minister said the positive trends recorded in the country’s economic indicators since the launch of the ERGP indicate that the Plan is working. Among others, he listed that:  We have been able to bring down inflation from 18.7% in January last year to 11.2% by August this year. Our aim is to bring inflation down to single digits by the end of the Plan period in 2020.

He said the exchange rate market has been stabilized through the introduction of the Investors and Importers foreign exchange window. We have also been able to build up our external reserves from $27 billion in 2016 to $43.9 billion by early this month.

‘‘Our current account, as a ratio of GDP, has moved from a deficit of 3.2% in 2015 to a surplus of 2.8% by end of last year. And this is built on export growth, including significant growth in non-oil exports that has resulted in the country recording a consistently positive trade balance since the fourth quarter of 2016.

He said: ‘‘The ERGP targets both oil and non-oil. With specific reference to the oil sector, it would be recalled that due to disruptions by militant activity, at some point in 2016, oil production was as low as 1 mbpd. Through positive engagements with the communities in the Niger Delta, we have improved the environment for oil production. Apart from technical hitches, from time to time, we are now able to produce up to 2 mbpd and take advantage of the more favourable international oil prices. Our target is to produce 2.3 mbpd.”

He pointed out that the implementation of the various initiatives in the Plan resulted in moving the country’s economy out of recession to a positive growth path. “Our GDP grew from -1.6% in 2016 to 1.5% by the second quarter of this year, with the non-oil sector growing at 2.05% – the highest growth in the sector since the fourth quarter of 2015”. He was confident that the country’s growth projection of 2.1% by the end of the year will be realized. Noting that the IMF’s projection for Nigeria is 1.9% this year, slightly lower than Nigeria’s projection, the Minister however pointed out that given Nigeria’s growth for 2017 which was only 0.8%, even if Nigeria achieves the IMF projection of 1.9% this year, it is a significant improvement on the 2017 numbers.

The direction of movement in Nigeria is clearly very positive. “As you have seen, these actions that we have taken have helped us to build buffers and appropriate measures to safeguard us from any external shocks,” he stressed. Referring to the recent IMF Report which indicated that one of the downside risks to growth prospects in the sub-region is security, the Minister said the Buhari Administration had long listed tackling security as one of its three policy thrusts.

Meanwhile, the IMF warned Nigeria and Sub-Saharan African economies to check rising levels of debts, diversify their revenue bases or face crisis. Nigeria’s debt profile was N22.3 trillion as at June 30, 2018. About two-thirds of the government’s revenues go into servicing interest payments, with the principal still waiting for redemption at maturity. The IMF advised the country to guard against the temptation to let higher oil prices delay reforms, warning that despite the recent recovery, oil prices are projected to remain below the 2013 peak.

Also, the  IMF called on Nigeria to explore ways of increasing its revenue outside its traditional base of oil proceeds. The IMF’s Deputy Director, Fiscal Affairs Department, Paulo Mauro, who made the call at a press briefing at the Meetings in Bali, Indonesia, admitted that there is an issue of how to increase Nigeria’s revenue base, pointing out that the matter was not only crucial, but of utmost priority.

Also, the Managing Director of IMF, Christine Lagarde, said that domestic revenue mobilisation, which stood at five per cent of the country’s Gross Domestic Product was too low for to elevate the Nigerian economy to the level it should be.

She said: “I remind you. You know that probably inside out that domestic revenue mobilisation is five per cent of GDP in Nigeria and that is just way too low, relative to where Nigeria should be in order to address issues of health, education, proper social spending on the people and particularly the young people of Nigeria.

“That would certainly be a very strong recommendation that I would give her and structural reforms that would probably include really making sure that the refineries and the oil facilities that are available in Nigeria work well and work for the benefit of Nigeria.”

Lagarde said that work was ongoing on the possible spillover effect of the trade war between the US and China on Nigeria.

Meanwhile, as the IMF said the global economy is now expected to grow at 3.7 percent this year and next year — down 0.2 percentage points from an earlier forecast, World Bank President Jim Yong Kim said the Bank is working with developing countries to brace for a further deterioration. “Trade is very critical because that is what has lifted people out of extreme poverty,” Kim said. “I am a globalist. That is my job. That is our only chance of ending extreme poverty. We need more trade not less trade,” he said.

However, some financial experts have said the Nigerian economy is faring well despite the drop in the foreign reserve, attributing this to some economic policy failures. Charles Ekpo, a financial expert, linked the drop in the nation’s reserve to the current increase in the U. S. interest rate. He however said: “This is not only affecting Nigeria but a lot of countries as well such that most countries are devaluing their currencies, instead of having that negative effect, our naira is still appreciating.

“It is good for the economy because it shows we have a dynamic economy that is reacting to what goes on in the world market,” he said.

Mr Tunji Adepeju, an economist, pointed out that since Nigeria’s economy is not “dollarised”, there is no need to panic because on the long run with what government is doing, the economy will be in good stead.

“If we continue to reduce importation and grow our exportation of agricultural produce, as it is being done with yam and other goods, we will have more foreign reserve.

“Again, the arrangement between Nigeria and China to do exchange business in Chinese currency instead of passing through the dollar, will also help our economy,” he said.

Mr Lanre Popoola, the Vice President, Manufacturers Association of Nigeria (MAN) said that Nigeria would soon bounce back to the peak of its foreign reserve.

“The price of crude oil is going higher, repatriated money is coming in and government diversification has started to yield fruits, so there is no need to fear that the foreign reserve has dropped. According to him, Nigeria will rise above this challenge in no distant time.

 

 



Copyright LEADERSHIP.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from LEADERSHIP Nigeria Newspapers. Contact: editor@leadership.ng







Advertisement

Sign up for our newsletter

MOST POPULAR

Pin It on Pinterest

Share This

Share this post with your friends!