President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, on Saturday condemned the worsening power situation in Nigeria under the President Muhammadu Buhari Federal Government, arguing that, there is no justification whatsoever for Nigeria not having efficient Power.
Adesina spoke during a Presidential Inauguration Lecture, in Abuja, organised by the 2023 Presidential Transition Council (PTC), ahead of the May 29, 2023 Presidential swearing-in.
His words: “For faster growth, Nigeria must fix decisively, the issue of power once and for all. There is no justification for Nigeria not having enough Power.
“The abnormal have simply become normal. Nigeria’s private sector is hampered by the high cost of power. Providing electricity will make Nigerian industry more competitive, especially within the context of the African Continental Free Trade Area.”
Adesina also charged President-elect Bola Ahmed Tinubu to cut down the cost of governance, saying that the bloated size of government comes with high cost of public sector expenditure and its negative impact on the development process in the country.
He said, “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.”
The Nigerian-born AfDB President asked Tinubu to rise to the challenge of governance on his first day in office, as the country needs leadership that will reassure it with hope of security, peace, and stability.
Speaking on the topic, “Strengthening Nigeria’s Economy,” Adesina said that Nigeria needs to be healed and united, stating that a fractious nation needs to arise above party lines and forge a united nation with inclusiveness, fairness, equity, and justice.
He noted that the new administration must prioritise macroeconomic and fiscal stability as imperative, insisting that the incoming administration must act as a matter of urgency.
“Unless the economy is revived and fiscal challenges addressed boldly, resources to develop will not be there. No, bird can fly if its wings are tied. Nigeria currently faces huge fiscal deficits, estimated at 6% of GDP. This has been due to huge federal and state government expenditures, lower receipts due to dwindling revenues from export of crude oil, vandalism of pipelines and illegal bunkering of crude oil,” he said.
Adesina noted that data from the Nigeria’s Debt Management Office (DMO), which indicates that “Nigeria now spends 96% of its revenue servicing debt, with the debt-to-revenue ratio rising from 83.2 percent in 2021 to 96.3 percent 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.”
The AfDB President added that for Nigeria’s incoming administration to move the economy ahead it needs to make bold decisions to end the inefficient fuel subsidies.
“The place to start is to remove the inefficient fuel subsidies. Nigeria’s fuel subsidies benefit the rich, not the poor, fueling theirs and the 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 $10bn 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 said.
He said that instead of the current policy of doling out monies for fuel subsidies, funding, support towards establishing private refineries and modular refineries will lead to efficiency and improved services.
“The newly commissioned Dangote Refinery by President Buhari, the largest single train petroleum refinery in the world, as well as its petrochemical complex will revolutionise Nigeria’s economy. Congratulation, Aliko Dangote for his amazing $19 billion investment,” he said.