ABUJA, Aug 28 Olawale Edun, Nigeria’s Finance Minister, stated that Nigeria will seek to encourage investments rather than rely on borrowing to create jobs, as the new government tries to find a solution to sluggish growth, double-digit inflation and a high debt burden.
Edun, 62, who doubles as coordinating minister for the economy, was speaking to reporters in Abuja after president Bola Tinubu held his first meeting with his new cabinet following the swearing-in of ministers.
“The federal government is not in a position to borrow at this time,” Edun said, adding that the emphasis is on creating a stable environment to attract both local and foreign investments.
Nigeria’s economy has been battered by previously low oil prices and the COVID-19 pandemic, which triggered two successive recessions in 2016 and 2020. The country has since exited that recession but growth is still fragile.
The disruptions weakened Nigeria’s public finances and created large deficits, leaving the previous government reliant on both local and foreign loans to plug holes in its budgets.
Tinubu at his inauguration in May vowed to expand the economy by at least 6% a year, lift barriers to investment and create jobs, while also tackling rampant insecurity.
Tinubu embarked on some of the boldest reforms that Nigeria has seen in years, including scrapping a popular but costly petrol subsidy and removing exchange rate restrictions. The naira has weakened to record lows.
The reforms are a gamble to try to kick-start growth but inflation has soared, worsening a cost of living crisis.
Edun, an ex-investment banker, who was special adviser to Tinubu on monetary policy before his appointment as minister, said he will focus on fixing Nigeria’s public finances.
He added that the government’s naira revenues have increased from crude oil proceeds following a devaluation in June.
“The federation earns dollars and if those dollars are feeding through, at let’s say, 700 naira or 750 naira or so to one dollar as opposed to 460 naira where it was before. Clearly, that is repairing the finances of government,” Edun said.
“So, that’s the plan.”
Now Edun is announcing that the West won’t invest in Nigeria after boasting in September that their neo-liberal economic policies will open the floodgates of FDI.
Tinubu and Edun wrongly believed that if they adopted neo-liberal economic policies, the Western world would pump foreign investment into Nigeria. Therefore they went ahead to remove fuel subsidies which were just 2% of our GDP when the same IMF reported that the global average for fuel subsidies were 7% of GDP. The Tinubu government also believed the hype that if they didn’t support Naira, it would find it’s level and attract FDI, unknown to them that every country supports their currency to remain at least within a 15% gap. Now, they have destabilized the Nigerian economy with their ignorant Our Masters Voice, we are all going to suffer.
Fools only learn from experience, otherwise they would know why the world beats the path to China for economic liberating infrastructure. 66 Black nations tried the neo-liberal economic policies and failed until they went cap in hand to China. GEJ opened Nigeria power sector for foreign investment, but the West had no money to invest so over 90% investment was from Asia. Nobody could finance the $13b Lagos-Calabar railway, our most important economic liberating infrastructure, except China but APC sabotaged the contract GEJ made with them. The same thing with the six refineries that GEJ signed with China in exchange of removing fuel subsidies in 2012 but APC and civil society protested and shut the country down.
I said it before in a previous article that until I see Tinubu and Edun signing contracts with the Chinese, I won’t believe they are serious. Definitely not the likes of India, Dubai, Qatar nor Saudis. Not because I am pro-China but the global finance reality that only China has the money to sponsor infrastructural development. For Tinubu to win Western political backing for his presidential ambitions, he has shunned China to our collective detriment.
Ladies and Gentlemen, fasten your seat belts because Tinubu/Edun have just driven the Nigerian economic bus off the cliff on false hope that Oyinbos will catch us mid air.
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