Pundits in the Nigerian economic space are predicting that the federal government’s current economic programme in tandem with developments in the private sector will strengthen and stabilize the naira over the next few years.
In a telephone conversation with NATIONAL ECONOMY, associate professor of the Department of Public and Private Development, Babcock University, Dr Tayo Bello, noting that the value of the nation’s currency depends on the its productivity, said the cost of production in Nigeria is higher in many sectors of the economy because of poor electricity supply, coupled with high cost of refining crude oil. He said that the trend will be considerably U-turned when Dangote Refinery begins operation.
He said the coming on stream of Dangote Refinery will considerably reduce pressure on the naira, as hard currency that would have been used to import refined fuel will be saved.
Bello said that the agriculture industry in the country is rife with potential for abundant food production, which, when fully engaged, will reduce Nigeria’s high food import bill and reduce pressure on the naira, except for the fact that the country lacks agriculture policy. He added that no country can survive without mechanized farming. He deplored the fact that the drawbacks in the agriculture industry are being exacerbated by the Boko Haram menace in food producing parts of the country.
Kurifi Garuba of APT Securities, also on a phone conversation with NATIONAL ECONOMY said the unfolding developments in the Nigerian economy will impact in two ways: importing generators, which is extra cost to manufacturers and service providers will save the country much needed foreign exchange, which will reduce pressure on the naira.
On agriculture, Garuba noted that Nigeria’s soil is better than her neighbours’ such as Niger, Chad, and Republic of Benin. He said that a visit to Kano reveals how much Nigeria’s agriculture products are sought by neighbouring countries. Garuba stressed that if the country increases its food productivity as is being witnessed over the past few years, Nigeria will become a net exporter of food, which will earn the country foreign exchange and reduce the pressure on the naira.
On petroleum products, Garuba said that billions of hard currency is being expended by the federal government annually because of lack of refining capacity, adding that with the coming on stream of Dangote Refinery next year, not only will the pressure on the naira reduce, but that the local currency will be strengthened.
Garuba caveated, though, that Dangote Refinery will save the naira only if it is designed to refine Nigerian oil, citing that the refinery in Kaduna was designed to refine crude oil from Venezuela, adding little value to the Nigerian economy.
Garuba also stated that when Dangote Refinery begins operation, Nigeria’s position in OPEC will improve because the country will be producing to supply Dangote Refinery and to also satisfy foreign demand, which would mean increased production.
It may be recalled that last year Nigeria expended approximately $15.5 billion on the importation of various petroleum products.
Also, Sequel to the directive from the federal government recently to the ministries of Power, Finance, Budget and National Planning, as well as the Bureau of Public Enterprises to hasten up the process of pre-engineering and concessionary financing agreement with Siemens AG to rev up power supply in Nigeria, renown economic watchers expressed optimism that there will be tremendous impact on the Nigerian economy.
Dr. Sam Amadi of Baze University and former chairman of the Nigeria Electricity Regulatory Commission (NERC) told NATIONAL ECONOMY in a phone conversation that the agreement, if bereft of politics and implemented to the letter, would have tremendous impact on the economy.
Amadi said the cost of production of Nigerian goods and services will reduce, and Nigerian companies will be competitive on the world stage. He added that more SMEs will be set up, and that would generate more jobs, as well as have implications for the healthcare system.
He added that the country’s GDP growth could double to at least 5 per cent as a result of improved power, and grow as much as China’s growth rate under the right conditions.
The Director General, Lagos Chamber of Commerce and Industry, Dr. Muda Yusuf, also in a phone conversation with NATIONAL ECONOMY said the agreement is very positive because power is the biggest problem investors are facing in the country. He said Nigerian manufacturers are not competing favourably because of the dearth of power, but if the agreement comes to fruition the manufacturing sector will contribute significantly to the country’s gross domestic product.
Yusuf added that with the development, the Nigerian economy will become more competitive, Nigeria’s exports, at least to other African countries will increase markedly, jobs will be created, the country’s revenue base will rev up, and the welfare of the peoples of the entire country will improve.
Yusuf concurred with Amadi’s assertion that with power supply to the tune of 7000 megawatts, the country’s GDP would grow by at least an additional three percent within the first one year of increase.
On his part, Dr. Tope Fasua, an economist, told NATIONAL ECONOMY that the development is good, as it will improve power supply, which is necessary for economic growth.
Fasua expressed glee in the fact that the more than 2,500 megawatts of power wasted daily will be consumed by Nigerians when the transmission and distribution problems will have been solved by implementation of the agreement.
Dangote Exports Clinker Abroad, Boosts FG’s Forex Drive
To reaffirm its status as the biggest cement producer in Africa, Dangote Cement has set the pace with the exportation of 27,800 metric tonnes of clinker to a neighbouring African country.
With this weekend’s historic maiden voyage from its Export Terminal located in Apapa Port Lagos, Dangote has gradually made Nigeria, which until recently was one of the world’s largest bulk importers of cement, firstly self-sufficient in cement production, and now an exporter of cement clinker to other countries.
The exportation of clinker from the Dangote Cement Export Terminal will also place Nigeria as one of the leading clinker exporters in the world. The company is expected to increase the quantity of clinker export to other African countries within the next few weeks, it was further learnt.
It said this development would enable Dangote Cement take advantage of the African Continental Free Trade Area, and by so doing contribute to the improvement of intra-regional trade within the ECOWAS region.
The Manufacturing Association of Nigeria (MAN) has commended Dangote Cement for leading the way for Nigeria to become one of the biggest cement and clinker exporter in the world.
Speaking during the departure of the ship conveying clinker from the Export Terminal at the weekend, Group Executive Director, Dangote Group, Alhaji Sada Ladan-Baki said the increased exportation of clinker and cement to other African countries would not only place Dangote Cement among top clinker exporters in the world, but would also boost Nigeria’s foreign exchange earnings and reduce unemployment in the country.
“The beauty of what we have done is that we are going to be generating foreign exchange for the country in terms of dollars and Euros. For every batch of clinker we export, the money comes back to Nigeria. The amount we are talking about is not small. Presently, Dangote Cement should either be number one or number two exporter of cement in Africa and the revenue we have generated in the form of foreign exchange is running into millions. Today, we have formally launched the Dangote Cement Export Terminal. We are still going to do another major launch when the second ship is going out of the country,” he added.
Alhaji Sada recalled that only a few years ago, Nigeria was one of the world’s largest bulk importers of cement, saying that “Dangote has gradually made Nigeria self-sufficient in cement production as well as an exporter of clinker to other countries.
He disclosed that the company would also be launching its export terminal in Onne in the next few days, adding that the export terminal would enable the company export clinker, initially to its grinding facility in Cameroon and then to new grinding plants the company is building across West Africa.
He explained that not only would this generate useful foreign currency for Dangote Cement to support other expansion projects outside Nigeria, it would also help to increase the output of the Nigerian plants, saying these would help to improve job creation and increase prosperity in Nigeria.
He stated: “This terminal will assist Dangote to actualise the full potential of the company’s investment in cement. You know as usual, when the rain comes, sales decline, but not clinker export. This feat by Dangote is going to generate a lot of jobs because the Export Terminal has already created jobs for many Nigerians. As at now, the numbers of employed Nigerians at the terminal have reached 100. We are targeting about 200 to 300 workers in Lagos Terminal alone.
“But, apart from job creation opportunities, the exportation of clinker by Dangote will position the country to participate fully in the Africa Free Trade Liberalisation Agreement when it comes into being, so that Nigeria will be protected against foreign products. It will also help the country compete effectively with every country that are in the business of exportation of clinker. At Dangote Cement, we are going about it aggressively and we are seeing it as an opportunity.”
Alhaji Sada said the company has also concluded plans to increase its clinker and cement export to other countries. “This vessel, being the maiden ship is exporting 27,800 metric tonnes to Senegal and this is just a tip of the ice-berg as to what we have in plan. What we have in plan is to send clinker from Nigeria to Ivory Coast, Cameroon and Ghana. Cameroon as an example, takes about 82,000 metric tonnes every month. Our target is to export at least 4 million metric tonnes of clinker annually to various parts of Africa.
“That is our target that we hope to achieve within the next one to two years. This particular voyage is going to our sister company in Senegal. We have an integrated plant of 1.5 million tonnes and this one is expected to give the plant additional clinker that is required for the plant to sustain production. In the next one week or two, we are going to be shipping 82,000 metric tonnes to Cameroon in batches of about 25,000 to 29,000 metric tonnes per voyage,” he added.
Speaking on Dangote’s achievement, the Acting Director-General of the Manufacturers Association of Nigeria (MAN), Chuma Oruche praised the wealthiest man in Africa for leading the way in the export of product from Nigeria to other countries.
According to him, this feat by Dangote Cement is capable of boosting Nigeria’s foreign earning and reducing unemployment in the country.