The story today is about Argentina.
Background: many economic troubles in recent past including stagnant growth, rising inflation, and exchange rate troubles. Pariah state of international capital markets after defaulting twice on its sovereign debt. Financing government spending via money printing. And so on.
Enter Mauricio Macri, assumed office December 2015 and immediately started implementing reforms. Got rid of the exchange rate controls and allowed the currency adjust. Scrapped a variety of export taxes and quotas. No reinventing the wheel or thinking outside the box. No local solutions for local problems. Just doing what many, although not all, economists who have studied Argentina say should be done.
The results? Optimism. Not just from Argentinians but from international investors as well. The kind of optimism that means that investors want to give you a $65bn loan when you only asked for $15bn. Not saying all is well and everyone is happy but at least the light at the end of the tunnel is getting brighter.
Morale of the story? You don’t need to tell investors that you are a credible investment destination. You need to show them. Actions speak louder than words.
What actions does Nigeria need to take to show the world (including China) that we are ready to move forward?
1. Let the naira adjust.
2. Let fuel prices go and depoliticize fuel pricing.
These two things had to be done on May 29th 2015. It is April 19th 2016 and those decisions haven’t been made.