Nigeria currently spends $600 million monthly on fuel importation, a high bill partly due to neighboring countries, even as far as Central Africa, benefiting from these imports, revealed Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
During an interview on AIT’s Moneyline programme, which was posted on YouTube on Wednesday, Edun explained that this situation prompted President Bola Tinubu to remove the fuel subsidy, as the exact amount of fuel consumed internally in Nigeria is unknown, The Punch reports.
“The fuel subsidy was removed on May 29, 2023, by Mr. President. At that time, the poorest 40 percent of the population was only getting four percent of the value, and basically, they were not benefiting at all. So, it was going to just a few,” Edun stated.
He further elaborated, “Another important point is that nobody knows the consumption of petroleum in Nigeria. We know we spend $600 million to import fuel every month, but all the neighboring countries are benefiting. We are buying fuel not just for Nigeria but for countries to the east, north, and west, almost as far as Central Africa. We have to ask ourselves as Nigerians how long we want to do that.”
Edun emphasized the necessity of taking decisive steps to tackle this issue, as it impedes economic growth. He stressed that the welfare of the people, particularly the vulnerable, is of great importance to the government, with a key focus on ensuring food availability and affordability.
In the interview, Edun also clarified that the N570 billion fund released to state governments was implemented last December. “This refers to a reimbursement received from December last year onwards under the COVID financing protocol. The states have received more money, and Mr. President has charged them to ensure food production in the states,” he explained.
Addressing the recent decision to raise the maximum borrowing percentage in the Ways and Means from five to ten percent, Edun clarified that this does not imply reliance on Central Bank of Nigeria financing. Instead, the government has used market instruments to manage its debts.
“We have not gone to the central bank to say, please lend the government money to pay its debt or salaries. That’s Ways and Means. We have used market instruments to pay down what we owed, and that is essential for having a strong economy,” Edun said.
The approval by the National Assembly is seen as a fail-safe measure, providing extra flexibility to manage payment gaps.
Edun assured that this measure would not undermine local farmers, as importation would only be permitted after exhausting local supplies.
“There is a concerted effort to ensure homegrown food is available. Apart from what is being distributed from reserves, there is a window opened for importation to drive down prices and make food available now,” he stated. Importation will be conditional on exhausting local supplies, with auditors checking compliance.
These interventions aim to reduce inflation, stabilize exchange rates, and lower interest rates, creating a conducive environment for investment and job creation.