The publisher of 9NewsNigeria, Mr Obinna Ejianya, has stated that in order to stabilize the Naira and the economy, the Federal Government must prioritize reducing fuel prices to a minimum until reliable electricity is available to power production to a greater extent.
He emphasized that it is essential to consider that with the high cost of fuel in Nigeria, the economy will continue to perform poorly, and the value of the Naira will continue to decline.
This is because every aspect of foreign exchange rate indicators is directly or indirectly linked to the local production of goods and services. As long as the cost of production and distribution remains high, the GDP will suffer greatly.
He further stressed the need for the Bola Ahmed Tinubu-led government to officially announce the annulment of the fuel subsidy removal. “This step would promote transparency, reduce fuel prices, and alleviate the toxic economic atmosphere in Nigeria,” he said.
Mr. Ejianya affirmed that President Tinubu’s government is committed to implementing economic reforms aimed at improving the lives of Nigerians who are already suffering from severe economic hardship.
However, he highlighted the importance of prioritizing and addressing certain fundamental issues to achieve meaningful progress. One such issue is the removal of the fuel subsidy, which he described as a hindrance to the Nigerian economy.
He criticized the government’s approach of compensating for the removal of the subsidy through clandestine or shady means, stating that it only exacerbates the situation due to widespread corruption. Mr. Ejianya emphasized the necessity for the government to establish a robust structure to ensure accountability for fuel subsidy payments and take strict action against corrupt practices, including imposing heavy fines and suspending licenses.
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He pointed out that the high cost of fuel in Nigeria has negative implications for the economy and contributes to the depreciation of the Naira. The removal of fuel subsidies by President Bola Tinubu’s government has led to a significant increase in fuel prices (petrol, gas, and diesel), more than doubling the previous prices. This increase has had a ripple effect on the costs of goods and services, causing hyperinflation in the country.
Mr. Ejianya argued that it is unreasonable to expect Nigerians to pay fuel prices that are nearly double those in countries with much higher incomes. He cautioned against comparing Nigeria’s fuel prices to those of countries with significantly higher incomes, citing the vast disparity between the average per capita income in the United States and Nigeria.
While acknowledging the government’s rationale for removing fuel subsidies to save money, Mr. Ejianya emphasized the adverse effects of significantly increased fuel costs on production expenses, leading to a decline in productivity and affecting the country’s GDP.
He highlighted the reliance of production in Nigeria on generator sets due to unreliable electricity supply, noting that any disruption or increase in fuel costs directly impacts production and business operations, including transportation. The fuel market, encompassing gasoline, petrol, gas, and diesel, is vital for Nigeria’s productivity in terms of manufacturing, production, and transportation of goods and services, ultimately influencing the country’s GDP.
Mr. Ejianya concluded by emphasizing that all the major indicators determining a currency’s exchange rate, such as GDP, export-import ratio, market sentiment, speculation, inflationary forces, central bank policies, and government policies, are significantly affected by production costs, which still heavily rely on fuel availability and cost in Nigeria.
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