The Federal Government has linked the country’s lack of foreign exchange to its limited export earnings.
At the Chartered Institute of Directors’ 40th annual conference in Abuja, Wale Edun, Minister of Finance, stressed the need for further economic diversification.
Though the economy has diversified, Edun expressed concern that foreign exchange revenue remains stagnant due to heavy reliance on oil as the primary income source.
“An important part of that is diversification. The economy is diversified as other sectors are increasingly contributing to the economy. But what is not diversified is our source of foreign exchange revenue.
“So, from all those sectors, whether telecommunications, transport, or manufacturing, there are not enough foreign exchange earnings or enough savings to give us what we need, which is the positive balance of trade,” Edun enunciated.
Yet, he highlighted the current administration’s readiness to ensure a steady economy.
“This means one that is growing more than the population growth, one where inflation is low, the exchange rate is stable, and there is a reasonable interest rate for people to borrow and invest in productive activities.”
According to the minister, “the country’s export earnings need to exceed import expenditures to generate foreign exchange for currency stabilisation.”
He elaborated, “Foreign investors show little interest in boosting foreign direct investment due to mounting inflation in Western nations.”
Edun said that this lack of investor interest might push the government to seek solutions and investments from the corporate sector.
He stated, “This development compels us to rely on ‘our domestic resource mobilisation.”
Edun underscored that attracting investment aimed to “boost productivity, foster economic growth, generate employment, and alleviate poverty.”
He said, “The government does not have the funding, and the funding is not available internationally.
They are not really interested, and they have inflation to fight in the Western world, so they have to keep interest high, tighten the money supply, and cannot provide any kind of development financing at the level we need.
“When we talk about investment and attracting investment into the economy, we are not only talking about domestic investors but about foreign direct investments, private investment, and much more than what the multilateral organisations may have to offer.
“The big prize is to make our economy, institutions, and corporate governance such that it attracts people from around the world who are interested and have surplus savings to invest in profitable ventures.”
Expressing his views, former Finance Minister Dr. Olusegun Aganga argued that Nigeria exhibits signs of a fragile economy.
He highlighted the hindrance to economic growth as the absence of policy continuity and effective implementation.
“The economy is the number one priority of any government. In some countries, elections are won or lost because of the economy. Our economy today is relatively small. It is not growing fast enough and is not inclusive.
“It has all the features of a weak economy: import dependence, a weak and unstable macroeconomic environment, and exports of primary products without value addition, among others,” he said.