SOLVING Nigeria’s economic challenges lies in addressing the issues around liquidity, stability, growth, and harmony, according to Ayo Teriba, a renowned economist and chief executive officer (CEO) of the Economic Associates (EA).
To Teriba, who spoke with The ICIR, the transition of power to President Bola Tinubu offers Nigeria an excellent opportunity to make fresh efforts to solve lingering economic problems, and to stabilise the growth and progress of the economy.
The four dimensions of liquidity, stability, growth and harmony, Teriba explained, are holistic, inclusive and sequential to each other.
“You cannot talk about stability without liquidity, you cannot talk about growth without stability, and you cannot talk about harmony without growth,” the economist explained.
He believed the new administration could improve on the experience Nigerians had under Buhari’s eight years of administration.
He also stressed that the change of leadership is presenting Nigeria an opportunity to address its difficulties, saying, “There is now a fresh set of hands and eyes who is going to make a fresh set of interventions.”
Teriba reminded that former president Muhammadu Buhari spent eight years in government, and the country was never liquid: it never had enough money to spend in its budgets nor enough foreign exchange to meet external demand for goods, services, and financial claims.
“Government lacked liquidity, and the financial system did not have adequate liquidity to fund growth. The little money we had went to the cost of borrowing, which kept rising.
“Buhari could not have enough revenue to back his spending, and ran a deficit. He left a mountain of debts at home and abroad and within the Central Bank of Nigeria (CBN). We are talking of more than N20 trillion in the domestic debt market, more than N20 trillion in CBN, and about N20 trillion in external debts,” Teriba said.
He then asked, “What is President Tinubu going to do differently in this aspect? How is he going to find money to fund the government spending? How will he find adequate foreign exchange? And how will he support the growth of micro, small, medium enterprises and large corporations? Teriba asked.
Teriba posited that the illiquidity in the financial system precipitated instability, adding that Nigerians watched all economic stability indicators, whether internal or external, deteriorate under Buhari.
For instance, when the former president came into office, the naira was about N200/$1, but now it is above N400/$1 at the official rate and close to N800/$1 at the unofficial rate, Teriba noted, lamenting the existence of a multiplicity of exchange rates.
“A look at the domestic dimension of stability showed that inflation was single digit when Mr Buhari became president. It is above 20 per cent now, and it has been close to 20 per cent for the last three years.
“If Mr Tinubu is going to be able to stabilise the exchange rate and inflation in a sustained manner, he must first ensure that Nigeria has adequate internal and external liquidity buffers that will underpin stability,” he told The ICIR.
Teriba said solutions to illiquidity and instability, economic growth, employment, or prosperity were lacking in past administrations as Nigeria was in and out of recession very often, and while employment was always declining, unemployment was always rising.
“Nigeria was largely in recession. The economy was often in decline, and when it grew, it was sluggish. That is the story of the last eight years,” he said.
As Tinubu is talking about six per cent or 12 per cent gross domestic product (GDP) growth, Teriba pointed out that there is about a 40 per cent unemployment rate.
“You cannot separate growth from the unemployment question, where able-bodied people cannot find work to do.
“It is more about knocking off the 40 per cent unemployment rate closer to zero than about 12 or six per cent growth. Tinubu could bring the country’s underutilised human, real estate, and infrastructure into full use, and we could double the economy within the next four or five years,” he suggested.
Teriba submitted that because the country had failed at the levels of liquidity, stability, and growth, it had also over the last four years increasingly failed on the harmony scale.
“When there is inequality, there is an unease. The poor are getting poorer, while the rich are getting richer. The gap between the rich and poor is widening. It is a sort of tension,” he said.
He recommended that for the good of the country, the Tinubu regime would do well to solve the liquidity, stability, growth and harmony problems inclusively and sequentially.
“The story is no longer about how sick the patient is, but about the opportunity presented for the physician to turn things around. What Nigerians and the global community expect from President Tinubu is to identify opportunities, seize them, and turn things around for the country,” Teriba maintained.