Business
Mixed Reactions To Tinubu’s Fuel Subsidy Removal, Forex Unification
President Bola Tinubu’s recent announcement regarding the removal of petrol subsidy and the unification of forex rates has garnered mixed reactions.
The Nigeria Labour Congress (NLC) responded by expressing skepticism, stating that they believe the President is merely testing the waters and lacks the determination to follow through with such actions.
In contrast, the Manufacturers Association of Nigeria (MAN), the Nigerian Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), and the Centre for the Promotion of Private Enterprise (CPPE) expressed support for President Bola Tinubu’s recent proposals.
They argued that the President’s decision to leverage various fiscal measures to boost domestic manufacturing indicated a positive future for manufacturers. NACCIMA also commended the President’s economic plans, considering them as significant steps taken in the right direction.
Director General, MAN, Segun Ajayi-Kadir, in an exclusive chat with Vanguard yesterday, however, added that the president’s speech would still be subjected to critical considerations by the group soonest.
His words: “It is, therefore, highly commendable and an assurance of better days ahead to hear the President saying that his industrial policy will utilize the full range of fiscal measures to promote domestic manufacturing and lessen import dependency.
“For me, this is a positive development. It is an unmistakable indication of a far-sighted strategic choice, one that is borne out of a deep reflection on the current inclement manufacturing environment and the need to stop the drift into inglorious de-industrialization of the Nigerian economy.
“What is most gratifying is that it came from the President from day one. The issues of multiple and often times punitive taxation; conflicting and contradictory fiscal and monetary policy measures; skewed and poor management of the foreign exchange regime and the long overdue stoppage of the fuel subsidy were addressed in the President’s speech and I believe they resonate with manufacturers in particular and the business community in general.
“A marching order is needed to move the Central Bank of Nigeria, CBN, towards a unified exchange rate.
“We also expect that, in line with his promise to enable a supportive fiscal policy regime, the President will order a reversal of the unwarranted violation of the government‘s three-year excise escalation roadmap on alcoholic beverages and tobacco. As we have shown, the latest hike as contained in the 2023 Fiscal Policy Measures is not only going to ruin the affected sectors, it will be counterproductive for government revenue in the near future.”
Meanwhile, the Director General, NACCIMA, Dr. Sola Obadimu, said some of the promises made by Tinubu on the economy in his inaugural speech were good steps in the right direction.
Obadimu stated: “They are good steps in the right direction. He spoke on the need to harmonize forex rates which is also good for probity and attracting foreign investment, and for the need to make it easier for foreign firms to repatriate their money. These are all very good.”
Reacting, President of Nigeria Labour Congress, NLC, Joe Ajaero, in terse text said “The comment on fuel subsidy removal is not well thought out, coming as an inaugural speech.
“It is going to draw the economy of the country backward by over 50 percent within the next 48 hours. Nigerians will speak in one accord at the appropriate moment.”
In his reaction to subsidy removal, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, said the decision of President Tinubu to put an end to fuel subsidy had enormous potential benefits for the country.
He said: “We welcome the position of our new President Bola Tinubu on subsidy removal. Fuel subsidy removal has enormous potential benefits. First, there is the revenue effect. The removal would unlock about N7 trillion into the federation account. This would reduce fiscal deficit, and ultimately ease the burden of mounting debt.
“Second, is the investment effect. Currently, it is extremely difficult to attract private investment into our petroleum downstream sector because of the unsustainable subsidy regime and the stifling regulatory environment. The subsidy removal will eliminate the distortions and stimulate investment. We would see more private investments in petroleum refineries, petrochemicals and fertiliser plants. Post subsidy regime would also unlock investments in pipelines, storage facilities, transportation and retail outlets. We would see the export of refined petroleum products petrochemicals and fertiliser as private capital comes into the space, and quality jobs will be created.
Uche Uwaleke, a Professor of Capital Market and President of Capital Market Academics of Nigeria, joined the chorus of support for President Bola Tinubu’s proposal to eliminate fuel subsidy and unify the exchange rate. Uwaleke highlighted the significant economic burden that fuel subsidies impose on the country and expressed his belief that they are ultimately unsustainable. In light of this, he endorsed the removal of fuel subsidy as a necessary measure.
He said “I support the removal of the fuel subsidy due to its huge cost on the economy. Fuel subsidies have proven to be unsustainable.
“I equally support the unification of exchange rates because doing so will discourage round-tripping, bring more transparency to the foreign exchange (forex) market which supports foreign investments.
“However, in order to minimize negative impact on the livelihoods, issues of fuel subsidy and exchange rates unification which he mentioned in the speech should be handled with care. Stakeholder engagement is required,” he said. In his comments, Mr. David Adonri, Vice Chairman, Highcap Securities, said the plan, if carried out, would repair the damages caused to the economy by the twin problem.
He, however, queried Tinubu’s failure to address the rising debt burden, saying that a continuation of the borrowing spree would be detrimental to real economic growth.
He said: “President Bola Ahmed Tinubu’s inaugural speech addressed three critical pressure points on the Nigerian economy. These are insecurity that has crippled the rural economy, discontinuation of fuel subsidy and unification of the exchange rate.
“His remedial plans against these challenges can repair their damages to the economy. However, he failed to address the crippling debt burden which has fueled inflation and caused a rise in interest rate.
“His GDP growth target of a minimum of 6% per annum could be a mirage if he concentrates on secondary infrastructure development at the expense of primary infrastructure like was done under President Muhammadu Buhari.”
. . . Tinubu Lauds NNPC Ltd, Partners Over Three Commissioned Gas Projects
In line with its renewed hope agenda, the Federal Government has reiterated determination to utilize Nigeria’s abundant gas resources towards revamping her industrial growth and kick-starting economic prosperity.
Biztellers reports that President Bola Ahmed Tinubu made the assertion while commissioning three critical gas infrastructure projects executed by the NNPC Limited and its partners in Ohaji-Egbema, in Imo State and Kwale, in Delta States, on Wednesday.
The three projects commissioned include the expansion of the AHL Gas Processing Plant, the ANOH Gas Processing Plant and the 23.3km ANOH to Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline Projects.
He said, “It is pleasing that approximately, 500MMscf of gas in aggregate would be supplied to the domestic market from these two Gas Processing Plants, which represents over 25% incremental growth in gas supply.
“In practical terms, this translates into more gas to the Power Sector, Gas-Based Industries, and other critical segments of the economy.”
The President pointed out that from the onset, his administration was clear of its intention to leverage on the virtually unlimited capacity of gas to deepen domestic gas utilization, increase national power generation capacity, revitalize industries, and create multiple job opportunities for economic growth.
He said aside the Presidential Compressed Natural Gas (CNG) Initiative which is aimed at moving Nigerians away from petrol and diesel as vehicular combustion fuel, significant progress has also been recorded in incentivizing gas development through Presidential Executive Orders.
While congratulating the projects partners (NNPC Limited, Sterling Oil Exploration & Energy Production Company Limited (SEEPCO) and Seplat Energy for the successful implementation of the three projects, Tinubu particularly charged the NNPC Limited to, as the national energy company of choice, sustain its relentless efforts and record more successes in the energy sector for the benefit of all Nigerians.
President Tinubu described the commissioning as a highly significant milestone for Nigeria as it demonstrates his administration’s efforts to accelerate the development of critical gas infrastructure geared at enhancing the supply of energy to boost industrial growth and create employment opportunities.
He said the projects were fully in line with the Federal Government’s Decade of Gas initiative, and his administration’s quest to grow value from the Nation’s abundant gas assets while concurrently eliminating gas flaring and accelerating industrialization.
“I wish to assure the citizenry that these are just the beginning, as the federal government is stepping up its coordination of other landmark projects and initiatives that will ensure the earliest realization of gas fueled prosperity in our country.
“Consequently, I wish to assure investors in the energy space that this is an investment enabling government and we will not relent in facilitating the ease of doing business,” the President noted.
Earlier in his address, the Minister of State for Petroleum Resources (Gas) Rt. Hon. Ekperikpe Ekpo highlighted the efforts of his ministry to continue to champion the utilisation of gas as a transition fuel as Nigeria moves towards achieving clean energy efficiency and security by 2060.
Ekpo commended the President for his leadership and support towards the success of the three projects.
In his remarks, the GCEO NNPC, Mele Kyari described the commissioning as a demonstration of Mr. President’s commitment and support to grow the domestic utilization of natural gas for power generation, as feedstock for gas-based industries and overall rapid industrialization of Nigeria on the back of the enormous gas resources in the country.
Kyari assured that as part of its mandate, NNPC Ltd remains committed to maintaining energy security by executing more strategic gas projects for the benefit of Nigeria.
The Nigerian Government has listed her April 2024 Savings Bonds worth N4.214 billion on the Nigerian Exchange Limited (NGX) platform.
This was disclosed in the market bulletin signed by the Head, Issuers Regulation Department of NGX, Godstime Iwenekhai.
According to the bulletin, “Trading License Holders are hereby notified that the April 2024 Issue of the Federal Government of Nigeria (FGN) Savings Bonds was listed on Nigerian Exchange Limited (NGX) on May 13, 2024.”
Details of the Bonds include FGS April 2026, 1.228 million units valued at N1.228 billion at a coupon rate of 17.046%, while FGS April 2027, 2.986 million units amounted to N2.986 billion at a coupon rate of 18.046%.
The bonds are backed by the full faith and credit of the FGN and charged upon the general assets of Nigeria, according to the debt office.
FGN Savings Bond is issued monthly in tenors of two and three years with quarterly payment of coupons (interest) at a rate predetermined and published by the DMO every month.
The retail savings bond product was introduced by the DMO on behalf of the FGN in 2017 to democratise its activities in the bond market by making it easily accessible to Nigerians to ensure continuous development of the domestic market and bridge infrastructure deficit which has been a constraint to economic growth.
Nigeria’s inflation rate surged to 33.69% in April 2024, up from 33.20% in March, according to the latest data from the National Bureau of Statistics (NBS).
The Consumer Price Index (CPI) report, released Wednesday, shows a 0.49 percentage point rise within a month.
Year-on-year, the inflation rate has surged by 11.47 percentage points, compared to 22.22% in April 2023, highlighting the ongoing economic challenges and rising costs for consumers.
The report reads “In April 2024, the headline inflation rate increased to 33.69% relative to the March 2024 head line inflation rate which was 33.20%.
“On a year-on-year basis, the headline inflation rate was 11.47% points higher compared to the rate recorded in April 2023, which was 22.22%.
This shows that the headline inflation rate (year-on-year basis) increased in the month of April 2024 when compared to the same month in the preceding year (i.e., April 2023).
“Furthermore, on a month-on-month basis, the headline inflation rate in April 2024 was 2.29%, which was 0.73% lower than the rate recorded in March 2024 (3.02%).
“This means that in the month of April 2024, the rate of increase in the average price level is less than the rate of in crease in the average price level in March 2024.”
Prices of food and basic commodities have surged dramatically in recent weeks, as Nigerians grapple with a soaring cost of living and one of the nation’s most severe economic crises.
The crisis has been intensified by the government’s removal of petrol subsidies and the unification of forex windows.
The naira, which had appreciated against the dollar in April, has since plummeted from about N1,100/$1 to roughly N1,500/$1.
Following the latest inflation report from the National Bureau of Statistics (NBS), the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is anticipated to review the country’s interest rate, currently set at 24.75%.
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