The Lagos Chamber of Commerce and Industry (LCCI) has issued a clarion call to the Federal Government of Nigeria, urging a significant boost in crude oil refining capacity and a subsequent surge in petrol exports. This strategic move, according to the LCCI, is crucial for achieving the government’s inflation reduction target and bolstering the value of the naira against foreign currencies. The LCCI president, Gabriel Idahosa, expressed concerns about the adequacy of the N54.99 trillion 2025 budget, arguing that it falls short of what is required to achieve the nation’s ambitious economic growth objectives. These targets include reaching a $1 trillion economy by 2030 and curbing inflation to 15% from its current alarming high of 34.8%. Idahosa emphasized that the budget, while a step in the right direction, represents only one piece of a larger puzzle in attaining these long-term goals.
A central theme in Idahosa’s analysis is the critical importance of stabilizing the foreign exchange market. He acknowledged the ambitious nature of the government’s 15% inflation reduction target, but maintained that it remains achievable with the implementation of disciplined and focused policies, particularly within the foreign exchange domain. Specifically, he suggested targeting a sustainable exchange rate between N1,300 and N1,400 to the dollar, a significant strengthening from the current rates. This, he argued, could drive inflation down even faster than the government’s projections. The underlying principle here is that a stronger naira reduces the cost of imported goods, thereby easing inflationary pressures.
Idahosa’s prescription for achieving this exchange rate stability and consequent inflation reduction centers on enhancing Nigeria’s domestic refining capacity and transforming the nation into a net exporter of refined petroleum products. He argued that increased exports, particularly of refined petroleum, will generate a surplus of foreign currency, strengthening the naira and lowering the cost of imported goods. This strategy, he emphasized, requires maximizing the output of existing refineries, including the Dangote Refinery and the Nigerian National Petroleum Corporation (NNPC) refineries. The ultimate goal, according to Idahosa, is to completely eliminate petrol imports and establish Nigeria as a major player in the global refined petroleum market.
This transition from a net importer to a net exporter of refined petroleum products, according to Idahosa, will have a cascading effect on the Nigerian economy. The increased inflow of foreign currency will not only strengthen the naira but also create a more favorable environment for investment and economic growth. This, coupled with the development of other non-oil export sectors such as fertilizer and cement, will further contribute to a healthier balance of trade and a more resilient economy. The LCCI president underscored the need for continued expansion of non-oil exports, emphasizing their importance in diversifying the Nigerian economy and reducing its reliance on crude oil.
Beyond the focus on petroleum refining, Idahosa also pointed to the role of transportation costs in driving inflation. He projected a decline in inflation throughout the year, driven by the expansion of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) vehicles, along with the ongoing development of metro rail projects in major cities like Lagos and Abuja. These initiatives, he explained, will significantly reduce transportation costs, a major component of the overall cost of goods and services, thus contributing to lower inflation rates. The shift to cleaner and more efficient transportation fuels will also have positive environmental benefits, aligning with global efforts to reduce carbon emissions.
In conclusion, Idahosa expressed optimism about Nigeria’s economic outlook, painting a picture of a nation transitioning from a consumption-based to a production-based economy. He believes that the expansion of domestic refining capacity and the subsequent increase in exports will position Nigeria as a significant player in the global refined petroleum market. This, coupled with a diversified export portfolio and investments in infrastructure projects like metro rail systems, will contribute to a stronger naira, reduced inflation, and a more robust and sustainable economy. The LCCI president’s vision emphasizes the importance of strategic investments, policy discipline, and a focus on maximizing Nigeria’s resource potential to achieve its ambitious economic goals. This transformation, according to Idahosa, is already underway, as evidenced by Nigeria’s growing recognition as a producer of refined petroleum products, signaling a positive trajectory for the nation’s economic future.
