The Independent Media and Policy Initiative (IMPI) has again thrown its weight behind the full deregulation of the downstream sector of the Petroleum Industry.
This comes as Nigerians have continued to react to new fuel prices as a result of the removal of subsidy on Premium Motor Spirit (PMS).
But weighing in on the issue in its latest policy statement signed by its Chairman Niyi Akinsiju, IMPI pointed out that what Nigerians are witnessing are temporary challenges associated with efforts to correct long-standing distortions in a national economy.
“Based on our qualitative research on the state of the economy, we can confidently submit that though cost of living remains high, there are enough indicators to show that the policies being implemented by the federal government are gradually addressing the challenges that had historically contributed to the near-asphyxiation of the economy before the coming of the Tinubu administration with its reforming zeal.
“Indeed, our desk research on the economy indicates that the federal government is making solid strides in different segments of the nation’s economic spheres. More impressive, to our minds, is the renaissance of the federal government’s saving capacity, targeted at infrastructural development across the 36 states and the Federal Capital Territory (FCT).
“President Tinubu approved the establishment of the Infrastructure Support Fund for the 36 states on 20 July 2023 as part of measures to cushion the effects of petrol subsidy removal on the people. We commend the federal government’s fiscal discipline, as exercised by the monthly deduction of N100 billion from the federation’s gross revenue. Thus far, a total sum of N900 billion had been saved between November 2023 and September 2024.
“The Federal Accounts Allocation Committee (FAAC) has been deducting the amount into a special account before its monthly revenue distribution to the three tiers of government. In a show of fiscal discipline, it is established that no singular deduction or diversion had been made from the account since its inception.
“These savings are helped by the substantial increase in the federation’s generated revenue threshold, which stood at N9.1 trillion in the first six months of 2024, compared to the N5.2 trillion made in the same period of 2023.
“This, without doubt, is a milestone in federal government’s fiscal management that should be credited to the reforms being consummated by the Tinubu administration.
“Therefore, as analysts, we have decidedly sided with the federal government as it transitions the national economy from the anachronistic dependency model to the liberal, free-market, enterprise-driven model.
“Of course, we are aware of the challenges associated with policies to wean citizens and corporations off the corruption and distortions of subsidies, either petroleum or foreign exchange. Still, our situation as a country is that we cannot continue in the old ways. It is self-exploitation.”
It added that the economy is posting impressive numbers across many sectors of the economy in response to government’s pro-business policies.
“Instructively, we observe with interest the manufacturing sector’s surge in tax contributions, recording a nine-month high in the second quarter of 2024 despite ongoing economic challenges. In Q2, 2024, the total tax paid by manufacturers, which combines both CIT and Value Added Tax (VAT), amounted to N405.86 billion. This implies the sub-sector’s growing resilience and underscores a resurgence of production, productivity, and related activities.
“Furthermore, the manufacturing sector’s tax contributions to the coffers headline a paradigm shift from the nation’s historical dependence on volatile crude oil sales for its foreign exchange, and thus, underlines the recently growing activities and fiscal returns from the non-oil sector.
“This has positively impacted the foreign exchange reserves since the policy to harmonise the multiple foreign exchange windows was announced soon after President Tinubu assumed office.
“In this regard, data from the Nigerian Export Promotion Council (NEPC) show that foreign exchange earnings from the non-oil sector increased to $2.7 billion in the first half of 2024, up from $2.5 billion in the same period last year.
“Again, impressively and in tandem with the objectives of the ongoing reforms, this growth is driven by agriculture, solid minerals, and manufacturing. From our standpoint, this marks a significant shift in Nigeria’s export dynamics. For instance, the exponential rise in the export of cocoa beans in the first quarter of 2024 demonstrates the surge in the export of agricultural products. Nigeria’s cocoa exports accounted for 42.4 per cent of the N1.04 trillion agricultural exports for the period, soaring to N438.7 billion in the first quarter of 2024 compared to N108.6 billion in the corresponding period of 2023.
“This shows the positive impact of the Naira’s depreciation on export value. Naturally, the price rally has caused Nigerian farmers to begin reviving old cocoa plantations and planting more high-yielding seedlings to replace old and unproductive trees while expanding their growing areas. We tick this in favour of the correctness of Tinubu’s economic reform programme.
“Meanwhile, during this period, total non-oil export volume amounted to 3.84 million metric tonnes, covering 211 products ranging from agricultural commodities to extractive industries.
“What is apparent is that Nigerian exports are gradually shifting from raw agricultural products exports to semi-processed and manufactured goods, conclusively indicating that the growth in non-oil exports points to a new direction for Nigeria’s economic development,” IMPI explained.
The policy group also reeled out data to show some improvement in employment figures in the country.
“For the first time in a long while, Nigeria is recording a change in the make-up of its labour force, with a 3.3 percentage point decline in the 87.3 per cent self-employed working population, according to the Nigeria Labour Force Survey (NLFS) Q1 2024.
“This 3.3 percentage point decline in self-employment is reflected in wage employment, which suggests that a percentage of the labour force engaged in self-employment has now found formal engagement in wage employment in Q1 2024. This percentage increased by the same 3.3 percentage points to 16.0 per cent from 12.7 per cent in Q3 2023.
“This translates to more Nigerians getting traditional salary-paying jobs by early 2024, thus reflecting a modest but steady workforce absorption into more formal employment sectors.
“We anticipate a speedier absorption of more workers from the informal, self-employed segment of the labour force as the economy gains more traction,”it concluded.