Weakened Reserves: Altering Nigeria’s economic orientation from consumption to production

The depletion of Nigeria’s Foreign Reserves remains one subject of prime significance with notation of strong  links to the workings of the economy. The devaluation of the Naira before hard currencies with the attendant results of recession are unfortunate characters which have coloured the outlook of the Nigerian economy deficiently. While reservations are right on bench on the assessment of circumstances giving definitions to the character of the Country’s economy, it is apparent that the exhibition of several weakened fundamental parameters are structural deficiencies which compound together to enmesh the economy in deep mire of dysfunctional woes.

The subject of the state of the Country’s foreign reserves which has been suffering from depletion and a lowering profile of records, is a function of unmatched navigation within the architecture of a mono-cultural economy and an incommensurate heavy demand of hard currencies for importation. The pressure of demands for hard currencies for importation on the reserves has been a burdensome character which is largely incompatible for friendly framework for the economy to thrive. The patterns of this working frameworks have been by and large recalcitrant in generating resistance against the yearnings of growth and development for a buoyant economy.

The dependence of the economy largely driven by importation is one deficient feature which has ill-charaterised the Nigerian economy, leaving it in critical condition. The matter is more or less given a paradoxical definition when consideration is given to the importation of finished or processed goods whose raw materials for their processing are abundantly available in the Country. The reality of this only portrays the Country’s economy as a consuming and not producing economy.

Giant among the resources that attract such paradoxical characterisation is oil and gas. The importation of refined petroleum products into Nigeria despite the Country being one of the headquarters of oil and gas reservoirs speaks to the paradox. The billions of dollars that go into importation of refined products clearly is one of the burden on the reserves which have continued to bear unmatched effects on the entire economy. Latest report from the National Bureau of Statistics (NBS), revealed that  the amount spent on the importation of Premium Motor Spirit (PMS) popularly called petrol rose by 17.54 per cent to N2.11trillion last year 2020. According to the latest data, the sum spent by the Country in 2019 on same importation of PMS was N1.71trillion while that of the preceding year was N2.95trillion. The data also revealed that petrol topped the list of products imported into the country, accounting for 11.7 per cent of the total amount spent on imported products from January to September. Petrol imports jumped to N573.69billion in the fourth quarter of 2020 from N532.62 billion in Q3 and N87.08 billion in Q2. In the first three months of 2020, the Country spent N1 trillion on the importation of petrol.  Recent developments have it that the Nigerian National Petroleum Corporation (NNPC) has been the sole importer of petrol into the country in recent years as private marketers are yet to resume petrol importation owing to controversies over full deregulation of petrol price and access to foreign exchange at the official rate.

It is glaring that for the narrative of the Country’s economic profile to receive a melodic resonance, the need for deliberate modifications in the fundamental patterns of the working character of the economy must take course. Redirecting the orientating course of the economy from import-dependent to self-sufficiency in local demands is a necessity that must be given conscious and deliberate effort. It is imperative for the Government to channel attention and give priorities to crafting, by policy instruments, modifying frameworks to redefine the fundamental workings of the appropriate parameters to shape the economy into the responsive patterns of productivity in moving from dependency to self-sufficiency and ultimately buoyancy for export.

Building structures within sectors towards the height of processing capacities to produce finished products is an imperative move to drive the economy for growth and development. The necessity for this in the oil and gas sector cannot be underestimated. The importation of refined products which over the years has been a subject of controversies particularly with losses from years of subsidy among other technical leakages constitute tingling narratives which are by and large functions of insensitivity and displacement of priorities. Just as the need to develop processing capacities for self sufficiency in refined petroleum products in the Country is required in the oil and gas sector, the same yearning must be extended to all other sectors bearing relevance to processing and manufacturing. This is important to drive the course of the economy from consumption to production orientation.