- Oil Discovery Exposed Nigeria’s Economy to Vulnerability –Emefiele
The Governor, Central Bank of Nigeria, Mr Godwin Emefiele, has said the discovery of crude oil and the country’s increasing reliance on crude oil revenues have led to a severe downturn in the agriculture and manufacturing sectors.
He said the development exposed the economy to vulnerabilities that normally accompanied an increased dependence on a single commodity for survival.
The CBN governor said given Nigeria’s dependence on crude oil revenues for close to 86 per cent of the country’s foreign exchange earnings and over 60 per cent of government expenditure, the drop in prices in 2014 led to heightened inflationary pressures, depreciation of exchange rate, significant drop in external reserves, and eventually, the recession of 2016.
The apex bank boss said these in his economic blueprint for the economy for the next five years.
Emefiele said if Nigeria had maintained its market dominance in the palm oil industry, which stood at 40 per cent in the 70s, the country would be earning above $20bn annually from the cultivation and processing of palm oil today.
This $20bn earnings, he explained, would have provided a sufficient buffer for the nation, following the drop in crude oil prices.
He said, “At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market.
“Some of these products include cocoa, groundnuts, cotton and palm oil. Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians.
“Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival.
“Our situation is further worsened by the unpatriotic activities of some unscrupulous individuals and businesses who embarked on massive smuggling and dumping of goods that can be produced in the country, thus leading to the demise of our agricultural and manufacturing sectors and hence the attendant high level of unemployment.”
He said the rising volatility in the crude oil market, occasioned by the rapid increase in the supply of shale oil by the United States, which had seen its production rise from 9 million barrels in 2017 to over 12 million barrels, currently posed risks to the Nigerian economy.
The governor said the development finance efforts of the CBN were driven by the need to reduce the country’s reliance on revenues from crude oil.
In order to reduce the reliance on the importation of items that could be produced in Nigeria, he said the bank restricted access to foreign exchange on 43 items while deploying intervention funds to support growth and productivity in the agricultural and manufacturing sectors.
Commenting on the CBN governor’s economic agenda, the Chairman, Chartered Institute of Bankers of Nigeria, Abuja Branch, Prof Uche Uwaleke, said the five-year policy thrust was a good development that would have a lot of positive impact on the economy.
He said the recapitalisation of banks would strengthen financial system stability and put the banks in a stronger position to finance big projects needed for development as well as play in the global scene.
However, the professor of the capital market called on the apex bank to have an alternative plan due to volatility in crude oil prices, which might have a negative impact on price and monetary stability.
He said, “Emefiele’s five-year policy thrust is a good development with a lot of positive impact on the economy.
“The recapitalisation of banks will strengthen financial system stability and put our banks in a stronger position to finance big projects needed for development as well as play in the global scene.
“The major risk I see in the pursuit of price and monetary stability, which is the core function of the CBN, is the volatility in crude oil price, given our dependence on the sector.
“The CBN is, therefore, advised to have a plan B in its five-year plan. It is also vital to get the cooperation of the fiscal authorities, especially when it comes to the task of achieving double-digit growth because, on this very score, the CBN cannot clap with one hand.”
Vice President, Yemi Osinbajo Seeks Collaboration With Vietnam on Agriculture and Technology
Nigeria’s Vice President, Prof Yemi Osinbajo has sought collaboration with Vietnam in the areas of agriculture and technology. The vice president spoke in Vietnam at a bilateral meeting on Monday.
During the meeting with his Vietnamese counterpart, Võ Thị Ánh Xuân, Osinbajo acknowledged both countries’ market potentials in the digital economy, telecommunications, and agriculture.
Speaking at the Presidential Palace in Hanoi, Vice President Yemi Osinbajo noted that telecommunication penetration in Nigeria is one of the deepest in any developing country, stating that about 120 million Nigerians now use one telecom service or the other.
Calling for collaboration on digital economy, Osinbajo said “We have close to 120 million of our citizens who have put to use telecom equipment or devices. And also, broadband connectivity is vastly improved. We hope that by 2025, we will have broadband connectivity for all of our over 200 million people”.
On the call for collaboration in the area of agriculture, the vice president noted that cashew production is an important area in which both counties can partner.
He said ” Given the food crisis that the world faces today, and is likely to continue facing even in the coming years, I like to say that the way forward is for our countries to collaborate. For instance, establishing cashew processing plants in Nigeria”.
Investors King understands that Vietnam is the world’s second-largest cashew processor with an annual processing capacity of 1.2 million tons representing up to 40 percent of the world’s total capacity.
Speaking at the event, the Vietnamese Vice President commended Nigeria’s leadership role in the ECOWAS sub-region and Africa generally, especially in the peaceful resolution of disputes.
She also commended Nigeria’s handling of the Covid 19 pandemic while reposing confidence in Nigeria’s ability to resolve challenges confronting the African continent and the West African region in particular.
Conclusively, she added that her country would continue to work with Africa to meet its aspirations in agriculture, clean energy and digital penetration.
Togo, Benin, and Niger Republic Owe Nigeria N4.1 Trillion in Electricity Debts
Nigeria currently supplies electricity to the Republic of Benin, Togo, and Niger through the Nigeria Bulk Electricity Trading, NBET Plc
The House of Representatives on Public Account has disclosed that Nigeria’s neighbouring countries, Togo, Benin, and Niger Republic owe the country about N4.1 trillion in electricity bills.
The revelation was contained in a letter sent by the committee to the Managing Director of Nigeria Bulk Electricity Trading, NBET Plc, Dr. Nnaemeka Eweluka.
According to the letter which was signed by the Chairman of the Committee, Hon. Oluwole Oke, the Managing Director of NBET is expected to appear alongside Dr. Marilyn Amobi, who served as MD/CEO from 2016 to 2020.
The house committee has accused the former MD, Amobi of non-rendition of the Audited Accounts for the years 2014, 2015, 2016, 2017, 2018, and 2019.
Investors King understands that Nigeria currently supplies electricity to the Republic of Benin, Togo, and Niger through the Nigeria Bulk Electricity Trading, NBET Plc. About 6 percent of the electricity generated in the country is sold to the neighboring countries.
Meanwhile, according to the managing director of NBET, the federal government is working on structures that will enhance power distribution in the country, stating that most of the power-generating companies are currently located in the southern part of the country.
“Most of the power generation companies are located within the south-south and south-west largely because of gas with one in the south-east, of course, we have the hydros in Niger state,” he said.
The MD added that Nigeria could generate up to a capacity of about 14,000 megawatts. He however noted that the distribution capacity is only between 4,000 to 5,000 megawatts per day.
Eweluka nonetheless sounded a note of hope, making references to the intervention projects that are currently ongoing such as the partnership with Simens.
“To address this gap between what is available and what the system can currently carry; there are a number of intervention projects that the government is currently pursuing, that include the presidential power initiatives in partnership with Siemens,” he concluded.
No Plan to Increase Fuel Price; Says FG
The Federal Government has stated that it has no plan to increase fuel price during the yuletide period.
This assurance is coming amid the nationwide fuel scarcity which has pushed the price of petrol above N250 in many retail stations.
Investors King learnt that fuel is being held for N250 per litre in Abuja and several other cities across the country while black marketers are charging between N400 and N450 per litre.
The scarcity and the high price of fuel are however becoming unbearable for many Nigerians, especially those who have reasons to embark on business travel for the December festivals.
According to the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Ukadike Chinedu, most of the association members, who owned the bulk of the filling stations across the country, were now subjected to purchasing PMS at about N220/litre, which was why many outlets currently dispensed at about N250/litre and above.
He noted that the cost of the commodity has been on the rise due to its unavailability and other concerns in the sector.
He added that the price of fuel could be sold from N350/litre to N400/litre before the end of the year.
Meanwhile, a number of senior officials at the NNPC had stated that the subsidy was becoming too burdensome on the national oil company, as this was another reason for the scarcity of PMS.
According to a source who is familiar with the development as reported by Punch News, “How can we continue to import 60 million litres of petrol daily and keep subsidising it, while millions of litres are either diverted or cannot be accounted for? The burden is too much, as you rightly captured in that story”.
Investors King understands that NNPC is the sole importer of petroleum into the country and it pays billions of naira every month to subsidise the product to N147 per litre.
Reuters News reported that in August 2022, NNPC paid more than $1 billion as fuel subsidy while the federal government earmarked N3.6 trillion as fuel subsidy in the 2023 budget proposal.
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