“Fuel, Foreign Exchange and Electricity Subsidies Hinder Nigeria’s Growth” – Economist

Business Latest News

Nigeria may continue to grapple with economic growth especially growth in double digit if three major subsidies being facilitated by the Nigerian federal government remains.

This was asserted by Mustafa Chike-Obi, executive vice chairman, Alpha African Advisory, who noted that the government must do away with the mentioned subsidies for security’s sake.

Chike-Obi explained that fuel, foreign exchange and electricity subsidies ere the three main subsidies hindering other sectors that needs urgent attention.

Also Read: Stock Market Begins Week with 247 Million Units Exchanged

Speaking at an agenda-setting forum for the Buhari’s second term organised by members of the Finance Correspondents Association of Nigeria (FICAN) in Lagos, Chike-Obi, a former CEO of the Asset Management Corporation of Nigeria (AMCON), disclosed that rich Nigerians benefit more from fuel subsidy.

He maintained that removing electricity subsidy would attract significant investments to the power sector and unlock other opportunities.

Speaking on theme, “Repositioning the Nigerian Economy for sustainable growth”, Chike-Obi explained that the economy loses N1.2 trillion per year to fuel subsidy.

“There is hidden figure in that fuel subsidy they do not allow you to see. They allow you to buy foreign exchange at N325/dollar. Who gets the fuel subsidy? The rich people with six cars are those benefiting from fuel subsidy.

“The average rich person in Ikoyi is getting approximately 100 times a year fuel subsidy than person in Shomolu in Lagos,”Chike-Obi said.

He added that, “everybody deserves to have electricity but you charge electricity based on those who needed it the most in the market price. Most people that uses generator pay N160/Kwh and pays comfortable.

“If you tell these power company that they can sell power at N160/kwh, they will make sure that more power will be generated.”

He also expressed concern about Nigeria’s rising debt service ratio, which according to him could be about 70%.

“It is almost a guarantee that Nigeria is going to be talking about debt rescheduling soon and we need to start putting our house in order ahead of that,” he said.

Chike-Obi stressed the need for coherent and forward-looking policies to address the myriad of problems confronting Nigeria.

“We are badly in need of good leadership; we need a leader that would map out the strategy and roadmap for economic growth in this country,” he said.

“There is need for coherent monetary and fiscal policies. For me, the position of a CBN Governor should be a cabinet position and the CBN Governor should always be meeting with the Minister of Finance and the Minister of Budget and Planning every two weeks,” he added.