The Nigerian Naira falls to N410 per US dollar, officially. The Central Bank of Nigeria (CBN) governor noted: “In order to adjust for the decrease in supply of foreign exchange, the naira depreciated at the official window from N305/$ to N360/$ and now hovers around N410/$.”
If you look at that statement, you will agree that Nigeria is in a vicious circle. Yes, our inability to reform our economic structures has muted the comparative advantages within the nation. So, just like that, a nation of extremely brilliant people, is lost, with no national vision to galvanize economic vibrancy and growth towards a hopeful future.
With political stasis evident everywhere, Nigeria is at a crossroads, and nothing can fix this paralysis until Nigeria decides to produce things it could sell internationally or substitute some it currently imports. But with the banks not lending at scale (not entirely their fault), and economic restructuring that will bring intra-state competition, to boost productivity and efficiency, not happening anytime, Nigeria’s only core hope is that Aliko Dangote’s refinery business will rise.
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Yes, Nigeria waits for Dangote because only him has a credible roadmap to change the economic trajectory of his nation. His position today is very vital and critical because he could be the only cousin to make Naira stronger. Naira looks like an orphan with no one helping it to compete globally. Dangote will come to assist it to find its space in the league of global currencies. Across human history, nations rise when pioneering entrepreneurs emerge. The moment of truth is here – and Naira needs pioneers in markets to save it from the ruins of the scale of Mexico, Venezuela, Argentina and even Zimbabwe, at different times of their histories.
I have written extensively on Dangote’s positioning in my book – The Dangote System. I have also accepted an invitation to meet the business legend in Nigeria anytime I make it home. Certainly, it may be a while since I have no plan to fly until they have solved the last case of Covid-19!
Saving the Nigeria
According to the News Agency of Nigeria, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has noted that Dangote Refinery will possibly sell refined crude to Nigeria in naira when it begins operations. When that happens, Nigeria will save about 41% of its foreign exchange, currently expended on the importation of crude oil products. That 41% will give a breathing space for Naira and that could be a turning point for the nation.
Emefiele said, ”Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira.
“That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with the freight will be totally eliminated.
“This will make the price of our petroleum products cheaper in naira. If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.
“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency.”
Emefiele was confident that the refinery would be completed by the first quarter of 2022, adding that this would put an end to the issue of petrol subsidy in the country.
He said, “I am saying that by this time next year, our cost of import of petroleum products for petrochemicals or fertiliser will be able to save that which will save Nigeria’s reserve. It will help us so that we can begin to focus on more important items that we cannot produce in Nigeria today.’’
For years, Nigeria has approached strengthening the naira through financial engineering at CBN headquarters; Dangote Refinery will help to strengthen Naira through technical innovation, at international markets through products and services, shifting equilibrium points to improve the balance of payment for Nigeria. The latter has always worked! Nigeria waits for that day because that refinery could be the most important national asset for a long time. Then, we will note that the N100 billion intervention to the projects, from the apex bank, is a good deal for the nation.
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Excellent piece! Hope for Nigeria.
The problem with this kind of warped thinking is that it will make us to become very lazy once more. When Oil was trading for over a hundred dollars we became numb and lazy, looting and sharing money, only to become confused and desolate once the price crashed.
Now the Naira has been raped and battered and all we could think is to wait for a certain Dangote to sell refined crude oil in Naira? What kind of idiotic minds do we breed here? The hope of a country of over 200 million people is now on one man to transact oil in Naira? We are a disgrace. Emefiele continues to think like a civil servant, he should have no business nearing the CBN gate, let alone heading it.
Whatever Dangote refinery offers the naira should be a bonus, just like what oil should have been to our economy; but here we have a generation of creatures who believe so much in easy life, that’s why we keep clinging to shallow solutions anytime we face problems.
For years we knew that importing refined crude drains naira, and what did we do? We kept pouring money on moribund refineries, doing TAM year in year out, only to produce bankruptcy.
If we fail to do the hard job and restructure this fraud we call Nigeria, even ten Dangotes won’t change our fortunes.
Thanks alot. You just nailed it.
You are amazing, with your analysis
Wow. Amazing point.
Please tell them Francis. We cannot all be fooled by the one-way, one size fits all analysis. The nation called Nigeria is yet to face the realities of how low she’s sunk.
Wow. This is such a wicked, hateful and evil hearted post. How did u manage to glean all this evil from such a hopeful post? A nation is out of its economic depths, and hope suddenly seems on the horizon, but all you have in you to spew out is condescension and bile. But I’m here to tell you, you are a bloody hypocrite – and a very soulless and heartless one at that. If you have the solutions, don’t tell us, SHOW US! If you have the answers, don’t tell us, demonstrate it on the field. If you are a leader, lead us, don’t tell us how to lead. But I know your type, you armchair critics that can’t even change the fortunes of your own extended family, but miraculously know how to restructure and revitalise a nation of 200million. Lol!! Fuck you Francis Oguaju
You said my mind dear. well, aside from the curse words of course. We all need to believe in a better tomorrow and if aliko Dangote or even the CBN can show us that little hope that all extensively need. I am more than happy and grateful for that. They are changing things and we should all try too. Not try and discredit their showing hard work to make this country a little healthier and safer to live in.
And @ Francis… You have the right to any point of view that suits you but we should all try our best to be more optimistic than pessimistic especially in these hard times.
This is true talk,God bless you my brother.
U have said it all, tell this idiot that, Facebook alone is richer than almost all the oil company in this world .,…..
Well said bro
You are so on point. What absolute rubbish – a government waiting for an individual to supply refined oil so it’s economy can improve.
Thank you Francis, this nation is a fraud and remains so for now. That we are paying the NNPC staff who work in our moribund refineries is a great pointer that Nigeria as a nation is doomed. How can we maintain refineries that are not producing for years, and now hoping on a capitalist businessman to be our redeemer? We maintain 2 to 3 different exchange rates ,encouraging those “favoured goats” who only take it to the black market to make billions without adding any value, I have never seen a nation where the leaders are so warped as this country. We do the wrong things and expect good results.
I don’t know why we are very myopic in our thinking?
Mediocrity at it’s worst state!!!
Thanks so much Francis?
I don’t know why we are very myopic in our thinking?
Mediocrity at it’s worst state!!!
Thank you Francis for your Intelligent response to the above article.
The management and staff of Nigeria owned refineries are being paid bogus salaries and allowances for zero input & output yearly. Some of them are even sent on foreign courses with our commonwealth for doing nothing.
It’s a big shame.
Honestly, I’m at a loss! Imagine, hinging the resuscitation of a dyeing economy on the success of one man’s investment and success seems to me like jesus has finally returned to save the entire world. Now I’m finally convinced Nigeria has lost it totally.
God bless you. The economic managers we currently have do not inspire confidence at all.
Emefiele will emerge the worst Central Bank Goveenor in History
That’s if he’s not emerged the worst cbn governor already in the history of financial management in Nigeria . Where are all the privilegef billionaires in this country this the time for them to come together to give Nigeria economy a boost by investing in other area of our immediate local needs just like that of Dangote without anymore delay. It’s time we forget about all this our clueless policy makers in government and chart away forward. Because if we are to wait for the government with the situation we have found ourselves as a nation then it will mean that we going nowhere soon. The Lord GOD have Mercy on us as a nation and as a people.
Just what I was thinking bro.I wonder what we doing with other sectors of the economy that are lying fallow. We import processed foods like crazy when we can produce them here. In 2020, the Federal Ministry of Agriculture and Rural Development estimated that we spend $5 billion on imported foods annually out of which $1.5 billion goes to importation of milk and other dairy products!!! We need to revive our manufacturing industry. When we have the factories working again, we would import less. We should be able to produce farm equipment that will facilitate mechanized farming (how many youths are willing to engage in agriculture with hoes and cutlasses only?). When should work more on what will revive our moribund factories. find it hard to believe that our economists are short of ideas,. We have lots of case studies from developed countries to leverage. It’s time to get back to the drawing board with all sincerity
Well said, God bless you
If you like break up Nigeria into 36 countries so long as this same extractive political and economic institutions are still in place and ruled by these same narrow elites nothing would change and they may even get worst.
So pathetic for 200 million people to now sit down, fold arms and wait for a redeemer. What makes the CBN think Dangote is a redeemer? Has not our current experience with the price of cement taught us enough lessons. Dangote is a businessman and a bourgeois at that. He will make maximum profit and possibly enslave the government and the poor masses. Would have thought the 100bn dashed out to him would have been govt investment in the project with a single digit interest. I hope they obtained due approval and due process followed? This amounts to helping a capitalist to exploit the people. Sectors such as textile, tire manufacturing and chemicals, metals and the rest have become moribund. Why haven’t government given free interest loans to rescue the sectors. There is foul play in the whole show of magnanimity. The power that be must have been a silent non published document co owners of this project. They are siphoning the money. It’s another conduit pipe and easy way to divert our resources. We need to question this magnanimous gesture by the CBN.
Thanks Francis. You said it well. However, I just want to buttress some of the points you made. Yes, when Oil was trading for over $100, there was looting and mismanagement everywhere. A sad story of this that comes to mind is Venezuela. But we still have to stop the importation of petroleum products. its ridiculous. I would suggest we have a strong executive and judiciary arm of government to deal with social vices like corruption and mis-management in public offices. These are what led to the collapse of the refinery. To avoid a monopolistic environment, other well spirited private companies should be given licenses to build their refineries with other benefits apportioned to Dangote. You would remember when MTN came into Nigeria, a sim card was sold for N35,000 but with the advent of other companies these sims are almost free today. In addition, to Prof. position, what we need are strong arms of government to tackle these issues.
Regards,
If getting a refinery was so important to the upturn of Nigeria economy, why serious government intervention not been made to see that our 3 refineries functioned effectively, why haven’t they looked closely into modular refineries, now they want us to believe a private sector owned refinery is the massiah we have all been waiting for
The private refinery is another way of milking the treasury. If really it will save us like they said,what is stopping the fed.govt from fixing the countries refineries.
They Neva had solution in mind
Thank you for this response/comment
Can you hear yourself, Mr cbn governor. Paper professor, with all your years of learning yet nothing. All you do is to loot, eat , hide and shit money after that you will shamelessly come on TV with your starch long sleeve and coat and start telling us super story. What if dangote drops dead now, that means no hope for Nigeria. Oga better start using your head o. Make I teach you book small. Why not advise the government to come up with a policy that can encourage manufacturing, production in Nigeria at a subsidized rate..yeye bunch of ancestors.
“Cry the beloved Country.” Tte Vultures are waiting too..
@Francis Oguaju, many thanks for your perspective, these people in Government keep pulling a wool over the eyes of the poor and unsuspecting citizens who look up to them year after year as they waste their precious time lining up at polling stations to vote them into office in the hope that they will use their head to restructure our economy…but NO, once they get there, the looting just progressively gets worse. Emefiele has continued to be a confused stooge of the current government aside from the fact that His several economic submersaults has long exposed him as the most confused CBN governor Nigeria ever had.
Wait o, so Nigerian business men will invest in small vessels to transport refined products to West African consumers and sell in naira to strengthen our naira and raise her status automatically to a regional currency…is Emefiele for real??!!
After reading the above, I felt sorry for my nation.. Let us assume that this is the reality we are in at the moment, what stops the country from taking a stand for years now to fix the fed government owned refinery? Now, they are telling us our fate hangs in Dangote refinery. Bunch of confused leaders!
Dangote can own a functionak refinery and Nigeria as a country cannot.. This is so disheartening.
For Oga CBN, it’s a pity you keep exposing your poor approach to help solve the naira crisis..Dangote will sell regained crude to us in Naira.. Seriously! Which currency is he supposed to sell to us, are we not in Nigeria??
The founding fathers of nija will be so disappointed in d leaders we have now..
Hmmmmm ( Nigeria cry for her children ) our leaders is as total bunch of disgrace to first our Creator, man hood and Nigeriahood. Shame on to you sophisticated Gov. Of CBN. We’re have heard that a country with 1.+ thrilion people survived with one person private company. No, you are counting on dangote right. Tell dangote to reduce price cement and food stocks let start from their animal. Leaders of dead Nigeria vacate the seat you occupied with your incompetent ass and let some one that has sense rule. Fools
The rich getting richer.
You are so on point. What absolute rubbish – a government waiting for an individual to supply refined oil so it’s economy can improve.
The fate of over 200million Nigerians is hanging on one man! And his name is merlin sorry Dagote.
All these criticism Left and right will not solve our problems. Think of Education for all. The children we educate today, will solve our problems tommorow. Functional education is what will take us to where China is today
That Education must be in our Languages
The government devalue the Naira so they can have enough money to pay salaries and sponsor bogus budget on naira. For instance if crude sells at $50 per dollar and official dollar rate is #200, it means 2 million barrels will generate $100,000,000 at a dollar rate of #200 is #20 billion. So when they devalue, its makes the naira stronger for domestic use. If naira is now devalued to #400, 2m barrels will be #40 billion.
The Dangote refinery that they are even placing all their hope on, is it for certain that it will commence full operation this year. Abeg enough of all these paddy paddy business…..yeye dey smell
Abeg, Francis tell them. The only thing I will add though is that the success of any nation is not just hinged on the efforts of government alone. Private individuals such as Dangote can help to partner and provide services like he is trying to do. We are lucky sef, what if Dangote wasn’t as rich as he is? The US has many billionaires such as Jeff Bezos, Elon Musk, Bill Gates, Mark Zuckerberg and others who do what Dangote is trying to do for Nigeria. At least we have one in him who is doing this. So whilst I lament the nation’s leadership incapacity, developed nations of the world have many Dangotes doing what he is doing to positively help their nations.
The pig is dying, the vultures are waiting?
Good job you, Aliko Dangote. Dangote refinery is not enough. All Nigerian refineries must produce along Dangote refinery to control monopoly.
Nigeria as a state is not productive. All Nigerians are productive with very few states governments. Others, please wake up.
Dangote refiery selling oil in naira would never be the silver bullet for the naira o Nigeria. Just consider how Dangote has dominated cement value chain yet naira ha no comparative advange in cement. The 50% net profit margin his cement company reports every yet on a mere commodity (cement production is mining not manufacturing) amounte to privately collected taxes on Nigerians. His play in oil refining would not be different; thete would only be one clear winnier – Dangote. Selling refined crude in naira to Dangotes Reinery reduces Nigeria’s dollar receipt which would be balanced out by selling ireined products in naira. So you got a zero sum game. But thats nio Dangite’ calculation. The genleman from Kano ddnt become richest an in Africa by playing zero sum games. Here is how he would make it a winner takes all – buy crude in naira, sell part of the refined crude to nigerias in naira and sell more in usd to foreign buyers. Dangote is not an would never by anybody’s messah, he is just one damn shrew businessman, the shrewdrest of them all you might aptly say
Welp, I think u r being a bit too pessimistic, maybe too suspicious of d character of Aliko, and i understand your perspective – the man’s monopolies in Nigeria have been too aggressive against potential competition, and he’s far more “shrewd business man” than “messiah”. And yes, you are right, the only “clear winner” in this deal is Dangote; but that doesn’t mean Nigeria and the naira won’t enjoy some valuable wins too. Cement isn’t nearly as central to the Nigerian economy as Oil – if we have someone that can bring even if a sliver of stability in there, Nigeria as a whole will feel it.
Moreover, since Nigeria doesn’t as of yet have the messiah, then it is wise that she settles for shrewd business men and women.
When is Nigeria going to look into iron and steel, silicon and aluminum, lithium and lead? All these spur the tech world of tomorrow and not petroleum. The world is drifting from carbon soaked environment to zero emission and we are still hoping on refineries. When Elon Musk is putting into place a world of ASV (autonomous shared vehicle) that runs on electric engine rather than fossil fuel. God save our future as an economy.
Nigeria is slumbering?
The truth of the matter is that Dangote, does not have the genuine means to contribute positively to the economic growth of Nigeria, because of favouritism and nepotism by the “powers that be”.
The Nigerian government and leaders are hypocrites and bunch of tribal and ethnic bigots, hence, the stagnation in our economic development.
There are much more reliable and vast business moguls in Nigeria that if given a “level playing ground” will join hands to set the country on economic pathways growth, but tribalism will never allow our leaders do the needful.
At this juncture, if the nigerian government and leaders choose “favouritism and tribalism” over national growth and patriotism, then the inevitable shall be born and we all shall pay dearly for it.
Francis, you just nail it. It’s really amazing that Nigeria leaders are short of good ideas again and they need help. May God help us.
We all have one or two things to say about how to move the country forward CBN governor is not.the most intelligent person in the country,as you criticism also profile a solution that can help to move the nation’s economy forward. As for dangote refinery is going to contribute to the Nigeria economy,but government should create an enably environment for every would be investors to operate.
The pig is dying, the vultures are waiting?
So, if we all agree that 41% of forex could be saved once Dangote refinary begins production; why have we not revived our national moribund refinaries and if need be increase their capacities saving another 3×41%. It makes those in government weak, wicked and Mad by ignoring serious economic indices and following cows about.
Francis has asked a very good question! The seventh largest exporter of crude oil with four refineries, and still waiting for a capitalist to help produce refined petroleum products?
Very difficult to understand
No one is ready to do something about Nigeria economy for the nation to depend on one man that means no hope. Please somebody should help because I am getting more confused, why should the government officials go to work every day and year in year out no result to show