Nigeria to Leverage Assets Over Debt to Unlock Liquidity – Edun

Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, said Nigeria will leverage national assets that are lying fallow to help unlock liquidity rather than using sovereign debt.

Edun disclosed this while speaking at the launching of the Afrinvest 2023 Nigerian Banking sector report.

He was represented by the Managing Director/Chief Executive, Ministry of Finance Incorporated, (MoFI), Mr. Armstrong Katang.

The minister said that it will be cheaper raising capital from assets that are lying fallow, than using sovereign debt as the country is laden by financial obligations.

“A lot of our assets are being wasted. Those assets can unlock liquidity rather than borrowing,” said Edun.

“We have to enumerate all the assets across different classes, introducing governance, monetising and optimising the assets,’’ said Edun.

Speaking further, Edun said the above will be achieved via a National Assets Register, to be created by MoFI, which will be leveraged to generate revenue of up to 3.0 per cent of the nation’s Gross Domestic Product, GDP or $13.3 billion.

Edun added that the plans will also be used to increase the value of National Assets Under Management, AuM, of the MoFI to N100 trillion from the present value of N18 trillion.

Edun added that rising interest rates and mortgage rates in the United States as a result of an aggressive tightening cycle by the US Fed that seeks to tame stubborn inflation are deleterious to financial markets in emerging and developing countries’ economies (EMDEs).

Of course, a strong dollar and depressed investor confidence boosts 10-year EMDE local-currency bond yields, widens EMBI+ sovereign risk spreads, dampens capital flows, depreciate currencies and depress equity prices.

The minister pointed out to participants at the event that the geopolitical tension such as the lingering war between Russia and Ukraine has ballooned the price of wheat, which further aggravated inflation as both countries are the largest exporter of the grain.

To stabilise the economy and ease the flow of foreign currency, the new administration has implemented some reforms such as the unification of the exchange rate and the removal of subsidies on Premium Motor Spirits (PMS).

This new currency reform has resulted in a 63 percent slump in the value of the Naira. In addition, all the existing official FX windows were collapsed into the I&E FX Window.

The country’s  headline inflation rate for September stands at 26.72 percent, according to data from the National Bureau of Statistics (NBS).

Global financial advisory service firm, KPMG has stated that headline inflation in Nigeria will reach 30% by December 2023.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has increased the benchmark interest rate (MPR) by 25 basis points to 18.75% from its initial 18.5%, representing the highest interest rate in 22 years.

Also speaking at the event, managing director and CEO of Pinnacle Oil and Gas Ltd, Bob Dickerman, said Nigeria has wonderful regulations but enforcing them remains a problem.

He added that foreign investors are avoiding the Nigerian market because of vague or nebulous regulations as he bemoans the country’s reliance on oil for foreign exchange.

“The population is an asset. I have not seen a country that depends so much on oil like Nigeria,” said Dickerman.

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