By Itohan Abara-Laserian
Lagos, Feb. 11, 2021 Mr Johnson Chukwu, Chief Executive Officer, Cowry Asset Management Ltd., has said that Foreign Direct Investment (FDI) was crucial to boosting capital inflows for funding of the country’s capital projects.
Chukwu said this while presenting a paper titled: ‘Addressing Nigeria’s fiscal challenges – Exploring Alternative Funding Approach,’ on Thursday in Lagos.
The webinar was organised by the Capital Market Correspondents Association of Nigeria (CAMCAN).
He stressed the need for appropriate policies that would attract more FDIs into the country for infrastructure development.
He noted that Nigeria recorded $1.44 trillion inflow of FDI in 2015 as against $1.028 trillion reported in 2020.
“It is a far cry compared to countries like Ghana whose receipts are two times what Nigeria realised and Egypt which is seven times what we received.
“The FDI is an important source of capital funding for a country like Nigeria. Nigeria needs to come out with appropriate policies that will attract FDI, especially on foreign exchange.
”This is because as it stands today, a country may not have the wherewital to fund most infrastructure like the telecommunications sector, specifically Nitel.
“Looking at the size of the economy, what we get as capital inflow is nothing compared to the size of the economy,” Chukwu added.
He said that Nigeria needed to look at foreign exchange policies and sectors of the economy that the country could create appropriate incentives to attract foreign capital.
Chukwu observed that Nigeria has a huge revenue challenge when compared with its expenditure.
“Nigeria has a huge revenue short fall which means we have to look for fund outside government budget .
“Total revenue has remained largely flat between 2015 and 2020.
“In 2015, total revenue realised by the Federal Government stood at N3.24 trillion as against N3.47 trillion reported as of November 2020.
“There has been a steady growth in expenditure. As of 2015, total expenditure stood at N4.76 trillion in contrast with N6.24 trillion recorded from January to November 2020.
“The challenge we have in this country is a revenue challenge, we don’t have the revenue size to support the type of government we run. That’s why our recurrent expenditure has been increasing while our revenue remains flat.
“We need alternative sources of funding approach to finance the country’s development,” Chukwu said.
He added that once capital expenditure was not growing, the country would not develop.