Nigeria Declares Petrol Subsidy Removal Irrevocable, Rallies Banking Sector

Nigeria Vice President Kashim Shettima, on Tuesday declared that the decision to end the petrol subsidy regime by the administration of President Bola Tinubu was irrevocable as he rallied the financial sector to support current efforts aimed at returning the economy on the path of inclusive growth.

Shettima, said the removal had already increased the amount of monthly revenues distributed among the federal, states and local governments to meet their financial obligations and enable them to serve the people better.

He added that the administration was working towards a future where no leader would grumble over the lack of funds to pay salaries or complete projects.

It came as the Nigeria Country Director, World Bank, Mr. Shubham Chaudhuri, said with the right mix of policies by the government, the potential for seven per cent GDP growth could be unleashed and further taken to double-digit, adding that subsidy removal added about 2.5 per cent to Nigeria’s Gross Domestic Product (GDP).

Also, Minister of Budget and Economic Planning, Senator Abubabar Bagudu, said the bold policy initiatives currently being implemented by the Tinubu administration would ensure a return to macroeconomic stability, promote inclusive growth as well as lay a foundation for the achievement of double-digit growth in the economy.

In his contribution, the acting Governor, Central Bank of Nigeria (CBN), Mr. Folashodun Shonubi, tasked the banking industry to set a realisation benchmark for contributing to the growth of the economy, particularly in the aspect of enhancing credit to the private sector.

The apex bank boss said though the industry had lived up to expectations in real sector interventions during the COVID-19, its contribution to GDP at 3.6 percent remained below average compared to the telecommunications industry’s 16.2 percent.

They all spoke at the opening of the 16th Annual Banking and Finance Conference with the theme: “Nigeria’s Economic Growth and Empowerment: The Role of the Financial Services Industry” which was organised by the Chartered Institute of Bankers of Nigeria (CIBN).

The vice president who declared the meeting open said the banking industry remained a strategic partner in actualising the present administration’s eight-point agenda aimed at repositioning the economy.

He said the agenda cannot be successfully implemented by the government without the cooperation of the financial sector, assuring that the government would not take their support for granted.

Promising hope, Shettima also declared that Nigeria, the “sleeping giant of Africa has awakened from slumber”, and described Tinubu as a man of courage who is determined to redefine the concept of modern leadership.

He further stressed that the bold policy actions so far taken by the government including the foreign exchange convergence and subsidy removal were taken in the best interest of the economy.

The VP said rather than the lack of potential, leadership remained the missing link adding that Tinubu was prepared to fill the gap.

He noted that the future of the country was in the ability of the youths to take advantage of digital technologies coupled with the country’s ability to apply value addition to raw materials for export.

To this effect, Shettima said the federal government was partnering with the banks to impart digital skills to the youth as well as develop the economy.

Bagudu, however, pointed out that the financial sector was indispensable in achieving double-digit growth which he said was realisable, adding that the actions so far embarked upon further buttressed the seriousness of the government to grow the economy.

The minister said the banks were well-positioned in helping to actualise the government’s promises to Nigerians, especially in the areas of enhancing access to credit that would stimulate economic activities.

He also said going forward, the nation’s budget would be plan-based and well-monitored.

While acknowledging the contribution of the financial sector to the economy, he said more was required from them.

Nonetheless, in his keynote address, the World Bank country director said for Nigeria to accelerate growth, public spending must be raised to between 15 percent and 20 percent of GDP, adding that it currently remained low at 12 per cent in the last five years.

He also said financial intermediation by banks to the real sector needed to be improved from the current 15 per cent to 40 per cent in peer economies.

He stated that to reposition the economy the government would need to guarantee security, develop human capital, unleash the potential of private investment and jobs as well as boost access to finance through patient capital.

He added that certainty of policy direction was crucial for attracting investors, including strengthening the digital identity system, and departure from business-as-usual mindset in the polity.

However, he insisted that the country had not lived up to its potential as the giant of Africa, adding that it stands to reap huge dividends from its demography if properly attended to.

Chaudhuri, said part of the country’s challenges were with its rising population which has exceeded its GDP, coupled with lack of jobs and human capital.

Among other things, he said while structural transformation was yet to begin, there was the need to increase domestic value-addition to boost foreign exchange earnings.

CIBN President, Dr. Ken Opara, said the institute believed that the reform initiatives including ending petrol subsidies, unifying the exchange rate, investing in infrastructure, promoting agriculture, and supporting small and medium enterprises, if followed through with diligent implementation and execution, would not only unlock the full potential of the economy but place the nation on a recovery trajectory to drive the prosperity of the continent.

He added that reducing corruption, tax system reforms, encouraging foreign investment, developing human capital, and diversifying the economy could also help to achieve recovery.

He said the effects of slow economic growth, high inflation, rising unemployment, and high public debt have contributed to the growing challenges confronting the global economy, adding that many nations have continued to raise interest rates, promote investment, reform the economy, reduce government spending and diversify sources of government revenue to drive growth in their economies.

He said, “We are delighted that Mr. President has recently reiterated the commitment of his administration to a clear vision to eradicate poverty in line with the SDGs which states that poverty should be eradicated by 2030.”

While assuring the government of the banking sector’s support, he said, “The task of nation-building is a collective responsibility and I charge every one of us here present to play our part within our sphere of influence.”

James Emejo

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