Importation due to lack of critical infrastructure like a petroleum refinery is estimated to account for about 30 per cent of Nigeria’s forex demand, former Minister of Work and Housing, Mr Babatunde Fashola, has said.
According to Fashola, if there is a reduced demand of forex by up to 30 per cent for petroleum products only, fertiliser and petrochemicals by guesswork will be aggregating by 10 per cent.
If the demand for forex drops, he explained that Naira will firm up by economic common sense.
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Painting the picture of the “Outlook of the Construction Industry in Nigeria over the next 5 to 10 years” in a keynote speech at a dinner organised by Julius Berger Nigeria Plc, the former minister said:” I agree that the economy means different things to different people. People who have a micro view of the economy only see things in their limited scope. How much is the exchange rate for example and the impact of inflation on cost of living?
“This is a permissible but very narrow view of the economy. Those who are able to see a broader view will see that it is the lack of critical infrastructure like a petroleum refinery that causes an oil producing country to import petroleum products”
He is of the opinion that if petroleum products are locally made, some cost reductions such as shipping, insurance and port charges will be realised, adding that for those who have a broader view of the economy, they would understand cost-push inflation reduction and its positive impact on cost of living.
“The same is true of gas pipelines, as it is true of sea and airports, roads and bridges, and telecommunications infrastructure to deliver broadband and related infrastructure in support of economic growth and jobs,” he said.
Simply put, he stated every economy seeking expansion, efficiency, and productivity must invest in the commensurate infrastructure in order to achieve it.
He said that Nigeria has been living largely on infrastructure built in the 70s and 80s “because we spent much of the 90s in the agitation to bring back democratic governance.
“We have a lot of building and construction to undertake and this much is evident in the latest National Infrastructure Master Plan. (2020 – 2043 estimated about $2.3 trillion over 21 years, that is about $110 billion per annum).”
Fashola expressed optimism about the outlook of the construction industry in Nigeria over the next 5 to 10 years and beyond, saying it remains highly positive based on the government’s master plan.
To achieve this, he said that there are choices to be made, dictated by the limitation of resources.
He said there’s need to set priorities for critical areas of the economy .
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