Address unaccounted government expenditure to fight inflation (2)

Rising GDP is always influenced by internal economic and commercial activities taking place in the economy. The positive influencers are; government expenditure (GE), investment (I), consumers expenditure (CE); while the lone negative influencer remains the almighty importation (IM); which must be strategically battled with institutional policy changes, to regulate and approve a legitimate local crude oil processing technique that should be of standard (void of any economic, social and environmental sustainability impact); to displace foreign made petroleum products.

Apart from the fact that Nigeria is stupendously rich in hydrocarbon reserves (both in crude oil and natural gas deposits), why must this economy keep exporting labour at a monthly cost of N120 billion (being spent as subsidy), while our labour market suffers from joblessness, and is characterized by rising unemployment (youths unemployment hitting an all time high figure of 47 percent, as reported by the National Bureau of Statistics)?

The Department of Petroleum Resources (DPR) should take a lead by instituting a Research and Development programme that will be tailored to suit operations of the small pockets of investors (SMEs), targeted at achieving a legitimate, scientifically proven refining technique, fashioned for subsistent economic activities, through the convergence of small scale investors in a cluster approach, for its internal consumption, specifically for the replacement of refined products imports. It should take a cue (the positive side) from the level or scale of operations being applied by illegal operators, but not their crude way of processing techniques, nor the oil bunkering aspect (by utilizing stolen crude oil); in the illicit operations going on in an unauthenticated manner, without official permits by the DPR (as contained in the hydrocarbon oil act of 1965; which was updated in 2004), as observed in the forests of the Niger Delta creeks.

These small pockets of illicit operations by the artisanal refiners in Rivers and Bayelsa states could be reformed by the DPR, by licensing them as a veritable option, after officially organising them in clusters of cooperative bodies to undergo formal professional trainings in the right scientific standards and processes needed, to curb further environmental damage and degradation through their crude manner of heating for oil separation. Indigenous technology needs to be encouraged through a strategic capacity building initiative for the affected youths in that region. Such a programme will go a long way in reducing oil theft, increase productivity by GDP growth, and shrink the present madness of volume importation of petroleum products that has turned this economy to misery, with high inflation and very weakened local currency exchange rate (based on continuous pressure mounted on the very scarce foreign exchange for fuel imports).

With the known fact that MSMEs are the major drivers of economic growth, they should not be ignored by the government (as a responsibility in governance, especially from the social dimension).

An initiative that ought to drastically reduce petrol imports into the country must be pursued with vigor because, it makes no economic sense to continually waste the hard foreign exchange on a product that has an optional solution that can save the economy from the present embarrassment of being tagged the world’s poverty capital (yet in the midst of plenty opportunities within the oil sector). Government expenditure ought to positively impact GDP growth (if transparently managed with clear accountability) than the present mode of waste as petroleum subsidy on imported perishable items the economy consumes daily.

Yet, it would seem, the country is not ashamed to keep reporting how the NNPC spent N492.05 billion in one month on subsidies, salaries and other expenses. Can’t the Ministry of Petroleum Resources wake up from this deep slumber for once, become sensitive, and stop this monstrous economic scourge draining the economy? Imagine the heavy load this singular item puts on the nation’s annual budget? What a country?

Nigeria must wake up! Enough of this insensitivity because, this economy must continue to find hydrocarbon business very relevant in macroeconomic calculations for another five decades; so long as we still have the crude oil deposits in abundance. The gigantic world class Dangote Refinery as a single massive refining plant of 650,000 barrels of crude oil daily offtake, a big added advantage and plus to the economy, should not discourage new investors in the local refining business. So long as the upstream operations go on, the trending alternative sources of energy other than fossil fuel (the likes of cleaner energy from natural gas, and the voltaic/electric car innovations) coming on stage in the global energy market, speculatively forecast to make crude unattractive, thereby reducing its demands as export item, will still not affect its present volume of local usage in Nigeria for another fifty years.

If on this basis we extract crude, add value to it by local refining, and also consume it, shift the excess for exports to our neighbours within the subregion (as a net products exporting country), imagine the place of inflation, local currency exchange strength, status of the annual balance of trade and the nation’s foreign reserves, employment profile of the labour market, GDP level, the microeconomic social status of the individuals’ disposable incomes, and so on? This leaves much to be imagined, by your thought, which is as good as mine!

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