By Suleiman Umaru
More facts have emerged why the Kingdom of Saudi Arabia, one of the founding fathers of the Organisation of Petroleum Exporting Countries, OPEC, has pledged ‘’to revamp, Nigeria’s ailing refineries as well as make available substantial deposit of foreign currencies to boost the country’s forex liquidity.
This is because President Bola Ahmed Tinubu, who had travelled to Riyadh, Capital of Saudi Arabia on Thursday, November 9, 2023, to attend the first ever Saudi- Arab-Africa economic summit had engaged the Arab nation in bilateral talks where he had solicited ‘’for foreign direct investments. FDI, into the Nigerian economy’’.
The Nigeria President was said to have made Mohammed bin Salman Al Saud, the Crown Prince to know that ‘’ Nigeria need more investments to revive its economy plagued by foreign currency shortages, double digit inflation, widespread insecurity and crude oil theft’’. He was said to have equally used the Saudi Investment round table talks’’ with the Captains of the Saudi Arabian industry to win thee heart of the Crown Prince to help Nigeria from its present economic problems
The Lagos state born Nigerian President had reassured the global investors that the country’s bold economic reforms will promote ‘’ free market economy ‘’ all bottlenecks associated with investments in the country in the past has been removed.
Describing himself as an apostle of ‘’free market economics, Tinubu, who could not his feelings was said to have given the investors a cause to be cherry when he declared: Your money will flow easily in and easily out’’, noting that the arbitrage around the nation’s foreign exchange policy regime and the corruption that was associated with it is gone for good.
Mohammed Al- Jadaan the, Saudi minister of Finance may have set the stage for the Saudi, Arab, Africa, economic Conference when he disclosed that the summit will witness the signing of various agreements between the country’s Fund for Development and a number of African countries on projects that was said to have been valued at about than two billion Saudi riyals, equivalent of the North American country of the United States ,US, $500 million, dollars.
Note that oil is the main stay of the Middle East country with a daily oil production of 12,402, 761, thus making the country one of the highest oil producing nations in the world in the league of US, Russia and China.
Given the judicious management of its oil resources, the Arab country, according to reports has foreign exchange reserves estimated at about US $402 billion and Sovereign Wealth Fund of over $776 billion, which was said to have put the country to be among the largest Sovereign Wealth Funds in the world. The Statement by Khalid Al- Falih, the Saudi minister of Investment that the Kingdom’s Sovereign Wealth Fund will make some game changing in the execution of projects in the African Continent speaks volume.
Reports has it that the development Institutions of the Arab Coordination Group was had announced the financing programs to support sustainable development in the African Continent until the year 2030 at the Riyadh summit. It was not surprising why the oil -rich Saudi Arabia government had pledged ‘’to invest in the revamp of the Nigeria’s four moribund refineries located at PortHarcourt, Rivers state, Kaduna, north western Nigerian and Warri, Delta state with a total installed refining capacity of 450,00 b/d.
Muhammed Idris Malagi, minister of Information and National Orientation had said that the Saudi government investment in the nation’s non-performing refineries will be led by the state oil Company Aramco, with the upgrades going to be completed within the next three years.
These are projects which Abdullahi Sule, an Engr. and a former governor of Adamawa, home state of Atiku Abubakar, a former Nigerian Vice President under President Olusegun Obsanjo’s Administration and Presidential Flag bearer of the Opposition People’s Democratic Party, PDP, in the February 25, 2023, Presidential elections had revealed that the former Nigerian President, spent US $19 billion in the eight years of his Administration to rehabilitate the refineries but turned out to a drain -pipe.
Indeed, the good news about the Nigerian President participation in the Saudi, Arab and African economic summit was that it facilitated the signing of a Memorandum of Understanding, MoU, between Nigeria and the Saudi government for Cooperation in oil and gas projects. Prince Abdulaziz Salman, the Saudi minister of Energy was said to have signed the energy Cooperation agreement on behalf the Arab country’s government while Senator Heineken Lokpobiri, Bayelsa state born minister of State, Petroleum Resources, Oil, signed on behalf of the Nigerian government.
Notwithstanding that the Saudi government had pledged to assist the Nigerian in putting back its non-performing four moribund refineries back to operation, the country may have also realised that what Nigeria needed most for now is to restore total confidence in the country’s foreign exchange market.
It was not surprising why the Saudi government was said to have also pledged to provide an undisclosed amount of US dollars to sustain the country’s official foreign exchange market which financial experts believe had been thrown into crisis over the last six months due to the government policy somersault.
Malagi, the minister of Information and National Orientation, may have alluded to this when he disclosed that the problem of the country’s local currency, began when the government allowed it ‘’to float freely against the US dollar and other world major currencies in June, 2023, thus resulting in a devaluation of about 40%.
The Nigerian Leader may have had at the back of his mind that market forces would determine the value of the naira which Senator Adams Oshiomhole, a former governor of Edo state had faulted, stating that ‘’the government must intervene to save the naira’’.
The former Edo state governor, who incidentally was a former Chairman of, the ruling All Progressive Congress, APC, had asserted that with the shortages of forex and ‘’interest rate at 20 or 25% , the government cannot be expecting the manufacturing sector with investments that require long-term gestation period to grow’’. He is not far from the truth. There are indications that over 10 manufacturing Companies have closed down due to the lingering forex shortage, poor electricity supply, port congestions, multiple taxation, insecurity, and poor infrastructure.
The plethora of problems posing as a threat to the manufacturing Companies also included high energy cost and sluggish demand for manufactured products due to low purchasing power . One of the Companies that was said to been closed shop was Procter &Gamble (P&G). Also on the list of the shutdown Companies were Tower Aluminium, GlaxoSmithKline Nigeria and Mayor Biscuits Company Limited and Evans Medicals, and Tecnoflex Company Limited.
Although, the Nigerian government had cleared the backlog of forex debt estimated at $7.6 billion owed Citibank, Stanbic IBTC and Standard Chartered bank, United Bank for Africa, plc, a Pan African Bank and other Banks, operating in the country, the naira has continued its free fall at the country’s official and parallel, popular, black foreign exchange markets, settling at N1,135.00 to the US, one dollar on Sunday, November 12, 2023. The situation has become so worrisome that Olayemi Michael Cardoso, who incidentally was the former head of Citibank in Nigeria and the new CBN, governor, has vowed to go after the currency hoarders and speculators who had benefitted from the currency round tripping under the Buhari’’s Administration and are currently fighting the system.
Olusegun Aganga, a- one-time minister of Finance , had predicted that despite the efforts put in by the trio of President Tinubu, Wale Edun, minister of Finance and Coordinating minister of the Economy and Cardoso, governor of CBN, the naira would continue the free fall because the country is ‘’an import-dependent nation’’.
The former minister of Finance remarks may have emboldened Lekan Adewoye, Vice Chairman of Basic Metal, Iron, and Steel products sector of the Manufacturers Association of Nigeria, MAN, to have asked President Tinubu, ‘’to urgently reverse its decision unbanning the 43 items on the foreign exchange restriction list of the CBN to save the country’s economy from outright collapse’’.
Edun , the minister of Finance who would not agree the recent picture painted about the depreciation value of the naira at both the official and parallel foreign exchange markets by Aganga, a former minister of minister, had said that that the shortage of the US dollar in the country would soon be a thing of the past as the government is expecting about 10 billion in foreign currency inflows into the Nigerian economy to ease the dollar shortages in the forex market.
