President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, says incoming administration of president-elect, Bola Tinubu, must be ready to take some hard and tough decisions in order revive Nigeria’s struggling economy.
He said this at the inauguration lecture which is part of activities lined up for Monday’s swearing-in of Tinubu as Nigeria’s next president.
Speaking on the topic, “Strengthening Nigeria’s Economy”, Adesina noted that the incoming administration must be decisive in removing the petrol subsidy that, according to him, is a drain the nation’s purse.
“The place to start is to remove the inefficient fuel subsidies. Nigeria’s fuel subsidies benefit the rich, not the poor, fueling theirs and the government’s endless fleets of cars at the expense of the poor. Estimates show that the poorest 40% of the population consume just 3% of petrol.
“Fuel subsidies are killing the Nigerian economy, costing Nigeria $10bn alone in 2022. That means Nigeria is borrowing what it does not have to… if it simply eliminates the subsidies and uses the resources well for its national development,” he said.
He said that instead of the current policy of doling out monies for fuel subsidies, funding, support towards establishing private refineries and modular refineries will lead to efficiency and improved services.
“The newly commissioned Dangote Refinery by President Buhari, the largest single train petroleum refinery in the world, as well as its petrochemical complex will revolutionise Nigeria’s economy. Congratulation, Aliko Dangote for his amazing $19 billion investment,” he said.
Adesina noted that data from the Nigeria’s Debt Management Office (DMO), which indicates that “Nigeria now spends 96% of its revenue servicing debt, with the debt-to-revenue ratio rising from 83.2 percent in 2021 to 96.3 percent by 2022.
He said “Nigeria currently faces huge fiscal deficits, estimated at 6% of GDP. This has been due to huge federal and state government expenditures, lower receipts due to dwindling revenues from export of crude oil, vandalism of pipelines and illegal bunkering of crude oil
“Some will argue that the debt to GDP ratio at 34% is still low compared to other countries in Africa, which is correct; but no one pays their debt using GDP. Debt is paid using revenue, and Nigeria’s revenues have been declining. Nigeria earns revenue now to service debt not to grow.”
Discussion about this post