Prominent Nigerian economist and CEO of Financial Derivatives Company Limited, Bismarck Rewane, has raised concerns over the recent 50.1% hike in petrol prices, warning that the increase from N568 to N855 per litre could extract N5 trillion from Nigerian consumers, deepening energy poverty and potentially triggering social unrest.
In his monthly presentation at the Lagos Business School, Rewane highlighted that the price hike could push 168 million Nigerians into energy poverty by 2025, up from 161 million in 2023. While the rise may strengthen the naira as liquidity drops, he cautioned that it could also provoke widespread frustration among citizens.
Rewane emphasized that the commencement of petrol production by the Dangote refinery could ease supply challenges but warned that domestic prices would still be dictated by global crude oil rates. He added that although the refinery would stabilize supply and reduce smuggling to neighbouring countries, the impact on prices remains uncertain since no producer would sell below production costs.
He further projected that the new petrol prices could escalate inflation in September, with higher logistics costs leading to reduced consumer demand due to shrinking incomes. Rewane suggested that expectations for a reduction in the Monetary Policy Rate might be delayed due to the inflationary pressures triggered by the petrol price hike.
Rewane also critiqued Nigeria’s current GDP figures, suggesting they mask the real economic situation. He noted that although GDP growth appeared positive due to base effects, only 10 out of 46 economic activities tracked by the National Bureau of Statistics expanded in Q2 2024, with the majority either slowing or contracting.
He highlighted the adverse economic implications, including reduced employment opportunities, slower growth, disrupted supply chains, and increased import dependency. Rewane called for increased electricity generation to stabilize power supply and stimulate economic growth, projecting that an increase from 4000MW to 6000MW could attract foreign investment, boost industrial output, and enhance overall economic stability.
Rewane concluded by emphasizing the need for fiscal policies to tackle structural inflation drivers such as insecurity, infrastructure deficiencies, and import dependence, to achieve a more balanced and sustainable economic outlook.
Seunmanuel Faleye is a brand and communications strategist. He is a covert writer and an overt creative head. He publishes Apple’s Bite International Magazine.
