Nigeria draws lessons from oil boom and bust and looks to invest

LONDON: Nigeria made policy errors during the era of high oil prices but was on track to reap the benefits of an “African Renaissance”, the Future Investment Initiative conference, in Riyadh heard on Wednesday.
Adewale Tinubu, CEO of Nigerian energy group OANDO, said the focus today was on soft issues such as “ease of doing business” to attract foreign investment, while at the same time learning from past errors.
He said: “We gained from high crude prices but rather than invest and save as much as we should have, we focused on financing consumption. We had petrol subsidies and at the same time the infrastructure decayed — the refineries couldn’t keep up with demand, and we are growing 5 percent per annum in population terms.” Tinubu acknowledged “self-inflicted” wounds to the Nigerian economy that meant “we end up producing what we don’t need and exporting what we need.”
He said: “We export 70 percent for gas but we only have 40 percent electricity penetration. We export 2 million barrels per day of crude, but import a billion tons a month of refined petroleum products (mainly petrol), so there is a mismatch, and the mismatch exists primarily because of policies that are self-inflicted.”
The key to alleviating Nigeria’s gasoline shortage — which has weighed heavily on the economy’s performance — is to expand its refining capacity, the conference heard during a panel discussion that was looking at investment opportunities in Africa.
If current refinery projects are successful, Nigeria could become an exporter of gasoline and other petroleum products to the region, analysts have said in the past.
Tinubu added that deregulation of the economy in Nigeria was a priority to ensure that the country could attract a growing volume of overseas capital.
He said: “Movement of capital should be free at the point of entry and people should be able to export capital as and when. They should be free to sell at the market price.”