Addressing Nigeria's FX pressure points

The Managing Director and CEO of Rainoil, Gabriel Ogbechie, has shared insights on strategies to protect local manufacturers and the forex market in Nigeria. In a recent interview with CNBC Africa during the Nigerian Economic Summit, Ogbechie emphasized the importance of raising tariffs on imported items to safeguard local producers. He highlighted the lifting of the foreign exchange ban on 43 items and advocated for imposing significant import duties on goods that can be produced locally to make them more expensive. By making imports pricier, the aim is to shield domestic manufacturers from unfair competition. Ogbechie explained that while imports are not banned, high tariffs can ensure a level playing field for local businesses. This approach not only supports local industries but also helps maintain a stable forex market. He stressed the need to avoid reliance on the parallel market for foreign currency, which contributes to discrepancies between official and unofficial exchange rates. Ogbechie also addressed challenges in the oil sector, particularly petroleum importation and the removal of fuel subsidies. Commending the government's decision to eliminate subsidies, he underscored the importance of establishing local refining capacity to reduce the strain on foreign exchange reserves. With Nigeria's status as a top crude oil producer, the reliance on imported refined products appears counterintuitive. Ogbechie called for concerted efforts to revive the country's refineries and support projects like the Dangote refinery, which can significantly lessen the burden of importing petroleum products. In the short term, he urged increased support for the NNPC to meet national fuel demands and emphasized the need for long-term solutions through domestic refining capabilities. In light of the persistent pressure on the forex market due to diesel and aviation fuel imports, Ogbechie highlighted the urgent need to address these key areas to alleviate the strain on foreign exchange resources. Transitioning towards self-sufficiency in refining would not only enhance Nigeria's economic resilience but also reduce its vulnerability to external market fluctuations. By prioritizing local production and refining, the country can mitigate its reliance on costly imports and promote sustainable economic growth.