Nigeria must levrage on its national assets in order to attract foreign exchange inflows and build huge external reserves needed to achieve stable exchange rate, said Chief Executive of Economic Associates, Ayo Teriba.

He added that the country remains the only big economy of the world that builds airports and not terminals, where about 40 percent of the revenue in aviation is made.

Teriba made the submissions during the 2024 Vanguard Economic Discourse themed: “Reforms In An Era Of Global Uncertainties: Whither Nigeria? held at the Civic Centre in Lagos, where he further submitted that there is a need for Nigeria to build up reserves that would support a trillion dollar economy.

His words: “We are in the midst of global economic uncertainties and fortunately, Nigeria has a new government, Tinubu, Shettima administration that gives Nigeria an opportunity to look at things afresh. Since the democratic transition in Nigeria in 1999, this is the first time; democrats who struggled for the democratic transition agenda are having a bite at the presidential seat. Ironically, Nigeria’s transition has produced two retired military officers and former heads of state, of the 34 years, 16 years has been under retired military heads of state. This is the first time you have people who were at the forefront of the struggle occupying the Aso Rock zone. The country and the democratic class cannot afford to fail these 30 years struggle. Both the president and vice have been members of the national assembly, senators, both of them have been state governors for eight years; they have been leading so they can speak to relate with the sub nationals, the legislators.

They have no reason to fail, they have to succeed; we need no excuses. I would contribute my own simple suggestions, and the first is that, I see what the government is doing in trying to find money with which to run the government, maintain people’s welfare and transform this into infrastructure. I have a very simple message for them.

As far as this country is concerned, the major lesson coming from the global uncertainty is that the age when you can rely on GDP or income to generate the resources you need to run governments is in the past. We are facing a post-industrial transition, and the major loss in that transitory process is output that our own GDP has declined steadily over the last 10 years, since 2015, from $600 billion to $350 billion.

If that is what you are trying to tax or borrow against our exports, it leads to decline, if you are trying to rely on exports or tax or debt, you borrow against income, which is the error of the past decade, that both the Jonathan administration that was there when the oil commodity prices collapsed, and the government needed to find a pathway from income dependence towards asset dependence. You find that any country that is still struggling to depend on income or output, including Japan,  Germany,  all the Euro area countries that were industrial champions and trade champions, are stagnating from the decline.

Japan shares a common feature with Nigeria, it GDP has declined steadily over the last one decade, it is not about, I am strong, I am an industrial giant, it is about the reality of global post-industrial transition that output dependence within the past replaces asset dependence. Some of the best examples of countries depending on assets include: United States that continues to grow steadily, led by its companies. India that has jumped from being the 10th GDP in the world to the 5th, would soon be the third, would soon over take Japan and Germany, to be the 3rd largest GDP, look at what they are doing, they are connecting global liquidity to their local assets. I had the CEO of Invest India say that since 2015, they have attracted $500 billion in FDI, it really does not matter what they lose from exports, they are able to generate more than compensate for it by turning to assets.  Nigeria is rich in assets, look at Saudi, UAE or even Malaysia leveraging on assets to find the resources to meet world values to do infrastructure to be strong to build reserves.

My second point is that we need to turn to assets. Nigeria is very rich in assets, we are rich in state-owned companies and we need to take them to the market. Expand to equity, raise five percent equity, I am not saying sell them, establish their market value, we don’t know what they are worth, our balance sheet are weak. Compare that with Saudi that took over the market in 2019 and Saudi is worth more than $2 trillion now. Is there half a trillion dollars hiding somewhere, corporate assets that we own? We would be the better for it if we discover those values, because we can leverage them.

We have real estate that is potentially valuable, they are not valuable but they are idle, they are not real estate. We have the National Stadium, many of the barracks; Onikan sitting next to Eko Atlantic city should be relocated. Market value is going to be similar to the market value of Eko Atlantic city, we earn nothing from it and we borrow $2 billion, $3 billion, think of what you can leverage your real estate assets.

We have infrastructure, we are the only big economy of the world that remains that builds airports but not terminals, where the money is made. 40 percent of the revenue in aviation is made in terminals, where people can shop, hospitality can be provided. Some people provide office accommodations, some provide hotel accommodations, we don’t build terminals which investors are willing to jump at. We can open doors to investors to build terminals in transportation; there are opportunities not just in travel, in power transmission. The generation is not our problem, transmission is. How did we get capacity in telecom? Open the space to investors and let investors come in. We have assets we can leverage on and we suffer needlessly because we just neglect to leverage on our assets.

We must move from income-centricism to asset-centricism, the sooner you move on to asset-dependence, the better for the future of Nigeria.

I will be the first to comment on the Forex theme at the central bank, because I am a living witness because we are all witness to the crisis at the private sectors, within CBN, within the banking system, within the foreign exchange market and in the economy. In the last six months we are bringing orderliness back into the foreign exchange market, they led us out of an opic regime in which no one knew what was happening, and we were shocked over about 2.4 billion false claims of forex. They led us out of that opic regime to a more transparent regime, is commendable. They led us out of an exclusive exchange regime were a group of players were excluded and that group of players are now in the regime of inclusiveness.

Everybody that deserves a place on the table told us how many new IMTOs have been licensed and they’re talking with the BDCs and the rest of them, removing unreasonable licensing fees. It’s commendable and most importantly they achieved unified exchange rate that had eluded us for a decade, they unified the exchange rate.

My only concern is the persistence of the volatility of the exchange rate, they are tightening, they are doing administrative interventions, but we can all see that the reason exchange rate is volatile is that our reserve limits are inadequate. And we hear the central bank, in particular the government saying loud and clear to banks that they should prepare to build their capital base to levels that will make them able to play in the trillion dollar economy.

What I don’t hear, anybody from the central bank say is what they are doing to ensure that Nigeria also builds up reserves that would support the trillion dollar economy. It is a conversation that we have to move to the front burner not coming to tighten monetary policy. Tightening monetary policy without reserve adequacy can be futile. Let us speak more about what is being done to ensure $40 billion in reserves is not adequate even for a $350 billion