President Bola Tinubu actually hit the ground sprinting; showing much determination, zeal commitment and courage. He has taken 2 extraordinarily bold steps by abolishing fuel subsidy and equalizing foreign exchange.
This without doubt is causing very severe pain and hardship on the populace. However, in order to ground these policies properly, and reduce the pain on the populace, the President will still need to take more bolder steps.
1. Nigeria must quit OPEC. In about two decades from now, oil reserves may become meaningless. The present allocation of less than 2 million barrels per day for Nigeria with a population of over 200 million people and it’s prevailing strangulating economic conditions, given volumes of export to our main foreign exchange earner (90%) is inimical to our growth as a nation and to the wellbeing of the citizens.
Outside OPEC, Nigeria can reduce it’s selling price of crude but also increase it’s exports to 3 million barells and above per day. This will increase accruable revenue from forex by up to 200% or more, which will allow the CBN have more supply of forex to the banks.
In the face of surplus liquidity in forex supply, Naira will gain tremendous value over the Dollar.
2. The present situation whereby the oil majors earn 60% of our accruable revenue from sales of oil leaving Nigeria with only 40% is no longer economically and financially prudent or reasonable.
Saudi Arabia, using its own Aramco drills its own oil and earns 100% of the revenue from sales. We may not be able to achieve this instantly, but we should renegotiate with the oil majors for the ratio to shift in the favour of Nigeria to 60:40 minimum even if we must add considerable investment in the processing for oil.
3. The NNPC can no longer serve fully, neither can it meet the full expectations of it’s obligations to the Nigerian people. I am inclined to recommend that the President & his team should take a look & study the Atiku Abubakar model as it concerns the NNPC as a commercial entity.
4. Most of the local refineries can still be made to be functional for the next 50 years. Part of the massive revenue inflow from the equalization of the forex regime should be used to refurbish once and for all all our refineries, employing the best acceptable international bidding procedures to choose reputable international contractors to be engaged in the refurbishment programme.
5. Government must instantly liberalize licensing for investors who are interested in building petroleum refineries in Nigeria; especially modular refineries.
6. The present crop of Nigerians engaged in crude petroleum refining who are scattered all over the place should no longer be hounded by task forces but rather harnessed officially into the downstream sector and licensed under supervision to produce and sell petroleum products.
7. Government must deploy all powers and resources available to it to put a final end to crude oil theft and limit to the barest minimum, pipeline vandalization throughout the country.
8. In spite of our leadership of ECOWAS in this period, the Nigerian government should encourage the deployment of diplomatic crises management approach and seek ways by using its influence with the organization to end the crises in Niger as quickly as possible as a precursor to urgent steps that need to be taken towards the activation of the plan to build the trans-sahara gas pipeline from Nigeria to Algeria and Europe, through Niger and Algeria.
If this can be accomplished in the next 3 years, with Nigeria being the 9th highest deposit of gas in the world, sales of gas to Europe will bring in revenue in excess of $30b per annum.
In order to ameliorate the present hardship in the country and give succor especially to the poor, government will have to revisit the 100% abolition of fuel subsidy pending the time when some of the items enumerated above can be accomplished. In the mean time, part of the excess inflow from forex equalization can be deployed to fund a supplementary budget to the National Assembly to cover for whatever percentage of the subsidy regime that government considers will suffice to grant the desired relief of the current hardship.
10. The equalization of the foreign exchange regime instantly brings in massive revenue into the federation account from NNPC. Last month, for the first time ever, a sum if 1.5tr was available for sharing among the 3 tiers of government.
The implication of this is that each tier of government will have the requisite financial cushioning to increase minimum wage to at least N60,000 per month.
The rest of the excess funds can be channeled towards the repair and refurbishing of refineries as stated above and further strategic infrastructural and human development projects especially at states and local government levels.
Furthermore, the more export trades our small and medium scale enterprises and business concerns within the country undertake will boost and improve the percentage of inflow of Dollars from non-oil exports.
The weakening of the naira also has a major economic advantage of making our goods and services cheap abroad. Government must seize the situation to encourage the export if anything and everything by individuals and enterprises.
Such encouragement may include payment of special grants per tonnage of goods exported.
11. In the same vein, a major international drive and campaign must be undertaken by the CBN to encourage Nigerians in diaspora to use the official platform for remitting money home from abroad. This may be in form of waving commissions and fees chargeable on transfers.
With an inflow of nearly $25b per annum from the diaspora community, Dollar supply to the CBN will increase to a large extent. 12. Power generation and distribution is a major player in our economy; creating employment and improving the living standard of people generally.
With this in view, I will strongly recommend that government shifts the level of power generation without official licensing from 1 MW to 5 MW. The cost of generating power from various sources is about $1-1.2m per MW on the average.
With this singular policy, up to 1,000 local investors can enter into the power generation market in less than 1 year thereby boosting our power generating potential by more than 5,000 MW in 1 year.
If this policy is followed with more liberalization of the power act of 2022, the need for generating sets by millions of Nigerians will drastically reduce by more than 80%.
This will also further cause a decline in the demand by the populace especially the lower class for petrol to power small generators either for business or leisure. In conclusion, I personally believe that President Bola Tinubu is a thinker and an achiever.
I have therefore enumerated the points above just to stimulate thoughts and actions and draw attention to areas which I consider if exploited, will add value to the plans of the current administration, increase revenue inflow to the country, reduce hardship and combat poverty.
Doyin Okupe is former S.A Media to President Obasanjo. Former S.S.A Public Affairs to President Goodluck Jonathan. Also, a former campaign DG for Labour Party (LP) presidential candidate, Peter Obi.
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