AfDB will support Nigeria but needs to fix FX reforms-Adesina

The African Development Bank will help Nigeria to overcome its recession,but Nigeria should increase taxes and lift hard currency curbs to ease the dollar shortages choking the economy, its President said.

The bank’s boss, Akinwumi Adesina, said in an interview late on Monday in London, that “Nigeria is too big to fail.

“The African Development Bank (AfDB) will rally strongly around Nigeria to overcome its recession.

“They (Nigeria) have a liquidity problem. We (AfDB) want to make sure Nigeria gets resilient,” said Adesina, a former Nigerian agriculture minister.

But the government should also lift hard currency curbs imposed by the central bank, Adesina said.

“In our view it would be better to have gradual (customs) tariffs as opposed to (Forex) restrictions,” he said, adding that such a move would end the pressure on the naira.

“Attracting investment was the only way for the central bank to lower its interest rates. The interest rate is way too high.

“You cannot drag the economy out of recession with those interest rates,” Adesina said.

He said Nigeria had agreed on several reforms such as increasing its value-added and corporation taxes to offset a loss of oil revenues.

He added that the tax-to-GDP ratio was four to five per cent, less than other countries in the region at around 15 per cent.

Nigeria has been hampered after a plunge in oil revenues, which makes up 70 per cent of national income and currency reserves needed to fund imports.

In September, the central bank left its benchmark rate at 14 per cent, resisting calls to lower borrowing costs to attract investment.