Background: The country has had many economic troubles in the recent past, including stagnant growth, rising inflation, and exchange rate troubles. It became a pariah state of international capital markets after defaulting twice on its sovereign debt. It sought to finance government spending through money printing. And so on. The typical economic basket case.
Enter Mauricio Macri, who assumed office in December 2015 and immediately started implementing reforms. He got rid of the exchange rate controls and allowed the currency adjust itself. He scrapped a variety of export taxes and quotas: Not reinventing the wheel or thinking outside the box. Not appealing to local solutions to local problems. Just doing what many, although not all, economists who have studied Argentina say should be done.
You don’t need to tell investors that you are a credible investment destination. You need to show them. Actions speak louder than words.
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. I’m not suggesting that 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 depoliticise fuel pricing.
These two things had to have been done since May 29th 2015. It is April 22nd 2016 and those decisions haven’t yet been made.
Nonso Obikili holds a PhD in economics and works as a researcher and consultant. He has published peer-reviewed articles in various international academic journals and blogs frequently on Nigerian economic issues. Follow him on twitter: @nonso2.