In a recent interview on Arise Television, Bayo Onanuga, the Special Adviser on Information and Strategy to President Tinubu, delivered a sobering assessment of Nigeria’s economic standing, categorizing the nation as “very poor” and asserting that its wealth has been grossly overestimated. Onanuga highlighted Nigeria’s low per capita income compared to other African nations as evidence of its impoverished state.
“Nigeria is a very very poor country, to be honest. I think our wealth is overestimated,” Onanuga stated frankly during the interview, emphasizing the need for a realistic appraisal of the country’s economic condition.
Discussing efforts to stabilize Nigeria’s economy, Onanuga pointed to recent measures such as the removal of subsidies on petrol and the unification of the exchange rate. While expressing hope that these actions would alleviate financial pressures, he acknowledged the challenges inherent in addressing Nigeria’s economic limitations.
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Addressing concerns regarding unpaid emoluments to federal workers, Onanuga refuted claims of outstanding debts, affirming that all federal employees have been paid. He attributed delays in salary disbursement to technical issues with the platforms used for payment.
The interview segued into a discussion about Nigeria’s oil output, with recent data from the Organization of Petroleum Exporting Countries (OPEC) revealing a significant shortfall in crude oil production compared to the targeted output set in the 2024 budget.
Nigeria’s daily production averaged around 1.427 million barrels in January, falling short of the 1.78 million barrels per day target.
Oil export accounts for about 90% of Nigeria’s revenue. Thus, this drop in oil output poses a grave threat to Nigeria’s fiscal plans, as the budget heavily relies on projected revenue from crude oil exports. The situation is compounded by a global decline in oil supply, exacerbating Nigeria’s challenges in meeting its budgetary goals.
Nigeria’s aspirations to increase crude oil production face obstacles such as rampant theft, divestment by oil majors, and insufficient investment in the industry. Despite President Tinubu’s administration’s commitment to revitalizing the sector, achieving the ambitious target of 4 million barrels per day by 2030 remains a formidable task.
In the 2024 budget, the federal government set a benchmark production target of 1.78 million barrels per day, alongside a crude oil price benchmark of $77.96 per barrel. However, failure to meet these targets not only undermines revenue projections but also jeopardizes budget implementation, potentially leading to fiscal deficits.
The challenges confronting Nigeria’s oil sector are further compounded by OPEC’s decision to reduce the country’s production quota, further limiting its ability to boost output and stabilize its economy.
A major setback is the nation’s inability to earn enough FX to mitigate the illiquidity situation that has seen its currency, the naira, falling helplessly in the foreign exchange market. The naira traded at N1,517.300 against the dollar at the parallel market on Tuesday, indicating how depleted the spending power of Nigerians has become.
Economic experts have called for comprehensive reforms and strategic interventions, including protecting oil installations to boost output, to tackle these challenges. Whether the nation can overcome these obstacles and realize its economic potential remains uncertain, but proactive measures will undoubtedly be crucial in addressing the current challenges and fostering long-term prosperity.