Renowned Nigerian economist and CEO of Economic Associates (EA), Dr. Ayo Teriba, has said that Nigeria’s inflation can be managed better and driven down to as low as 5% by 2025 if the Federal Government can attract $50 billion in foreign direct investment (FDI) – 9am News Nigeria can report.
Dr. Teriba stated this on Arise TV’s breakfast show, ‘The Good Morning Show’.
He explained that such a massive inflow of investment would see to the strengthen the naira, stabilize exchange rates, and positively and rapidly stimulate the economy which is still reeling from runaway inflation.
Dr. Teriba argued that bold reforms aimed at attracting massive FDI would be very impactful.
“5% inflation is possible next year. Look at what happened in Argentina. Economists don’t prophesy but make conditional statements. If the president can complement the efforts on tax and finance reforms with an investment act to attract $50bn FDI within the next year, exchange rates will stabilize, and inflation will drop to single digits,” Dr. Teriba stated.
He further noted that the current economic policies which is somewhat hyper-focused on debt servicing, undermines the government’s ability to adequately manage inflation. He pointed out that borrowing money to offset old debts is counterproductive and unable to salvage Nigeria’s economic challenges.
“The interest rates offered to Nigeria by international creditors are among the highest globally, primarily due to the country’s poor credit rating. This makes borrowing inefficient and unsustainable as a long-term strategy,” he said.
Dr. Teriba criticized the government’s current borrowing practices. He noted that many countries with economies comparable to Nigeria’s borrow at significantly lower rates because they utilize more enhanced debt management instruments.
“They said they were not going to borrow, but they have continued to borrow. There are right and wrong ways of borrowing, and efficient and inefficient methods. The foremost issue is the quality of the debt instruments you issue. Some countries of similar economic size borrow more heavily than we do but at a third of our rates”.
“If we remain on this trajectory of high-interest borrowing and poor credit management, we’ll miss the opportunity to stabilize our economy. However, if we adopt bold reforms and attract $50 billion FDI, Nigeria can transition to an era of growth and stability.”
He further stated that Nigeria’s over reliance on borrowing to fund budget deficits is unsustainable.
“We should not continue to fund deficits year in, year out with debt. A country with a well-structured balance sheet would prioritize equity over debt,” he concluded.
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