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 revitalizing 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, said that the lecture topic was timely, having come at a time the MOUAU College of Management Sciences is being re-inaugurated after its hitherto closure, along with some other colleges and courses, then considered in some quarters not to be relevant in an agricultural university or strictly directly related to farming and agriculture management.

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 favorable investment scenarios/panaceas or a climate that would entice and lure both potential foreign and domestic investors.
According to him, while the upward trend of inflation in Nigeria is largely influenced by macroeconomic variables that include fiscal deficits, uncontrolled growth in money supply, interest rates, and exchange rate volatility, other causes are imported inflation, insecurity, middlemen 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: implementation of strict fiscal policies to reduce budget deficits; alignment of money supply growth with economic output to prevent excess liquidity; adoption of balanced interest rate policies that control inflation without hampering growth; as well as stabilization of exchange rates to mitigate the effects of imported inflation.

Adding to these, he advocated for a more investment-friendly environment for commercial banks and other sectors, plus strategic policies that ensure efficient allocation of public resources, predicting that once such key economic drivers are put in place, Nigeria’s financial ecosystem would stabilize, with results on long-term economic sustainability.

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