Famend economist and CEO of Financial Associates (EA), Ayo Teriba, has mentioned that Nigeria’s inflation price will be pushed down to five% by 2025 if the Federal Authorities efficiently attracts $50 billion in international direct funding (FDI).
Teriba made this recognized whereas talking on Come up TV’s Good Morning Present.
He emphasised that such an influx of funding would strengthen the naira, stabilize change charges, and positively affect the nation’s macroeconomic indices, which presently exacerbate its inflation woes.
The economist argued that daring reforms aimed toward attracting substantial FDI can be transformative.
“5% inflation is feasible subsequent yr. Take a look at what occurred in Argentina. Economists don’t prophesy however make conditional statements. If the president can complement the efforts on tax and finance reforms with an funding act to draw $50bn FDI inside the subsequent yr, change charges will stabilize, and inflation will drop to single digits,” Teriba defined.
Teriba famous that the present financial insurance policies, significantly these targeted on debt servicing, undermine the federal government’s capability to attain this goal. He identified that borrowing to repay earlier debt is counterproductive and fails to deal with Nigeria’s underlying financial challenges.
“The rates of interest provided to Nigeria by worldwide collectors are among the many highest globally, primarily as a result of nation’s poor credit standing. This makes borrowing inefficient and unsustainable as a long-term technique,” he mentioned.
“We should always not proceed to fund deficits”
Teriba criticized the federal government’s present borrowing practices, urging a shift towards equity-based financing over debt. He famous that many nations with economies akin to Nigeria’s borrow at considerably decrease charges as a result of they difficulty higher-grade debt devices.
“They mentioned they weren’t going to borrow, however they’ve continued to borrow. There are proper and mistaken methods of borrowing, and environment friendly and inefficient strategies. The foremost difficulty is the standard of the debt devices you difficulty. Some nations of comparable financial dimension borrow extra closely than we do however at a 3rd of our charges,” he mentioned.
He additional argued that Nigeria’s steady reliance on debt to fund fiscal deficits is unsustainable. “We should always not proceed to fund deficits yr in, yr out with debt. A rustic with a well-structured stability sheet would prioritize fairness over debt.”
Teriba referred to as for the federal government to implement a sturdy funding technique that prioritizes structural reforms and incentives to draw international capital. He warned that with out such efforts, inflationary pressures would persist, undermining financial stability.
“If we stay on this trajectory of high-interest borrowing and poor credit score administration, we’ll miss the chance to stabilize our economic system. -u=-Nonetheless, if we undertake daring reforms and entice $50bn FDI, Nigeria can transition to an period of progress and stability,” he concluded.
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