Cost of finance affecting Nigeria’s economic growth — Minister

Nigeria’s Minister of Finance, Budget and National Planning, Zainab Ahmed said cost of finance had remained one of the country’s major challenges.

Ahmed said this at the on-going 36th African Union (AU) Summit in Addis Ababa, Ethiopia on Friday.

The minister spoke during the presentation of the African Development Bank’s (AfDB) Macroeconomic Performance and Outlook Report.

”Our target is to reach the pre COVID-19 levels but we still face a number of challenges a lot of which are global, but affect us locally.

”We have high food prices. Inflation is at a very high rate and still climbing. The Naira also continues to weaken against the dollar, increasing our debt service obligations.

”There is also the issue of cost of financing that we are faced with when we have to go to the market and don’t have any support.

”We end up going at very high cost compared to European countries whose economies are not as strong as ours, ” she said.

According to Ahmed, Nigeria needs financing to invest in critical infrastructure that is required for us to go to industry to expand the fiber optics.

She further said that finance was also needed to provide better quality education among other things for the citizens.

“We have also been asking Money Deposit Banks (MDBs) to consider giving us longer term financing and larger size financing.

“Most MDBs come with financing that enable us to do pilots, we are tired of pilot projects that take years to roll out, we need scale at this time.

“Nigeria has shown a lot of resilience as a country but also the people have shown a lot of resilience.

“And we just need that breakthrough, that support to enable us to take the full advantage within the continent or the Africa Continental Free Trade Area (AfCFTA).”

Ahmed said that the country needed to support micro small and medium enterprises to be able to attain the seven to 10 per cent growth rate projected in the report.

“We are currently growing at an average of three per cent in our country. With a population of 201 million people and with the population increase rate almost at the same rate as Gross Domestic Product (GDP).

“So we need skill in finance and we are also urging countries that are providing support, therefore, to address the high food prices.

“We want inputs and technology and machinery to enable our people to export the food to add value to the food items.

“We don’t need grains to be delivered into our countries.We need to be able to grow the food as well as process it and export this food items across the country, ” she said.

On rating, Ahmed said it was a critical issue and affected the lives of people and the economy.

“It shouldn’t just be a tick box exercise, this assessment should be on a long term basis.

“An incident happens and because of that a country is downgraded and your instruments in the international capital markets goes down too.

“If you go out to ask for financing for developmental projects, you are not able to access the finances, or you access it at very high cost which makes the returns almost impractical to achieve.

“We have done a lot of work in Nigeria, we have moved away from dependence on oil revenues. There’s a lot of reforms. But there are global incidents.

“But in spite that, Nigeria remains resilient and will continue to push the bar, ” the minister said.

Ahmed congratulated AfDB for continuously putting the macro economic outlook together, saying It was important we continue to see the trend.

She said the recommendations provided were very apt and Nigeria would strengthen its reform efforts using the recommendations of the report.