Chika Mbonu, the astute Managing Director and Chief Executive Officer of KSBC Advisory Partners Limited stressed the imperative for the Federal Government to address current challenges to bolster the nation’s oil production.
This, he emphasized, is vital to streamline and fortify the nation’s public finance, encompassing both revenue generation and expenditure management.
Mbonu underscored this point, elucidating that the current administration, under Tinubu’s leadership, lacks alternative initiatives capable of significantly augmenting the country’s revenue streams.
This perspective was articulated during the Nairametrics webinar held on September 23, where the discussion centred on an analysis of President Tinubu’s initial 100 days in office.
Mbonu further explained that, in his assessment, the Tinubu administration has not presented any viable schemes that could substantially boost revenue generation.
He reiterated the significance of oil as a primary revenue and foreign exchange source, highlighting the necessity for the government to elevate oil production levels, irrespective of the ongoing discourse regarding diversification away from oil.
He said:
- “Oil has been our major source of revenue and foreign exchange in the last 50 years. Our oil production came down from almost 2 million barrels per day to less than a million barrels per day.
- “I expect the government to do something drastic about our oil production. We need to get our oil production levels up again to increase our revenue.”
According to him, for the last three years, Nigeria has been a broke country, because there is always a question of how the government is financing the gaps that exist in public financing.
He noted that key initiatives from Tinubu’s first 100 days aligned with what everyone knew they should do, the first of which was the removal of fuel subsidy.
He said:
- “We did not really have a choice for the removal of fuel subsidy, because we could not sustain it, the public finance couldn’t sustain it and that is very commendable. Incidentally, almost all the 2023 Presidential candidates also said the subsidies were going.”
Fuel subsidy is back under a different name
Mbonu noted that recent market occurrences like the rise in global crude prices as well as the maintenance of petrol pump prices at the current average price of N615 per litre indicate that the subsidy is back.
He said:
“Diesel is about N1000 per liter now and PMS (petrol) should be hugging that same amount now per liter, if not for the subsidy that has come back into the system. So, Ladies and Gentlemen, let nobody fool you, subsidy by whatever name it is called, whether it is recovery/under-recovery, is back into public finance.”
The forex context
He also shed light on foreign exchange. According to him, the exchange rate unification had to do with the fact that the Central Bank of Nigeria had a multiplicity of rates and they have now been tied into one rate.
So, there is only one window now.
He also highlighted the fact that the free market will be a mirage because there is no supply to back it up. He said the major issue is where the forex supply will come from, stating that the country’s problem is not debt but revenue.
He stated further that the country is facing the challenge of how to expand revenues and reduce expenditures.
