It is a big revelation: the Central Bank of Nigeria Governor blames Nigeria’s foreign exchange crisis on petroleum import. The nation spends 40% of its forex on import of the crude oil products after it has exported the crude oil for largely nothing. You sell for cents and buy back in dollars, primarily because you cannot have a working local refinery.

“On the Dangote Refinery, by the time it begins production latest July next year, it is going to be a major source to save forex for Nigeria. Right now, the overall forex we spend on imported items, the importation of petroleum products consumes close to 30 per cent.

“By the time you add diesel, aviation fuel, petrol and the rest of that which makes up the 30 per cent, the Dangote Refinery has the capacity to produce 650,000 barrels per day. There is a domestic component that is about 455,000 barrels. Even if the 455,000 is what is sold to Dangote in naira alone, it is going to be a major forex savings for Nigeria,

“What does that mean? It is going to save five percent of our imports. If you save five per cent of your imports and another 30 per cent in petroleum products and then in fertliser where we would save about two per cent of our imports, we are moving close to saving 40 percent of the country’s imports.

“By that time, you will see what we would be doing when people talk about floating the naira, and then let’s see how the currency will depreciate,” Central Bank of Nigeria Governor

Yes,  Nigeria is spending 40% of its foreign exchange on the importation of petroleum products and that is crippling the Naira. If Dangote Refinery fixes that 40% FX paralysis, Nigeria has a promise. That is essentially what the Central Bank of Nigeria is saying.

CBN Governor Blames Nigeria’s FX Crisis on Petroleum Import, Says It Gulps 40%

As Nigeria’s foreign exchange crisis lingers, the Central Bank of Nigeria (CBN) governor has advertently revealed where the bulk of the FX, which exacerbates dollar scarcity, goes.

The CBN Governor, Mr. Godwin Emefiele, revealed this on Thursday while speaking during a media briefing on the sidelines of the ongoing International Monetary Fund (IMF)/World Bank annual meetings in Washington DC.

He lamented that the country spends almost 40 per cent of its scarce foreign exchange on the importation of petroleum products as well as petrochemicals, which continues to put pressure on the naira exchange rate.

As pressure mounts on the naira due to insufficient dollar liquidity in the country, resulting in naira’s free fall, the CBN has been helplessly trying to contain the pressure. With every effort made by the central bank so far futile, Emefiele is counting on Dangote Refinery and Petrochemical Plant to save Nigeria from the FX crisis.

He was optimistic that when the refinery and petrochemical plant commence operations around July next year, the country would be in a position to be able to save 40 percent of the FX it spends on the importation of petroleum products as well as petrochemicals.

“On the Dangote Refinery, by the time it begins production latest July next year, it is going to be a major source to save forex for Nigeria. Right now, the overall forex we spend on imported items, the importation of petroleum products consumes close to 30 per cent.

“By the time you add diesel, aviation fuel, petrol and the rest of that which makes up the 30 per cent, the Dangote Refinery has the capacity to produce 650,000 barrels per day. There is a domestic component that is about 455,000 barrels. Even if the 455,000 is what is sold to Dangote in naira alone, it is going to be a major forex savings for Nigeria,” he explained.

The apex bank governor explained that both the CBN local, and foreign banks have a stake of about $9 billion in the $17.5 billion Dangote Refinery project. He said the completion of the project will put the central bank in a better position to float the naira.

“So, you are looking at a transaction where the leverage is almost one-to-one. We think that is going to be a major FX saver for our country and we would export those refined products.

“If you look at the cost of freight alone, it is a major saving for Nigeria. That is because if we have to go to Europe or other parts of the world to bring in petroleum products where we pay heavily in freight and in stocking those products in the high sea before we offload them, Nigerians would benefit a lot from the Dangote Refinery,” he added.

Emefiele pointed out that the project was one of Nigeria’s backward integration programmes, saying the country was proud that it was coming to light.

“Indeed, we know that refineries abroad are already scared because they know the market they would lose because Nigeria will prefer to patronize Dangote Refinery instead of foreign refined petroleum products.

“On the petrochemical, it is also expected to commence about same period next. That petrochemical plant will be producing 900,000 tonnnes of polyethylene and polypropylene granules. Nigeria’s annual consumption here is less than 200,000.

“What does that mean? It is going to save five percent of our imports. If you save five per cent of your imports and another 30 per cent in petroleum products and then in fertliser where we would save about two per cent of our imports, we are moving close to saving 40 percent of the country’s imports.

“By that time, you will see what we would be doing when people talk about floating the naira, and then let’s see how the currency will depreciate,” he added.

Emefiele thus, by this statement, upholds what experts have been saying all along. Economists have fingered insufficient dollar liquidity, resulting from low export of goods and services, as the reason for naira’s continuous depreciation.

Recently, the governor has been pointing fingers at Bureau de Change operators and other non-state actors, accusing them of manipulating the FX market. A typical example was AbokiFX, an online FX rates aggregator, who was accused by Emefiele of fixing parallel market rates to sabotage Nigeria’s economy. AbokiFX was forced to shut down its FX rates services in the hope that it will help the naira bounce back.

It has been weeks now and nothing has changed for the good of the naira. Experts said that the CBN is concentrating on the symptoms instead of treating the ailment, by scapegoating an online foreign exchange rates aggregator that is only publishing parallel market rates.

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The value of education is not just determined by how much you make in money. The greatest value from education is the liberation of the mind. Do not measure the value of your education, formal or otherwise, by paycheck. Rather, try to ascertain how that program has liberated you from dogmas and norms which hitherto could have affected your ability to advance.

The same applies when people write “those fighting for As, where has it taken them?” The argument is that possibly Dangote, Elumelu, Zuckerberg, etc were not the top of their respective classes. Making that argument misses the point: that you made As in school does not mean that you will make “As” as an entrepreneur, doctor, engineer, etc. 

This is the point: it is statistically possible that a student who pursued As in school will be a better candidate to be a better doctor, engineer, lawyer, etc largely because of universality of the principles of aiming high, pursuing visions, and working to become the best possible one that be. Applying those principles in anything  will deliver better results. But that is not a probability of “1” (i.e. certainty).

But if I may ask those who throw digital flames to the As makers: does making Es help? I think they cannot provide better data. Yes, making Es does not improve chances either!

When you earn a PhD degree (doctor of philosophy), the school has essentially ascertained that you have mastered logic and philosophy in that field (say Mathematics, Economics, Chemical Engineering, etc). That “philosophy” there goes back to how “education” was structured before the end of the 18th century where all core sciences were studied under natural philosophy. 

You get it? Education does one thing: it liberates your mind by helping you to master logic. Do not equate your degree with paycheck. See beyond money as you go to school. Of course, if you master logic of your field, big paycheck follows.

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Comment: If “Es” doesn’t help beause of its Face Value, then “As” don’t equally help due to the hidden inadequacies of its Intrinsic Value.

Elon Musk’s classmates said he never showed signs of exceptional intelligence in school, he didn’t fail at school albeit, but Richard Branson was an academic fiasco, yet their companies make case studies here. Their types make up most of the top successful entrepreneurs.

Michael Faraday who propounded the famous Laws of Electromagnetism that is widely studied in schools and applied world over was completely self-taught, he never set foot in college. Nikola Tesla who capitalised on that theory to invent the AC Motor and many great inventions that power our Post Modern lives had No Degrees.

Meanwhile, Dr. Samuel Langley, a DECORATED PROFESSOR of PHYSICS and MATHEMATICS and president of the Simthsonian Institute who was HEAVILY FUNDED by the government to build the first aeroplane failed, but Wright Brothers, who were bicycle mechanics, did it.

When we make these arguments, it’s not to negate the fact that multitudes of A Students also achieve great success, it’s simply to prove that Education is NOT EQUAL TO Academics whose Promise is now dated, that Education can be Informal too, and adequately so.

My Response: note this – Elon Musk broke records on computer related subjects that the Board requested that he be re-tested. See here . Steve Jobs went to school and largely studied one thing many times. He did not care for other things. In Carnegie Mellon University, we had a student who came, took courses on autonomous vehicles and said he was done. George Hotz went to create Comma AI which turns cars into autonomous vehicles. 

You may not believe, it would be hard to find any successful person who did VERY poorly in school in the area he later became successful even though his CGPA may be poor. In other words, Musk made As in computer related courses but possibly struggled in the distractions and that could make his CPGA low. But he was brilliant in his interests. Same for Steve Jobs. Same for Elumelu. Same for Holz.  What the press does is not the full story: Mr A made 3.0/4.0 in college without noting that he was above average in one area he cared about!

Musk made all A+ (see link) but he possibly was low on History of South Africa, Afrikaner, etc.

On Tesla, etc, I already wrote “education, formal or otherwise,”