Nigeria will seek to encourage investments rather than rely on borrowing to create jobs, Finance Minister Olawale Edun said on Monday, as the new government tries to find a solution to sluggish growth, double-digit inflation and a high debt burden.
Edun, 62, who doubles as coordinating minister for the economy, was speaking to reporters in Abuja after president Bola Tinubu held his first meeting with his new cabinet following last week’s swearing-in of ministers.
“The federal government is not in a position to borrow at this time,” Edun said, adding that the emphasis is on creating a stable environment to attract both local and foreign investments.
Nigeria’s economy has been battered by previously low oil prices and the COVID-19 pandemic, which triggered two successive recessions in 2016 and 2020. The country has since exited that recession but growth is still fragile.
The disruptions weakened Nigeria’s public finances and created large deficits, leaving the previous government reliant on both local and foreign loans to plug holes in its budgets.
Tinubu at his inauguration in May vowed to expand the economy by at least 6% a year, lift barriers to investment and create jobs, while also tackling rampant insecurity.
He has embarked on some of the boldest reforms that Nigeria has seen in years, including scrapping a popular but costly petrol subsidy and removing exchange rate restrictions. The naira has weakened to record lows.
The reforms are a gamble to try to kick-start growth but inflation has soared, worsening a cost of living crisis.
Edun, an ex-investment banker, who was special adviser to Tinubu on monetary policy before his appointment as minister, said he will focus on fixing Nigeria’s public finances.
He added that the government’s naira revenues have increased from crude oil proceeds following a devaluation in June.
“The federation earns dollars and if those dollars are feeding through, at let’s say, 700 naira or 750 naira or so to one dollar as opposed to 460 naira where it was before. Clearly, that is repairing the finances of government,” Edun said.
“So, that’s the plan.”