The Executive Vice-Chairman, Alpha African Advisory, Mr Mustafa Chike-Obi on Monday urged the Federal Government to remove subsidies on fuel, foreign exchange and electricity for the nation’s economy to achieve double -digit growth.
Chike-Obi gave the advice at a bi-monthly forum organised by the Finance Correspondents Association of Nigeria (FICAN) in Lagos with the theme, “Reposition the Nigerian Economy for Sustainable Growth”, noting that the various forms of subsidies were unduly hindering other sectors that needed urgent attention.
“The most challenge to our economy is the three subsidies that is added up to our total revenue”, Chike-Obi, a former Chief Executive Officer of the Asset Management Corporation of Nigeria (AMCON) said, stressing that it is the rich Nigerians that were benefiting more from fuel subsidy, rather than the poor.
“The nation’s economy is losing about N1.2 trillion per year.
“There is hidden figure in that fuel subsidy they do not allow you to see. They allow them to buy foreign exchange at N325/dollar.
“Who gets the fuel subsidy? The rich people with six cars are those benefiting from fuel subsidy.
“The average rich person in Ikoyi is getting approximately 100 times a year fuel subsidy than person in Shomolu in Lagos.
“Everybody deserves to have electricity but you charge electricity based on those who need it the most at the market price. Most people that uses generator pay N160/Kwh and pays comfortably.
“If you tell these power companies that they can sell power at N160/kwh, they will make sure that more power will be generated.”
Speaking further, he highlighted the need for the removal of electricity subsidy, adding that this will also attract significant investments to the power sector and unlock other opportunities.
He also expressed concern about Nigeria’s rising debt service ratio which, according to him, could be about 70 per cent.
“It is almost a guarantee that Nigeria is going to be talking about debt rescheduling soon and we need to start putting our house in order ahead of that,” he added.
Chike-Obi stressed the need for coherent and forward-looking policies to address the myriad of problems confronting Nigeria.
“There is need for coherent monetary and fiscal policies. For me, the position of a Central Bank of Nigeria (CBN) Governor should be a cabinet position.
“The CBN Governor should always be meeting with the Minister of Finance and the Minister of Budget and Planning every two weeks,” the financial expert said.
According to the former AMCON CEO, revenue mobilisation is Nigeria’s biggest problem.
In addition, he proposed the creation of a Ministry of Infrastructure to address the nation’s infrastructure challenge.