Nigeria at 65, how would you assess the performance of the nation’s economy in the last six and a half decades?
My assessment of the state of our economy is this: in 65 years, we’ve not made much progress as a people. It’s disturbing that the GDP per capita is less than $1,000, and the unemployment rate is in double digits. Inflation is also in double digits, over 30 percent, regardless of the numbers being reeled out by the National Bureau of Statistics (NBS). In 2025, 65 years after independence, it is sad that government is still operating three budgets concurrently. In the 2025 budget, expected revenue is N41.91 trillion, while the budget size is N54.99 trillion, leaving a deficit of N13.08 trillion or 1.52 percent of GDP, despite being an oil-producing country. It’s quite disturbing. I don’t think we’ve made much progress, because the indices with which we measure development, especially when compared to countries that gained independence around the same time as Nigeria, are not encouraging.
The picture you’ve painted of the nation’s economy is no doubt scary. Does it mean the reforms, especially the floating of the naira and fuel subsidy withdrawal introduced by the present administration in 2023, are not working? Or, put differently, how do you see these reforms and where have they left businesses in Nigeria?
Well, in 2023 when President Tinubu came into office, Nigeria was technically bankrupt. Former President Buhari left the economy in a very sorry state. We had debt of over $20 billion and couldn’t meet our balance of payment obligations. There were about $7 million FX backlogs and the CBN was technically insolvent. Airlines could not retrieve their funds, which was one of the reasons Emirates pulled out of Nigerian routes. The airline had over $100 million it could not access. Government also could not pay petrol subsidy, forcing it to swap federation crude oil for petrol guarantees. The decision President Tinubu made to remove petrol subsidy was therefore timely. Yes, it raised the price of petroleum products. Yes, the exchange rate hit the naira and caused serious inflation. But those two decisions were important because they prevented Nigeria from plunging into the abyss. They saved Nigeria.
However, government has not shown the desire to fight corruption. If you are asking Nigerians to tighten their belts while leaders remain profligate, fiscally reckless and wasteful, then you will not be taken seriously. In reforms, there is always a timeline between macro reforms and nano reforms. Macro reforms are the broad, system-wide changes, while nano reforms are those that impact ordinary people directly. The trickle-down timeline may take four to five years, but the question is: will Nigerians wait that long? The answer is no, because they don’t trust their leaders. The consequence of this is mutual distrust, which negatively impacts the economy. For businesses, the result is higher operational costs, with lending rates above 30 percent. How many businesses can survive that? To worsen matters, banks are not supportive of businesses, which is why the real sector is not growing; no capital, no funds. It’s a tough environment for enterprises.
What is your opinion on the latest Monetary Policy Committee’s (MPC) decision to reduce the Monetary Policy Rate (MPR) by 50 basis points, from 27.5 to 27 percent, and also cut the Cash Reserve Ratio (CRR) of commercial banks by 500 basis points from 50 percent to 45 percent? Do we begin to expect relief for Nigerian businesses, whose major complaint is the inability to borrow for expansion due to high interest rates?
Unfortunately, I have always said that the National Bureau of Statistics (NBS) cannot justify, empirically, the basis on which it rebased the CPI, using 2019 as reference. It cannot justify moving the food basket from 60 percent, as a weighted composite contribution to the index, to 51.8 percent, while grouping water, housing, electricity, gas and fuel into one basket weighted at 16.7 percent. This is strange, because that was what significantly brought down the inflation rate. Even the CBN’s Monetary Policy Committee does not believe the NBS figures. If they did, they would have cut the interest rate to about 18.5 percent or 19 percent. But the CBN couldn’t, because it knows the figures are faulty.
The danger is that, in government’s attempt to look good too quickly, it risks providing the CBN with the wrong framework for decision-making, something that could be counterproductive. My advice is that they should allow the cycle to run its natural course.
What you are saying in essence is that the numbers are not actually real?
I do not believe the numbers. Like I said, the metrics with which the CPI was rebased were faulty.
Recently, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) took on the management of Dangote Refinery over its decision to sack 800 workers, allegedly for being actively involved in unionism. How do you see this? How justified is Dangote Refinery in carrying it out?
The decision of the company to sack 800 workers was a management decision. It’s not uncommon, not strange. It happens all over the world. Companies reorganise. Not too long ago, Bayo Ojulari of the NNPC let go of 200 people. Can PENGASSAN claim it was because those workers were union members? No, they cannot. It was management’s decision, and such things happen everywhere.
Look, the Trade Union Act and the Trade Dispute Act are very clear. There is a process unions are expected to follow if they are aggrieved, before picketing or taking industrial action. The process involves meeting the Minister within seven days. If unresolved, it goes to a coordinator, then to the Industrial Arbitration Panel and other authorities. Only after all these avenues are exhausted can the union give a seven-day warning notice. For critical assets like energy security, the law even requires 14 days’ notice before a strike.
So what PENGASSAN, TUC, NUPENG and others did was completely illegal. I think it is time for government to take decisive action concerning these unions. They have outlived their usefulness and should be proscribed. Remember, the same unions threatened Ojulari when he tried to restructure NNPC. I believe this fight is by proxy; the unions are being used. The real battle is coming from marketers. Sadly, the regulator, Farouk Ahmed, is missing in action. He is not living up to his responsibilities under the Petroleum Industry Act (PIA).
Dangote Refinery is the answer to the challenges we’ve faced in that sector for decades. Nigeria has been importing low-quality petrol since 1975. Dangote came and solved that. It’s because of Dangote that petrol prices have not gone up to N1,500, even though 98 percent of the crude used is bought in US dollars. The marketers know the game is up. Their profitable model of importing substandard fuel has ended. Their resistance is just blackmail and the Federal Government must handle it properly. The way this matter is resolved will serve as a signal to international investors about whether Nigeria is safe for business.
Since 2007, the government has spent about $33 billion on turn-around maintenance of refineries, and this money remains largely unaccounted for. We cannot continue this way.
But why Dangote, when other oil companies, including the multinationals, seem to enjoy cordial working relationships with these unions?
The answer is clear: it is Dangote because the refinery challenges the status quo. Its success means the traditional business model of importing low-quality fuel is gone.