Low production rate, theft and pipeline vandalism have combined to rob Nigeria of the benefits of high cost of crude oil in the global market.
The declaration was made by the Nigeria Economic Summit Group (NESG) in a communiqué issued at the end of a meeting of its Board of Directors.
The communiqué, issued in Abuja on Wednesday was signed by the board chairman, Mr Asue Ighodalo.
Ighodalo stated that declining investment and divestment, high cost of production, and a harsh operating environment also contributed to robbing Nigeria of the benefits.
“Nigeria is not appropriating the benefits of high global prices. As a result, fiscal pressure is imploding because of declining revenues and soaring public debt.
“Only recently, the Minister for Finance alerted Nigerians that the cost of debt servicing has surpassed Federal Government’s retained revenue as total public debt continues to rise.
“Meanwhile, the Central Bank of Nigeria’s Ways and Means financing to the Federal Government peaked at N19.6 trillion as of May, and the country maintains an unsustainable fuel subsidy regime,” he stated.
He said that the growing deficit meant that Nigeria would rely on borrowing to finance the 2022 budget.
Ighodalo noted that in spite of increased budgetary allocation to defence and national security, insecurity had not abated.
“Despite some changes in the leadership of the national security apparatus, conditions have not improved.
“There is hardly any need to itemise the adverse impact of insecurity on food prices, productivity, ease and cost of doing business, investor confidence and national pride,” he stated.
He added that as a policy think tank, the NESG would continue to offer policy advice to any government in power in the national interest.
He commended the Federal Government for initiating the recently-launched National Development Plan (2021–2025).
“We remain resolute in our mandate – we will continue to be in the vanguard of economic reforms and positive change.
“The Board of Directors of the NESG notes and commends the Federal Government for commencing the implementation of the Medium-Term National Development Plan (2021–2025),” Ighodalo also stated.
He called for steps by the government to tackle revenue challenges that created room for rising national debt.
“Government must take decisive action to tackle its revenue challenges which cannot be divorced from leakages through oil theft, difficult operating environment for businesses, and lack of innovation in tax collection.
“The challenges have resulted in low accretion to the nation’s revenue base. We strongly believe these leakages have continued unabated because of the absence of sanctions and ineffective tax systems.
“We must return to the path of debt sustainability in the face of dwindling revenues not to create a debt burden for future governments and, indeed, future generations.
“We must prioritise our expenditure, limit our spending to items we can sustain, and eliminate wastage and graft in government,” he stressed.
Ighodalo also urged all tiers of government to lead by example through drastic reduction in governance costs to reflect the austere times.
“We strongly advise greater transparency and simplicity in the management and communication of various subsidies, like in petroleum products and electricity, to establish their true costs that benefit the people,” he stated.
According to him, urgent action is required to ensure food self-sufficiency by prioritising critical value chains and supporting private sector-led interventions.