Chief Executive Officer of BIC Consultancy Services, Dr Boniface Chizea, has said it was improper for the Nigerian National Petroleum Company Limited (NNPCL) to have negotiated the $3bn loan from Afreximbank.
He stated that the Central Bank of Nigeria should have negotiated for the loan.
He said, “We have recently obtained a lifeline of 3 billion dollars from Afriexim Bank to be disbursed in tranches and to be repaid with oil proceeds. There are some usual developments with this loan. In the first place, it is strange that it is NNPCL that negotiated the loan. Ordinarily, that should be the purview of the Central Bank which has the responsibility for keeping foreign reserves and maintenance of price and exchange rate stability.
He said it was sad that about 50 manufacturing Nigerian companies shut down in the last five years, and 20 shipping companies left Nigeria on account of low business.
He also recalled that about 800 companies have shut down in the last three years.
He also lamented the high rate of inflation and Nigeria’s inability to meet the quota allotted to it by the Organisation of Petroleum Exporting Countries (OPEC).
He has urged the federal government to prioritize productivity by either leveraging the operations of the Dangote Refinery or focusing on getting the local refineries up and running, while also taking decisive action to address the economic challenges caused by foreign exchange volatility in the shortest possible time.
Chizea said, “An inflationary spiral at over 24% is unprecedented. We have not had inflation at such a high rate in Nigeria for the past 22 years. The fact is that for a long time, we targeted single-digit inflation and specifically aimed for an inflation rate within the range of 6-9%.
““Until the President took up the gauntlet with the announcements that there will be no more hike in the pump price of fuel, I suppose we should expect that there must be a benchmark target for the rate of exchange of the Naira.
“It does not matter for now whether we are going to be able to sustain these developments. That is an issue we would have to address as matters unfold. Saying the obvious, if we don’t secure today, there will be no tomorrow to worry about.
”I had cautioned severally that there is no market for dollars in Nigeria. What sort of market is that with only one major source of dollar inflow into the economy? And even this source it will appear has had its days under the sun.”
He added, “As of today, we are not able to meet our OPEC quota of about 1.6 million barrels a day (mbd) but rather struggling to produce just over one million barrels a day due to rapid and rampant theft and other leakages due to operational issues.
“Meanwhile the demand for dollars in the economy is insatiable. If you float the currency, there is only one predictable outcome just as we are now witnessing as it has always been safe to take a bet on the movement of rates in the country.
“You don’t also remove subsidy as we just did because it will impact the inflationary spiral. There is nothing that has such a devastating potential as an increase in the pump price of fuel. The velocity at which such increases transmit through the economy is unbelievable.
“What we needed to do was to tackle the root causes of our dilemma which essentially is lack of productivity. If we stopped fuel importation today, we would be reducing demand pressure on the dollar to the extent of at least 30%.
“In the interim, there is the need to mobilize all forces to hasten the commencement of operations by Dangote Refinery. That represents low-hanging fruits that we must not allow to go begging for a prolonged duration. We must either get the local Refineries operational in the shortest possible time or quickly privatize them.
“We must brace up to mobilize alternative sources of energy in place of petrol such as Condensed Natural Gas and Electric Cars which we have been informed that Lagos State is already experimenting with.”
”It is about time steps are taken to officially source foreign exchange inflow from solid minerals, by stepping into such areas instead of leaving them to be exploited by unauthorized non-State actors.”
