By Stella Odueme
The Independent Media and Policy Initiative (IMPI) has declared that President Bola Tinubu has achieved more in strengthening Nigeria's economy and attracting foreign investment than previous administrations did despite benefiting from huge oil revenues.
The policy think tank said successive administrations between 1999 and 2015 failed to utilise the country's unprecedented oil windfalls to build sustainable industrial capacity and diversify the economy.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, IMPI attributed the failure to the diversion of excess oil revenues into short-term consumption, debt repayment and funding of the Excess Crude Account (ECA).
The group noted that the ECA, which lacked constitutional backing, was depleted from $22 billion in 2008 to less than $3 billion in 2014, largely through distributions used to finance recurrent expenditure rather than critical infrastructure.
It also accused the Central Bank of Nigeria during the period of using foreign exchange earnings to artificially sustain the naira, encourage cheap imports and finance the importation of refined petroleum products.
According to IMPI, the collapse in global oil prices in 2014 exposed these structural weaknesses, triggering a currency crisis, the country's first major recession in decades in 2016 and a sharp increase in poverty.
The think tank said the economic vulnerabilities persisted, resulting in successive current account deficits, which reached $17 billion in 2019 and $15.8 billion in 2020.
It, however, said the Tinubu administration introduced major policy adjustments in 2023 through foreign exchange market unification and the removal of petrol subsidies.
Although the reforms initially triggered inflationary pressures and currency depreciation, IMPI maintained that they had helped reposition the economy, improve external balances and strengthen foreign reserves.
The group further identified domestic refining, increased non-oil exports, particularly agricultural produce, solid minerals and industrial chemicals, as key contributors to the country's improving economic outlook.
It added that positive assessments by international credit rating agencies, including Moody's, Standard & Poor's and Fitch, had helped improve Nigeria's investment prospects, reduce borrowing costs and stimulate gains in the Nigerian Exchange.
In a related assessment, IMPI said the planned expansion of global financial institution, JP Morgan Chase, into Nigeria's banking industry through an application for a merchant banking licence was an indication of growing investor confidence in the country's economy.
The group argued that the move could encourage more multinational corporations to undertake long-term investments in Nigeria by improving access to international financing and strengthening the country's corporate finance landscape.
According to the think tank, a fully licensed merchant bank would enable JP Morgan to provide trade finance, corporate lending, cross-border underwriting and financing for major projects in energy, telecommunications and industrial development.
It said the development would also give Nigerian sovereign and corporate debt issuers improved access to global capital markets while reassuring international pension funds, sovereign wealth funds and private equity firms about the country's economic prospects.
IMPI attributed the renewed investor interest to the Tinubu administration's foreign exchange reforms and petrol subsidy removal, which it said had helped rebuild confidence in Nigeria's external financial position.
The group also explained that the Central Bank's initial strategy of attracting foreign portfolio investments to address foreign exchange backlogs and strengthen reserves was gradually creating room for more sustainable foreign direct investments.
It noted that as inflation moderates and yields on fixed-income securities decline, institutional investors could increasingly redirect their funds from short-term government securities into infrastructure, industrial projects and physical business investments.
IMPI expressed optimism that the ongoing reforms would help transform temporary foreign portfolio inflows into long-term investments capable of expanding productive capacity, creating jobs and supporting sustainable economic growth.