Former Minister of Work and Housing, Mr Babatunde Fashola, delved into a pressing concern affecting Nigeria’s economic stability— the absence of a petroleum refinery, which contributes significantly to the nation’s foreign exchange demand, estimated at 30%.
Fashola highlighted the far-reaching consequences of Nigeria’s reliance on imports due to the absence of a critical infrastructure like a petroleum refinery. He highlighted that this gap leads to a substantial 30% demand for forex, affecting not only petroleum products but also fertilizers and petrochemicals.
Fashola emphasized the potential positive impact on the economy if forex demand were to decrease. He logically pointed out that such a reduction would naturally result in a strengthened Naira, aligning with economic principles.
In his comprehensive analysis, Fashola explained, “The lack of critical infrastructure, such as a petroleum refinery, forces an oil-producing country like Nigeria to resort to importing petroleum products.” Advocating for localized production, he pointed out the potential cost reductions in shipping, insurance, and port charges.
Expanding on the economic ripple effects, Fashola highlighted the interconnected nature of various sectors, stressing that a holistic approach is essential for growth. “Every economy aspiring for expansion, efficiency, and productivity must invest in commensurate infrastructure,” he noted.
Reflecting on Nigeria’s current infrastructure, Fashola acknowledged the reliance on structures built in the ’70s and ’80s. He referenced the National Infrastructure Master Plan, spanning from 2020 to 2043, which outlines a substantial $2.3 trillion investment over 21 years—approximately $110 billion annually.
Despite the challenges, Fashola expressed optimism about the construction industry’s outlook in the next 5 to 10 years. He underscored the need for strategic resource allocation to achieve the government’s master plan, emphasizing the critical importance of setting priorities for key economic areas to foster sustainable growth and development.
By: Montel Kamau
Serrari Financial Analyst
4th December, 2023
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