The Nigerian Economic Summit Group (NESG) has advised the Federal Government to invest the projected ₦30 trillion oil windfall—arising from the ongoing Middle East crisis—in critical infrastructure and economic stability.
Its Chief Economist/Director of Research, Dr. Olusegun Omisakin, who gave the advice at a virtual press conference, said Nigeria could generate fiscal windfalls as oil prices approach $100 per barrel compared to Nigeria’s budget benchmark of $60–$70.
He warned that such gains must be judiciously used to add value to the lives of the citizens.
According to him, the windfall should be channeled to critical infrastructure and social protection to cushion the impact on vulnerable groups in Nigeria.
He also advocated the need for improved and efficient power supply, adding that Nigeria should consider increasing electricity generation to at least 7,000 megawatts by 2027 with a view to supporting industrial growth.
He also cautioned against higher fuel prices, saying it could worsen inflation in the country.
“Inflation is the big elephant in the room. It erodes purchasing power and affects the cost of living. We must bring reduce it to single digits,” he added.
He advocated a productivity-led approach, alongside broader structural reforms aimed at boosting domestic production.
Speaking, Head of Research, Dr. Joseph Ogebe,also suggested that the windfall from the increase in global crude oil prices could be harnessed in terms of social protection and protection for the poor and vulnerable against the increase in prices.
Government, he advised, must ensure that increased revenues are judiciously used to enhance the welfare of citizens and not spent on recurrent expenditure.
He said:“What we budgeted for the oil price is around 60, close to 60-70 dollars per barrel. But what we have now recently is about close to 100 dollars per barrel. So that gap alone in oil price will create a windfall.
“In February we had about 1.4 million barrels per day, but recently we heard the Minister say that the production has gone up to about 1.8 mbpd though we’re yet to see the reports from NUPRC. But if that’s the case, right, so we’ve been able to increase production and we’ve also seen increased price. So what happens is that we expect some elements of windfall to come into the economy.
“But what we’re saying is that this windfall should be, you know, judiciously used. We should not just spend on recurrent spending. The windfall should be directed or targeted to critical sectors, critical infrastructure, and also to shore protection,” he said.
He suggested that government must focus on ensuring structural transformation by empowering the key sectors of the economy including agriculture, manufacturing, power to enhance production activities.
Governments at federal and subnational level, he reasoned, must spend on critical projects, focus on expenditure efficiency.
“We have to increase growth in those sectors. Agriculture should grow by six to eight percent, manufacturing about six to eight percent also. Then we cannot develop without power. Power is very critical, we need to move to around 7,500 or 7,000 megawatts before 2027 because this power is what we need to power your SMEs, to power your industrial sector, and also to power the manufacturing sector that we envisage that should grow by six to eight percent in the major term,” he added.
He cautioned the government against reversing fuel subsidy reforms, saying the development could collapse key sectors in the country’s economy.
Nigeria must stay the course on the reform while ensuring that gains recorded so far add value to t to the common Nigerians.
He added:“With the recent issue in the Middle East, we’ve heard in some context people say that we should go back to, the policy reversal. But we are saying no, that shouldn’t be thought about. We shouldn’t think about that for now. Why? We all know what happened during subsidy regime, right?
“We were actually borrowing to pay for subsidy. There was no money to spend on capital and development projects. We’re actually borrowing to pay for subsidy. So that is not where we should go now.
“If you check where we were, we were at the brink of a collapse if the reforms were not done. So we need to actually focus on the reform and make sure that we don’t get to experience serious reform fatigue by 2027.”