Professor of Banking and Finance at the Michael Okpara University of Agriculture, Umudike (MOUAU), Abia State, Professor Sebastian Ofumbia Uremadu, has declared that capital formation is critical to revitalising Nigeria’s economy, maintaining that Direct Foreign Investment (DFI) is a significant contributor in driving viable economic growth.

Professor Uremadu, who stated this while delivering the 60th inaugural lecture of the university titled “Navigating the Trade-Off: Profitability Vs Liquidity in Nigeria’s Investment Environment”, included that enhancing infrastructure and strengthening institutional frameworks are other essential steps capable of positively impacting sustainable capital formation.

The Vice Chancellor, Professor Maduebibisi Ofo Iwe, described the lecture topic as timely and applauded the inaugural lecturer (Professor Uremadu) for contributing impactfully to Banking and Finance, positing that the expositions in his lecture would help rejuvenate Nigeria’s ailing investment climate.

He applauded the inaugural lecturer (Professor Uremadu) for contributing impactfully to Banking and Finance, positing that the expositions in his lecture would help rejuvenate Nigeria’s ailing investment climate.

Rating FDI as a major catalyst for capital formation that can significantly bolster economic development during Nigeria’s extant economic challenges, the professor tasked policymakers to formulate fosterable, favourable investment scenarios/panaceas or a climate that would entice and lure both potential foreign and domestic investors.

According to him, the upward trend of inflation in Nigeria is largely influenced by macroeconomic variables, including fiscal deficits, uncontrolled growth in the money supply, interest rates, and exchange rate volatility. Other causes include imported inflation, insecurity, and middleman activities, among others.

He specifically cited the insecurity in the North, which he stated has negatively impacted distribution of food items to the South, lamenting that due to reported alleged Boko Haram and banditry activities that prevent fish farmers from accessing the sea, it is the consequence that reduces output/availability that causes high prices, going by demand and supply determinants.

Noting that fuel subsidy removal has imposed significantly higher transportation costs, thus raising prices of goods across the country, Prof. Uremadu further stated that inflation in Nigeria is multifaceted and requires more than traditional monetary policy tools for effective management.

In this regard, he recommended a multi-pronged approach he listed to include the implementation of strict fiscal policies to reduce budget deficits; the alignment of money supply growth with economic output to prevent excess liquidity; the adoption of balanced interest rate policies that control inflation without hampering growth; and the stabilisation of exchange rates to mitigate the effects of imported inflation.

Additionally, he advocated for a more investment-friendly environment for commercial banks and other sectors, as well as strategic policies that ensure the efficient allocation of public resources. He predicted that once these key economic drivers are put in place, Nigeria’s financial ecosystem would stabilise, with positive results for long-term economic sustainability.

He consequently called on the government to implement policies that encourage domestic investment while reducing over-reliance on foreign capital.