Sun. May 25th, 2025

Nigeria’s recent extension of its naira-for-crude oil sales program has highlighted both the challenges and opportunities in leveraging the nation’s vast oil resources for sustainable economic development. As the initial six-month arrangement between NNPCL and local refineries approached its March expiration, public concern underscored the critical nature of this policy for national economic stability.

Despite oil’s dominance in Nigeria’s export earnings, its contribution to GDP remains surprisingly modest at just 4.6 percent in Q4 2024. Meanwhile, the nation continued spending N2.63 trillion on petrol imports in Q1 2024 alone even after fuel subsidy removal halved domestic consumption.

The world-class Dangote Refinery, now fully operational with 650,000 barrels per day capacity, offers a promising solution with potential to meet domestic demand, create over 100,000 jobs, and ease pressure on the naira by reducing foreign exchange demand for fuel imports.

Other African nations are following similar strategies. Angola is expanding refining capacity with its Cabinda refinery set to launch this year, while Ghana plans three new refineries and five petrochemical plants to become a regional energy hub. Namibia has approved comprehensive local content policies for its oil sector to ensure broad benefits from resource extraction.

For Nigeria to truly transform its oil wealth into inclusive prosperity, it must institutionalize domestic crude allocation, strengthen local participation, and channel revenues into productive sectors like agriculture, manufacturing, and services. By embracing a strategic approach to resource management, Nigeria can turn its oil resources from a vulnerability into a foundation for sustainable growth.

Source: Business Day

By Editor

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