As the nation grapples with the rising crisis of credit crunch, no thanks to the fall in the price of crude oil at the International market, the non-oil sectors, especially the information and communication technology (ICT) can help the economy to rebound, renowned economist, Dr. Ayo Teriba has said.
Teriba, who sits atop at Economic Associates, an economic think tank that provides clients with the economic information required to spot new opportunities and risks in the Nigerian environment among others, spoke at a television magazine programme monitored in Lagos.
According to him, policy makers and analysts gloss over the contribution of the non oil sector, especially the ICT sector, which he says has helped to generate millions of jobs as well to the growth of the Nigerian economy.
While acknowledging the fact that year 2015 has been a challenging year for the Nigeria economy both from the external front because of the weakling of commodity prices especially oil price, he says the nation should look beyond oil.
“One key issue is the fall in the oil revenue that means government has to look beyond oil and look towards non oil revenue in particular because of the very ambitious capital project the government will have to embark upon especially in infrastructure,” he said, adding: “I think that the government should accord more priority to attracting private investments particularly foreign investments into the infrastructure sectors.”
The ICT and telecoms sector, he maintained, can help to shore up the nation’s dwindling oil receipts. “The best way to think about revenue generation is growth. If you are able to stimulate growth you can count on more revenue been generated and the best way to stimulate growth is to ensure that investment keep flowing into sectors that need them. If you have steady flow of investment that is going to lead to growth, that will lead to improved revenue for the government.”
Expatiating, he said: “The telecoms operators have been a major source of revenue to the government and I do not think that government has previously raised any issue or conflict about their contributions to the government purse. The incident of breech of regulatory directive is an isolated development and I do not think that that should define the relationship between the government and the ICT companies.”
Teriba who spoke against the background of the ongoing rancor between MTN Nigeria and the Nigeria Communications Commission, said: “You cannot because of an isolated event rubbish the cordial relationship that existed between these companies and the Nigerian government for over one and a half decade; we are talking 15 years.
“In the ICT sector, we have one of Nigeria’s most successful example of liberalisation; Nigeria’s most successful example of attracting and retaining non oil investments. I hope that we would be able to replicate that success elsewhere for example in rail, housing, works, pipelines, gas distribution and others, and not make a mountain out of a mole hill.”
The World Bank, and as a Visiting Scholar at the IMF Research Department in Washington DC, while reviewing the 2016 budget proposal by the government, said it is laughable that Nigeria wants to borrow N2trillion, to be invested largely in capital projects.
Raising some posers, he said: “Should Nigeria borrow money from investors at home and abroad or they should encourage the investors to come in to Nigeria to do business the way it was done in the telecom sector?”
The bulk of the money to be borrowed, he argued, “Will be spent by the government and they are unlikely to have equivalent returns. However, a private investor will invest that money, meet the demand, solve the infrastructure bottle necks and make more profit because they take more judicious investment decisions. So, we should be happy that Nigeria can benefit from such venture.”
“On following the global trend on attracting foreign direct investment (FDI), Teriba said: “The fastest growing economies in the world today accord a place of importance to foreign investments. For instance, India used to be protective.
He reiterated that: “If government borrows N2trillion this year, it creates a burden of servicing the debt and the challenge of paying it back. However, if you get the same N2trillion in foreign investment, you never pay back, it’s irreversible. One of the companies that won the GSM license originally is no longer operating it. Ownership of that company has changed hands about two or three times but the operations continue. In that aspect, investment is better than you borrowing to fund capital spending.”
“If we allow investors come in, they are not depositing their money in the bank but they are investing it irreversibly. If they want to leave, they have an option of selling their investment to another investor. But if you borrow you borrow N2trillion now, in one or two years you have to pay back and as long as the debt is outstanding you have to pay hefty sums to service them. Whereas if you get investors they will bring in investment, they will pay you some fees and then they will be generating revenue; they will be paying us taxes, they will be generating employment and so on.”
Most of the leading countries in the world, he observed, “give a pride of place to foreign investments. India in the first half of this year got more than $30 billion dollars from foreign investments; they came first, followed by followed by the United States and then China that also got very close to $30 billion in the first half of the year. “
Nigeria, he stressed, “Should be trying to join countries like that. We should solicit these investments. As is it, presently, I do not see any strong appeal to investors in the budget proposals and I believe we can do better.”