The United States Deputy Treasury Secretary, Adewale ‘Wally’ Adeyemo, said a stable naira and strong microeconomic outlook are critical to achieving sustainable economic growth.
Adeyemo, who is the most senior official of African descent in President Joe Biden’s administration, said this yesterday during a media interaction in Lagos.
Whereas the U.S. is deeply interested in sustaining its strong economic tie with Nigeria, he told the media that some of the American businesses he spoke with are not investing much in the country because of weak macroeconomic indicators.
He commended the liberalisation of the foreign exchange (FX) market but noted that there are several many other steps the government needs to take to stabilise the local currency to unlock the country’s investment potential.
Earlier in his address at the Lagos Business School (LBS), Adeyemo said Nigeria must strengthen its macro-economic framework and institutions as well as ensure ease of capital flow to incentivise and attract investors.
Adding that the U.S. remains committed to a strong U.S.-Nigeria relationship built on shared values and mutual benefits as well as foreign investments in Africa’s biggest economy, he said companies need to feel comfortable and assured that their funds will not be trapped to bring their money into the country.
Speaking further, he said the US wants to partner Nigeria to accelerate economic reforms, unlock Nigeria’s economic success and make the country its largest trading partner in Africa. He added that they are already one of the largest foreign investors in Nigeria and in addition to both countries’ trading activities, they provided Nigeria with over $1 billion in assistance last year.
Adeyemo said this a critical moment for Nigeria, where decisive actions by the government can create the changes needed to unlock unrealised opportunities. Adding that Nigeria’s greatest resource is not oil but the people, he said creating jobs and access to opportunity for the masses is essential to Nigeria’s success.
“It is clear from my conversations with investors and foreign companies that they are eager to invest in Nigeria to help grow a diversified economy that can meet your needs. We know that with the right macroeconomic framework, Nigeria can be a destination of choice for FDI,” he said.
He said that while demographics and capital can fuel an economic boom, small and medium-sized enterprises (SMEs) remain key to sustaining growth.
“There are over 40 million micro, small and medium-sized enterprises (MSMEs) in the country, which employ more than 80 per cent of Nigerians and these businesses represent the heart of the Nigerian economy. For these businesses to thrive, they need government policy to go from being the problem to providing solutions. These businesses can be drivers of growth, but require an ecosystem of public-private partnership that fosters investment,” he said.
Reiterating that they are ready and eager to partner with the people and government to build a better future, he said Nigeria needs to invest in digital infrastructure and create a conducive economic environment to not just accelerate SME growth but attract foreign investors.
“Nigeria needs a stable naira. Unifying Nigeria’s foreign exchange rate will also create the kind of macroeconomic stability that is essential to attracting FDI. The path to unification is not easy, but going backward would be even worse.”
“The government also needs to articulate and implement a fiscal strategy that will provide the resources to make critical investments. I recognise the decision to end fuel subsidies is hard for many Nigerian households, but it was an important early step to create resources the government can use to invest in physical and digital infrastructure, education, and a strong small business environment.
“There is nowhere this need is greater than the agriculture industry, which despite the digital revolution taking place remains Nigeria’s top employer. Its full potential is held back by issues like access to fertilizer, limited use of new technology, access to water and land, unavailability of credit and high market entry costs,” he said,
Speaking further, Adeyemo said Nigeria needs to root out corruption and its perception in the business environment. This, he said, would go a long way in removing fears from potential investors. He said creating economic opportunity will require a government-driven effort that addresses these fears by shining a light on corruption, holding people accountable and taking meaningful steps to improve the business climate.
“Nigeria is a hotbed for digital entrepreneurship. Taking simple steps like moving government functions online, so Nigerians can apply for business and manufacturing licenses and visas using their smartphones and computers will help improve services and reduce opportunities for fees to go into pockets rather than government coffers, he said”
Adeyemo said protecting the integrity of Nigeria’s financial system was also imperative in sustaining economic growth. “Making your banking system more secure will help reduce the ability of criminals, terrorists and others to illicitly use the Nigerian financial system. We are ready to help work through these steps and challenges in financial institution supervision, implementing controls in high-risk sectors and pursuing investigations.”
Vice Chancellor, LBS, Prof. Enase Okonedo, who served as moderator, said trading activities between both countries have always been strong and posited that Adeyemo’s visit would spur even more trade and investment opportunities between Nigerians and their U.S. counterparts.