The richest man in Nigeria (and Africa), Aliko Dangote, had already predicted, during an interactive session with journalists in July, 2015, that the Naira would depreciate greatly in value if the fuel subsidy was removed.
The past two or so weeks have been very busy for both the Nigerian government and Nigerians in general. Some times last week, reports surfaced suggesting that President Muhammadu Buhari may have succumbed to international pressure and given the go ahead for the devaluation of the Naira - a move he has repeatedly turned down.
News of the devaluation of the Naira closely followed that of the removal of fuel subsidy, with the Federal Government putting a N145 cap on the price of PMS (fuel, petrol) from a price of N86.50.
According to the Federal Government, all of this has become necessary due to the dwindling prices of crude oil on the international market, drastically reduced foreign reserves as a result of said drop in oil prices, and continuous depreciation of the Naira against foreign currencies in the last 8 months or so. The naira dropped to about N360 per dollar when news of the fuel subsidy removal surfaced.
As it would turn out, the richest man in Nigeria (and Africa), Aliko Dangote, had already predicted, during an interactive session with journalists in July, 2015, that the Naira would depreciate greatly in value if the fuel subsidy was removed.
"The issue with subsidy is that government needs to block all loopholes. If there’s no subsidy, it will affect our foreign exchange, we’ll end up buying a dollar at N500, because there’s no VAT on petroleum products. That’s why the import of petroleum products is taking about 30% of our foreign reserve. We just need to make sure that there’s no siphoning of money. The refining business requires volume. If you don’t have a massive volume, there’s no way you’ll make money. Most of the refineries in Africa are running at a big loss. It’s not possible for government officials to successfully manage oil businesses. It’s good enough if they remove the subsidy, but you can check with neighboring countries like Senegal. If a poor person in Senegal can afford to pay subsidy, why can’t a poor person in Nigeria afford to pay. I think there must be something for the masses, which should be in terms of power, social insurance, good education system, good roads etc.," said Dangote, according to a Vanguard report of the session.
Dangote might have a point, after all he must know his onions to become the richest man on the continent. What do you think?