The Minister of Budget and Economic Planning, Abubakar Bagudu, has blamed the nation’s current economic quagmire on underinvestment in the oil and gas sector.
The Minister who spoke at the ‘Ministerial Sectoral Updates’ in Abuja on Wednesday noted that the absence of investment in crude oil production in recent times was affecting government revenue generation negatively.
According to him, the government has initiated a microeconomic reform as part of the renewed hope agenda to address the root causes of low investment and revenues.
“We embarked as part of the renewed hope agenda on a microeconomic reform because that was what was responsible for low investment, low revenues, and our economy size was shrinking. It was too small compared to our need.
“That is why we are not even producing crude oil in the quantity we used to before or as allowed by international convention, which is our OPEC quarter, because of underinvestment, whether in the physical infrastructure itself or security,” Bagudu said.
Last week, Chief Executive Officer of TotalEnergies, Parrick Pouyanne, revealed that his company chose to invest a total of $6 billion in energy projects in Angola instead of Nigeria.
Pouyanne, who spoke alongside other panellists at the Africa CEO summit in Kigali, Rwanda, attributed the decision to divert the investment earlier earmarked for Nigeria to inconsistency in policy making.
While accepting that the Niger Delta is the most productive region in the West Africa region, he said the erratic policy environment in Nigeria has made investment in it untenable.
Latest data from the global petroleum cartel, the Organisation of Petroleum Exporting Countries shows that Nigeria’s average daily crude oil production was 1.28 million barrels per day (mbpd) in April.
The figure falls short of the 1.78 million bpd estimate adopted in the 2024 budget by President Bola Tinubu, and the production quota of 1.5 million bpd set for the country by OPEC in 2024.
Meanwhile, the Minister confirmed that apart from the oil and gas sector, other sectors are also experiencing underinvestment, adding that the nation’s infrastructure is not aligning with the government’s dreams.
According to Bagudu, these sectors include the education system, healthcare system, creative economy, digital economy, and the steel sector.
Bagudu said the solution to eliminating low investment is to restore a macroeconomic environment that can stimulate investment and generate revenues for the economy.
“Food security, despite our potential, we are underinvesting. Most of our farmers are one-season per year farmers.
“Our infrastructure is not catching up with our dreams. Our educational system, our health system is suffering from underinvestment. In addition to our other sectors, the creative economy, digital economy, and the steel sector.
“The answer to all this is to restore macroeconomic stability that will ensure that investors, both domestic and international, put their faith in our economy once again,” he said.
Bagudu said while the exchange rate and inflation are not yet at the desired levels, the government is on the right path to restore the economy.