A stakeholder in Nigeria’s energy sector, Mr. Gbenga Olawepo-Hashim has indicated that the country may be set for a huge economic growth owing to the current financial and economic reforms by President Bola Ahmed Tinubu in the past one month of his ascension to power.
According to reports, the new administration inherited a floundering economy with gross domestic product growth rates for 2022 at 3.1 per cent, and for the first quarter of 2023 at 2.31 per cent. The 2022 trade surplus at only $2.85 billion dwindles in comparison to 2014’s $54.1 billion.
Also, foreign direct investment into Nigeria’s economy fell from $2.2 billion in 2014 to $0.47 billion in 2022, while budget deficit rose by 370.54 per cent from 2016 to 2023. Total public debt as of June 2013 was N7.93 trillion. It’s now at around N77 trillion.
But in the last one month, President Tinubu has announced two major economic reforms. One is the end to the debilitating petrol subsidies, while the other is the unification of the Naira’s multiple exchange rates. The petrol subsidies, experts agree, has strained Nigeria’s public accounts, contributing to a situation where higher global oil prices hurt, rather than help the economy.
Olawepo-Hashim told journalists in Abuja on Monday that the current policy reforms had eliminated distortions in the foreign exchange management on the one hand; and the removal of the corrupt system of oil subsidies on the other hand.
Before now, in Nigeria, there are four foreign exchange markets: the Interbank market, the Investors and Exporters window, the Bureau De Change window, and the Small and Medium Enterprises window. However, due to the limited foreign exchange supply from exporters and foreign investors, the Central Bank of Nigeria played a significant role in supplying foreign exchange (in this case, United States dollars) to these windows.
Olawepo-Hashim however stated that the policy to unify the exchange windows should have a long-term positive effect on foreign exchange rate and free flow of capital in the country while also yielding a positive impact due to increased confidence in the new government.
According to him, the removal of subsidies regime in the pricing of petroleum products is expected to lead to more investment in mid and downstream subsectors of the oil and gas sectors with a net effect of creation of value added needed jobs.
He stressed that the new law on decentralization of electricity generation, transmission and distribution if properly implemented with concomitant policies, is capable of attracting about US$300 billion over five to 7seven years into the electricity sector from local and foreign financing sources.
He explained that Nigeria, at per capital comparison with South Africa, needs to generate, transmit and distribute about 200,000 MW of electricity, adding that “we can, if we stay steadfast to needed reform. Nigeria recorded that fit before with liberalisation of the telecom sector as she moved from a nation of 400,000 telephone lines in 1999 to a nation of 222 million active lines now”.
While stressing the importance of a Naira exchange rate based on market indicators and informed projections to settle around N660 to one US dollar in the exchange market within the next six to nine months, Olawepo-Hashim urged government to pay attention to immediate deployment of relevant social intervention programmes to cushion the effect of inflation on the burgeoning numbers of the poor.
He also emphasised that “our economic growth expectations must be inclusive and must not leave the majority of our people behind. It is a great season of hope and confidence for Nigeria. The nation is steadily on to an assured future as an economic power house and great nation”.
He projected that “Nigeria, with the right policy mix, will exceed the projection of PricewaterhouseCoopers (PwC) that Nigeria will be the ninth largest economy in the world by 2050″, adding that “we are capable of hitting the great economic milestone predicted by PwC much earlier and climbing higher on the ladder”.
