Exchange rate will stabilise, Bagudu tells investors

The Minister of Budget and Economic Planning, Atiku Bagudu, has said he expects the exchange rate to improve following the ongoing exchange reforms of President Bola Tinubu and the Central Bank of Nigeria.

According to him, countries which have liberalised their foreign exchange market like Nigeria have enjoyed better exchange rates, expressing confidence Nigeria foreign exchange market will perfomer better.

He said global indices had shown that things would improve, advising local and foreign investors to take steps in this direction.

His comments came about six months after Tinubu removed rate cap on the exchange rate, among other currency reforms.

Bagudu, a former Kebbi State governor, said this during a chat with some business editors in Lagos on Friday.

He said the foreign exchange market would stabilise further under the current administration.

He said, “Mr. President has signed two Executive Orders. We have been deceiving ourselves; we have run a system where we don't have dollars, or we don't have foreign exchange anymore. So even if you desire to enjoy repatration, you don't have, because you have boxed yourself into a corner. It has to be a willing-buyer, willing-seller market.

“There are things you can't control. If somebody makes legislation and says that every bag of yams will cost N100, the people who hold the yams will just take them quickly back to the store and lock them. So the steps taken by Mr. President and the central bank may  be inconvenient now in terms of the fluctuation, but we believe it will stabilise and get better. Countries that have chosen that route have done better on average in the long-run.”

Bagudu also said Nigeria had reduced borrowing in the 2024 budget, adding that the country was making efforts to raise revenue in order to achieve better economic stability.

Bagudu also advised Nigerians to demand the resignation of public officials if they failed to perform in the office they had been assigned.

He said, “We should task people, we should ask questions from public officials so that (for example) if you don't think you can do it, step aside and allow somebody who can do it. That's how companies are run.

“If you are given a sector to run and you accept that it can contribute ‘X' to our national life; If for any reason you can't deliver, then the search light should be beamed on you to make a choice. President Bola Ahmed Tinubu in signing the budget said as much. If you cannot help us, then you may consider leaving. A budget, just like the vision of a private company, demands hard work. It's not a presumed achievement. It depends on the industry and hard work of those who have the duty of delivering it. And we should put everyone to task, let everyone earn their job.”

Elaborating on the need for those tasked with responsibilities to deliver, the minister said that Nigeria could achieve the 1.78 million barrels per day projected in the 2024 budget if all hands were on deck.

Bagudu said, “1.78 million barrels may sound high but we have done more than that before. So, I go back to my point, why can't we task the people who accept to do particular assignment, that look, ‘We need this. If you can't, can you step aside and let's find somebody who can?' I think if we begin to challenge public officers that way, then we will find out that we can achieve our objectives better; rather than assuming that things cannot get better and even providing the legal cover for it by budgeting that we cannot. It's not an unusual thing.

“We have done that before. We have had production in excess of two million barrels per day at one time in our national life. Those who are running institutions that are charged with this should be put under pressure to say.

Speaking further, the minister stressed the need to raise oil output noting boosting production would encourage investment, most of which are in foreign currency. The more foreign currency inflow you have into the country, the stronger your exchange rate is.”

In a statement issued mid December, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari, said that 1.785 million barrels of oil per day in 2024 was achievable for Nigeria.

Kyari told the Senate Committee on Finance that the projections on crude oil production and price benchmark for the 2024 Budget were realistic and realisable.

He said, “The number we have is 1.785mbpd. This is cumulative of all oil produced in the country. This figure is inclusive of all production including crude oil and condensate.

“I need to make this clarification because of the reports in the media that our OPEC quota is 1.5 million barrels per day. The OPEC quota is related only to crude oil. We also do between 250,000 to 300,000 barrels per day of condensate in our production. When you combine the two, the 1.78 mbpd is realistic and realisable.”

Meanwhile, the latest report by Meristem Research has projected an increase in Nigeria's oil production in 2024 barring any significant, unexpected shock to the sector in the year.

The 2024 Annual Outlook entitled: ‘Setting Sail for Gradual Recovery',

Stated, “Looking ahead into 2024, barring any significant unprecedented or unexpected shock to the sector, we expect oil production to be higher at 1.55mbpd (vs 1.46mbpd 2023), premised on several factors. We envision that Federal Government's dedicated efforts to improve output will be crucial in enhancing oil production.

“Strategic initiatives, such as introducing the Nembe Oil grade to the global market, combined with intensified efforts to curb oil theft are poised to boost production significantly.”