By Enyichukwu Enemanna
President of the African Development Bank (AfDB) Group, Dr Akinwumi Adesina, has urged the incoming government of Bola Ahmed Tinubu to pay attention to macroeconomics and fiscal stability.
Tinubu will be inaugurated on Monday in Abuja as the President of the most populous black nation.
He succeeds Muhammadu Buhari, whose tenure expires May 29 after two terms of four years each in office.
Adesina at thr Inauguration Lecture for the new President of Nigeria in Abuja on Saturday, which also had in attendance Uhuru Kenyatta, former President of Kenya, said unless the economy is revived and fiscal challenges addressed boldly, resources to develop the nation will not be there.
“Nigeria currently faces huge fiscal deficits, estimated at 6 % of GDP”, he stated, attributing it 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.
Adesina disclosed 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, quoting Nigeria’s Debt Management Office.
“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,” Adesina said.
While regretting that Nigeria earns revenue now to service debt and not growth, Adesina called for the removal of fuel subsidies.
“The place to start is to remove the inefficient fuel subsidies.
“Nigeria’s fuel subsidies benefit the rich, not the poor, fueling their and governments 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 $10 billion 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 added, “Rather, support should be given to private sector refineries and modular refineries to allow for efficiency and competitiveness to drive down fuel pump prices.”
The AfDB President noted that the newly commissioned Dangote Refinery by President Buhari – the largest single train petroleum refinery in the world, as well as it’s Petrochemical Complex — will revolutionize Nigeria’s economy.
He also congratulated Aliko Dangote for his amazing $19 billion investment in Nigeria.
While noting that Nigeria will be looking to Tinubu, on his first day in office, with hope, Adesina said there is an urgent need to look at the cost of governance.
“The cost of governance in Nigeria is way too high and should be drastically reduced to free up more resources for development. Nigeria is spending very little on development.
“Today, Nigeria is ranked among countries with the lowest human development index in the world, with a rank of 167 among 174 countries globally, according to the World Bank 2022 Public Expenditure Review report.
“To meet Nigeria’s massive infrastructure needs, according to the report, will require $3 trillion by 2050.
“According to the report, at the current rate, it would take Nigeria 300 years to provide its minimum level of infrastructure needed for development.
“All living Nigerians today, and many generations to come, will be long gone by then!” he said.
He added, “We must change this. Nigeria must rely more on the private sector for infrastructure development, to reduce fiscal burdens on the government.”
