Asset valuation as catalyst for economic growth, development

Given the growing scale of the nation’s economic challenges, including biting inflation, rising unemployment and poverty, among others, it has become important to deploy new economic approaches that prioritise long-term sustainability over short-term gains.

The government must be commended for taking that route through economic reforms being implemented but need to be strengthened with additional measures capable of setting the country towards accelerated, sustainable economic development and growth path.

The importance of asset valuation in economic stability cannot be over emphasised. Valuation has the potential to be a powerful tool for stimulating and driving growth, if properly harnessed and utilised, Nigeria’s assets have the potential to achieve that objective.

Through asset valuation, the valuers determine the present or expected worth of a property, asset, stock, or company. Valuation produces the estimate of the actual price a property is expected to fetch in the open market. Valuation is crucial to driving economic growth in several ways. For instance, economic growth is the outcome of investments. With the reality that investment is a risk, investors would always want to minimise it by investing only in projects that are properly and professionally valued.

Nothing short of an accurate, credible and reliable valuation, in compliance with relevant regulations and standards, would convince, attract and appeal to investors.

In other words, accurate valuation helps attract both domestic and foreign investments. That is why valuation must be accurate, market-driven, focus more on investment and direct market comparison to make it reliable for securing funds/loans as the case may be. With this in place, it will facilitate investments and ultimately economic growth. Also, investors would be reluctant to invest in businesses when proper valuation is not in place.

Resources are efficiently assigned or deployed to growth-oriented endeavours when they are powered by proper and accurate valuation. More capital can be accessed by companies with higher valuations, and this will ensure more investment in growth-oriented activities.

No doubt, accurate valuations ensure and enhance confidence in the financial markets, where investors buy and sell various financial instruments such as stocks, bonds, currencies, commodities, derivatives and raise capital. With more capital raised, more funds are available for investment, and the more we invest in the economy, the more growth we record. Proper valuation enhances this.

Proper property valuation is critical in mergers and acquisitions. Mergers and acquisitions, in turn, are central to strategic consolidations and growth. In other words, valuation helps investors, companies and organisations to make strategic decisions which focus on synergies and a fair price for acquisitions, and ultimately, economic growth.

Understanding the true worth of a company is crucial for making informed investment decisions. Valuation metrics, such as market capitalisation and price-to-earnings ratios, play vital roles in evaluating a company’s economic performance and progress, market position and growth potential. They also provide insights into the performance of different sectors and the economy as a whole.

Proper valuation can drive innovation and contribute to economic growth. That is why venture capital and other forms of equity financing rely heavily on valuation to determine the potential of start-ups and innovative projects.

To ensure accuracy, objectivity and reliability, valuers must strictly adhere to valuation standards, which are sets of guidelines, which highlight and guide the various steps professionals take and how they go about the assignment.

Nigeria’s policymakers at all levels need to take a closer look at the huge benefits of asset valuation to the government’s economic development agenda. Nigeria is sitting on a goldmine; yet, it is going through excruciating economic challenges. Asset valuation is no doubt important to unlocking those potentials and identifying the inherent resources that are available for the benefit of not just the present generation, but also the generations to come.

As Nigeria pushes forward to attain full economic recovery, re-engineering the economy towards sustainable development and prosperity, the country will need sustained efforts to deliver on key public goods for its citizens.

We would need the right partnerships and support to achieve the long-term goal of a prosperous economy, where jobs are created and human development is significantly improved.

Estate surveyors and valuers are key stakeholders to achieving rapid economic recovery through asset valuation and advisory services.

Akwarandu is an Estate Surveyor and Valuer based in Lagos.

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