Dr Ayo Teriba, Chief Executive Officer, Economic Associates, has advised the Federal Government to financialise national wealth for capital gains.
Teriba gave the advice in Lagos at the Nigerian-American Chamber of Commerce (NACC) February Breakfast Meeting with the theme: “Nigeria Economic Outlook 2022: Implications for the Real Estate Sector”.
Financialisation is a process whereby financial markets, financial institutions and financial elites gain greater influence over economic policy and economic outcomes.
Teriba said that the advice was in line with the growing global preference for exploiting assets as portfolios for capital gains more than outputs as transactions for profits.
The economist said this could be achieved by valuation, securitisation, liberalisation and commercialisation of physical, intangible or corporate assets.
Teriba said that it was time to rely more on financialisation targets critical to agriculture, industry and services than on gross domestic product figures.
“Seeking increased government revenues from economic transactions at a time of dwindling global operating margins are a mirage.
“The surest path to full and effective funding of annual budgets and five-year plans is to turn to our portfolio of national assets and unlock liquidity from them.
“Spending a tiny fraction of the time, energy and other resources we currently expend on transaction-centric finance acts on portfolio-centric investment acts, will have bigger liquidity payoffs.
“These will boost government revenue, ease debt burden and create adequate foreign reserves to stabilise the Naira as well as accelerate growth, employment and prosperity,” he said.
Teriba also advised the government to boost digital technology adoption rates in the tech-political space and tech-social space, noting that the country was presented with the same set of e-commerce possibility frontiers as other countries.
Chief Emma Wike, President, Nigerian Institution of Estate Surveyors and Valuers, said that the year 2022 would witness an uptrend in real estate investment and development with assurances of a high return on investment.
According to him, the real estate sector will play an integral part in the nation’s economy as in the U. S. where real estate business and investment provide a source of revenue and housing for millions of people.
Wike said that real estate market in Nigeria was filled with opportunities for profitability, given the country’s population of over 200 million.
“Before this time, we observed that the sector was witnessing an emerging market characterised with investment in residential, hospitality and commercial property, with private developers playing key roles.
“Real estate is a reliable route to revamp the economy, and it can drive growth and job creation if harnessed with the right enabling environment by the different levels of governments.
“Analysts have also expressed optimism that full implementation of the 2022 Budget will shore up productivity and impact the economy immensely, especially if the focus remains largely on infrastructure development and improved security.
“It is expected that businesses and households will fare slightly better than they did in 2021,” he said.
The estate surveyor said that there was the need for governments to come up with clear-cut policies to address the challenges to real estate funding and investment in Nigeria.
He listed critical challenges to housing development to include land tenure system, regulation around land use, ease of securing or transferring land title, physical planning laws and their enforcement.
“The Land Use Act should be reviewed to make it more relevant and in tune with the needs and aspirations of Nigerians.
“As it is today, the Act is a damper to real estate investment and development.
“Tied closely to this is provision of infrastructure that supports land use and population densities, which is mostly inadequate.
“Government should concentrate more on provision of infrastructure, easing the burden on property developers, and ensuring a more cost-effective and affordable home development,” he said.