As the President-elect, Asiwaju Bola Ahmed Tinubu gets sworn in on Monday, May 29, the President of the African Development Bank Group (AfDB), Dr Akinwumi Adesina has said his starting point of addressing multiple challenges facing the country is macroeconomic and fiscal stability.
Adesina told Nigeria’s new President that unless the economy is revived and fiscal challenges addressed boldly, resources to develop will not be there.
The AfDB President who stated this on Saturday in Abuja at the inaugural lecture for the new President of Nigeria said “No bird can fly if its wings are tied'”.
He listed another plethora of challenges that require the immediate attention of the new government led by the former governor of Lagos state.
” The election of a new President always elicits hope. Nigeria will be looking to you, as President Tinubu, on your first day in office, with hope.
“Hope that you will assure security, peace, and stability. Hope that you will heal and unite a fractious nation.Hope that you will rise above party lines and forge a compelling force to move the nation forward, with inclusiveness, fairness, equity, and justice.
“Hope that you will drastically improve the economy. Hope that you will spark a new wave of prosperity. And hope must be brought to the present, as hope deferred makes the heart grow weary”.
He said the country is currently saddled with enormous fiscal challenges, noting that, Nigeria currently faces huge fiscal deficits, estimated at 6 % of GDP. This not has been due to huge federal and state government expenditures, lower receipts due to dwindling revenues from the export of crude oil, vandalism of pipelines and illegal bunkering of crude oil.
” According to Nigeria’s Debt Management Office, Nigeria now spends 96% of its revenue servicing debt, with the debt-to-revenue ratio rising from 83.2 per cent in 2021 to 96.3 per cent by 2022.
“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. Nigeria earns revenue now to service debt — not to grow”.
Adesina said the place to start was to remove the inefficient fuel subsidies. “Nigeria’s fuel subsidies benefit the rich, not the poor, fueling their and government’s 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 proposed instead of financing the subsidy, support he suggested be given to private sector refineries and modular refineries to allow for efficiency and competitiveness to drive down fuel pump prices.
He applauded the newly commissioned Dangote refinery by outgoing President Buhari – the largest single-train petroleum refinery in the world, as well as its Petrochemical Complex — will revolutionize Nigeria’s economy. In addition, he tasked the new president with pruning 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