….Charts 8-Point Remedial Policy Roadmap For FG
The Centre for the Promotion of Private Enterprise (CPPE) has expressed serious concern about the unfolding development in the global political space, particularly the growing uncertainties in the crude oil market, which will likely result to exponential revenue loss to Nigeria.
The leading organized private sector (OPS) advocacy group’s Chief Executive Officer (CEO), Dr. Muda Yusuf, in a statement circulated to our correspondent on Sunday, has alerted the Federal Government on the risks of the ugly development to the nation’s economy and the need for accelerated diversification of the nation’s economy to ensure its sustainable growth.
He pointed out that the inception of the Trump administration in the United States (US) had remarkably changed the dynamics of global trade, global economic outlook and geopolitical trajectory.
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According to the renowned economist, the US is currently experiencing a record disruption in its economic, trade and political governance systems with the potential of multi-dimensional negative implications for the Nigerian economy.
He stated: “There are immediate and remote consequences for energy prices, trade relations, economic diplomacy, macroeconomic stability, donor funding and capital flows. These are evolving outcomes of the Trump presidency which would impact the outlook for Nigerian economy in the near term.”
Noting that the US has been the largest oil producer globally for the past six years, Yusuf recalled that “in 2023, for instance, the USA produced an average of 21.91 million barrels per day, which is about 22 per cent of the global oil production. The USA is, therefore, in a good position to influence global oil output and prices.”
Yusuf further noted that the Trump administration had committed to increasing oil output to reduce energy prices in the USA and globally and country also has the global diplomatic clout to get OPEC to boost oil production, following which President Trump signed an Executive Order creating a National Energy Dominance Council to drive the country’s energy dominance agenda.
In addition, the CPPE boss stated that the Trump administration was also committed to moderating the current global geopolitical tension, especially the Russian-Ukraine war, and possibly the Israeli Hamas war.
He warned that if Trump succeeded in ending the war, especially the Russian-Ukraine war, the prospects for growth in global oil output will be considerably heightened as Russia supplies about 10 mbd of oil to the global oil market, adding that there is also a good chance that the current sanctions on Russia by the USA may be lifted thereafter as the relationship between the two countries normalizes.
In light of the unsettling outlook of the global oil market, Yusuf warned that the scenario of a weakening of crude oil prices in the near term remained very high and in this context, the crude oil price benchmark of $75 per barrel in the Federal Government’s 2025 budget may not hold.
This would impact the outlook for government revenue and foreign exchange earnings in 2025.
On the decision of President Trump to opt out of the Climate change agreement (the Paris Accord), the analyst pointed out this had far-reaching consequences for the global oil market, indicating less commitment to climate change concerns and the acceleration of more investment in fossil fuels by the USA.
Similarly, the CPPE chief pointed out that the sweeping imposition of trade tariffs on major US trading partners may weaken the global economic growth outlook, dampen global oil demand and depress oil prices.
However, he stated that the upside would be that energy prices would drop globally – the price of diesel, PMS Jet fuel, gas etc, gladdening the hearts of many economic players in the country, and that the transmission effect would be very fast because of the deregulated regime of the oil and gas sector.
Yusuf, who also appraised the implications of crude oil price slash at the global market, the planned deportation of thousands of Nigerians from the US and other challenges associated with the Trump administration’s policies for Nigeria, advised the Federal Government to adopt proactive policy strategies to mitigate the negative impacts on Nigeria.
The CPPE boss canvassed an eight-point agenda for the Nigerian government to implement as a desirable step towards ensuring improved performance of the economy, boost revenue earnings to take care of the citizens’ needs and reposition Nigeria on the path of sustainable development.
Specifically, he advocated: “There is a need for the government to commit more to the policy of self-reliance and less import dependence in critical areas of the economy, especially energy, food, pharmaceuticals and security. Excessive import dependence poses a major risk to economic and social security of a country.
“A key lesson is from the disruption is that no country should be too dependent on others for its strategic needs. It has once again underscored the risk of overdependence on other countries. The Covid experience offered a similar lesson. Therefore, there is a need to ensure that policies of government are geared towards ensuring economic resilience that minimizes vulnerabilities to external shocks.
“Supply chains should be localized as much as possible.
“The emerging new global order is progressively leaning towards economic nationalism, deglobalization and economic fragmentation. Domestic economic policies must be framed within the context of this reality. Nigeria’s trade and industrial policies are very critical to achieving this resilience.
“The government must deepen backward integration through stronger intentionality to promote domestic production of goods and services as well as export development. The current economic reforms are already on course to ensure strategic structural shifts towards reducing dependence on imports”, the CPPE chief added.
Also, he charged the governments to place special emphasis on food security, energy security, health security and internal security, leveraging largely domestic resources, and urgently address current productivity shortcomings in the real sector to make domestic production competitive domestically and internationally.
Yusuf concluded by stressing that current global developments reinforce the need for the Federal Government to protect domestic industries against unfair competition from imports.
