Oil WindFall Fails To Lift Nigerian Economy, Says Rewane
Despite the high price of oil triggered by the Russia/Ukraine war, the Chief Executive Officer, Financial Derivatives Company Limited (FDC), Bismarck Rewane said that the Nigerian economy has not been better off.
Rewane speaking on a theme: ‘Distracted Leaders &Conflicted Policy Makers,’ at the Lagos Business School weekend noted that subsidy payments following petroleum products importation had added to government’s revenue challenges, saying that this had eroded the oil wind fall revenue generated by the Federal Government.
The FDC boss pointed out that swap deals were also narrowing oil revenue in the country, stressing that the Federal Accounts Allocation Committee (FAAC) disbursements is reflective of the hard time, down by 10.67 per cent to N621.68 billion in Q1’22 from N695.94 billion in Q4’21.
Rewane noted that the Nigerian National Petroleum Corporation (NNPC) had continued to maintain monthly deductions from FAAC remittance, stressing that low interest rates amid rising inflation had widened negative real rates of return on investment.
The CEO explained that another distraction for investors is the growing Nigeria’s debt profile, whereby the total public debt rose 20 per cent to N39.56 trillion in 2021 from N32.92 trillion in 2020, and which is expected to go up by N965 billion at the end of the second quarter of 2022.
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Insecurity also, has affected prospective FDI inflows dropping to a 5-year low by 32.14 per cent to $698.8 million in 2021. Political uncertainties are a factor, making investors tread cautiously in the country, while capital imports dominated by hot money (FPIs) were 50.6 per cent of total capital imports).
He maintained that businesses were out of breath over insecurity and structural difficulties arising from kidnapping, banditry, protests, secessionists agitations, supply chain disruptions and infrastructural decays. These have affected costs.
“Manufacturers and corporate are trying to absorb costs rather than pass all the burden to the already stretched consumer.
“Shift from North East to North West, Zamfara now the epicentre of crime & poverty. Deteriorating social conditions leading to high, insecurity and crime rates, kidnapping and ransom rising, BRTs and commercial vehicles unsafe, train bombings now a reality, Boko haram activities spreading to central Nigeria.
“Nigerians are now buying less in quantity and lower quality, real income of fixed income earners fall in the face of rising price level, real Income rapidly eroding and with salary cuts and layoffs imminent
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