Efforts by the federal government, in particular, the policies of the Central Bank of Nigeria (CBN) to restructure and diversify the economy in the areas of agriculture, mining and manufacturing are beginning to attract local investors like Dangote Group.
The CBN’s decision to ban several import items from accessing the official forex and the establishment of Investors’ and Exporters’ foreign exchange window, among other policies, has encouraged growth of indigenous manufacturing companies. CBN has always demonstrated its readiness to facilitate access to foreign exchange by Nigerian companies desirous of importing equipment to enhance business growth in the country.
In the area of agriculture, the Anchor Borrowers’ Programme (ABP), launched by President Muhammadu Buhari in 2015, is intended to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities. The thrust of ABP is the provision of farm inputs in kind and cash to small holder farmers to boost production of these commodities, stabilise inputs supply to agro-processors and address the country’s negative balance of payments on food.
At the inspection of facilities of the $9 billion Dangote Refinery within the Lekki Free Trade Zone in Lagos, recently, the Governor of CBN, Godwin Emefiele said that indigenous companies will get the support of the apex bank to import equipment.
The refinery has capacity to refine 650, 000 barrels of crude oil per day (bpd). The project comprises a 883 KPTA polypropylene plant, three million tons per annum urea plant and 1,100 kilometres sub-sea pipeline infrastructure. The Dangote fertilizer project when completed next year, will position Nigeria as the largest exporter of fertilizer in Africa, and equal the rate of South Africa’s SAWSO in exporting petrochemicals in the continent.
Already, $2 billion has been invested in the project, with additional N50 billion support from the CBN, while no less than $9 billion is being invested in the refinery project with the apex bank supporting with N75 billion.
Emefiele said that the project would transform the Nigerian economy from a net importer of refined petroleum products to a net- exporter of petroleum products and maintained that the support the CBN was giving to indigenous companies was to ease the importation of equipment needed in Nigeria for production.
The apex bank chief, during that facility tour, commended the President of Dangote Group, Aliko Dangote for the volume of work done so far on the projects and stated that the refinery and fertilizer projects would help Nigeria to create jobs and check the importation of petrol thereby saving the country huge amounts of forex.
He added that about 55 to 60 per cent of Nigeria’s spending on foreign exchange for the importation of petroleum products and food items would be saved when the refinery comes on stream and added that one third of Nigeria’s spending on forex will also be retained when the refinery is completed.
Emefiele described the refinery as a transformational project for Nigeria, which totally keys into the objectives of President Buhari on self-sufficiency in petroleum products, conservation of forex and diversification of the economy. “I am sure by that time, the CBN will be begging Dangote to sell its dollars to the bank,” he said.
He used the occasion of the facility tour to declare the CBN’s support to any company or individual ready to invest in the transformation of the Nigeria economy. “We are ready to support in Naira and also ready to provide foreign exchange for any investor who is ready to support Nigeria’s transformational agenda.
“I use this opportunity to repeat that we are ready to support any individual like Aliko Dangote who is willing to invest in this country. We will continue to support companies that display the determination to support the CBN to actualise its policies geared toward developing the economy. I feel so delighted and I am happy this is happening in my own life-time and I am sure you are all so happy.”
Also, president of Dangote Group, Aliko Dangote, said the project would definitely transform the Nigerian economy. “We have a couple of projects at hand and we will continue with these transformative projects. The biggest problem we have in Nigeria is that we currently import more than we produce like most other African countries. But, by the time we finish our fertilizer plant, Nigeria will be the largest exporter of fertilizer in Africa. We will also be the largest exporter of petrochemicals and the largest exporter of petroleum products in the whole of Africa. This is a major transformation.”
The business magnate also said that the three billion Standard Cubic Feet gas pipeline and other Dangote Projects are geared towards Nigeria’s economic transformation and commended CBN for its moral and financial support to the refinery project. “There are lots going on in Nigeria. We want the CBN to support us like what it did in cement sector, which made Nigeria not only self-sufficient in the production of cement, but it became an exporter of the product. Today, Nigeria will not even import cement because we no longer have capacity for importation of cement,” he added.
In a presentation made to the CBN governor, group executive director at Dangote Industries Limited, Devakumar Edwin, disclosed that the company’s target is for a significant portion of Nigeria’s crude oil production to be refined domestically, rather than imported, thereby creating jobs within Nigeria, and bringing a halt to the current importation of refined petroleum product.
Edwin said that the refinery is going to provide over 100,000 indirect employment through retail outlets and added that the refinery is designed to meet Euro V grade, which is the highest standard in the world, hence products can be exported to any part of the world.
“It will be well diversified and able to process Nigerian crude, African crude and crude from other parts of the world. In terms of evacuation routes, two crude oil single point mooring (SPM) buoys and three multi-product SPMs will be located within the Atlantic Ocean to transfer crude oil to a calling tanker.
“The two-Line Dangote Fertilizer Complex, consisting of Ammonia and Urea plants, are conceived to be some of the world’s largest fertilizer plants with a total capacity of three million tonnes per annum of Urea fertilizer. Therefore, the Dangote fertilizer is positioned to bridge the gap between local demand and national capacity. The fertilizer plants will produce Urea that will assist farmers boost their crop yields,” he added.
Meanwhile, the Monetary Policy Committee (MPC) of the CBN at its most recent meeting noted with satisfaction, the performance of the economy in 2018, highlighting the achievements in key macroeconomic indicators in the face of global uncertainties and domestic challenges and noted the stability in the exchange rate, stable accretion to external reserves, moderation in inflation and the low but gradual improvement in real Gross Domestic Product (GDP) growth in the last six consecutive quarters commencing from second quarter of 2017.
The MPC noted that given global economic conditions and the risk confronting emerging markets and developing economies in recent times, as well as the limited productive capacity of the economy, the foreign exchange management regime of the CBN has delivered the most optimal results when compared with other emerging markets in recent times.
The Committee commended the government’s focused expenditure on investment in infrastructure, urging the federal government to sustain the pace towards addressing the infrastructural deficit in Nigeria.
It noted that the immediate impact of this approach on GDP may be slow in coming, but will eventually expand the economy’s productive base, reduce unemployment and increase aggregate demand in a more sustainable manner and over a long period of time.
The Committee acknowledged the strategic role of the private sector in economic growth and remained concerned over the slow growth in credit to the private sector throughout 2018, while noting the sudden increase at end-December 2018.
The committee urged the federal government and the CBN to sustain the fast-tracking of the growth of the manufacturing sector through the provision of infrastructure and the provision of credit for the sustainability of the economy.