Aliko Dangote’s petroleum refinery is the largest single-train refinery in the world and aims to reduce the reliance on imports for most refined petroleum products in Nigeria.
The refinery is set to be commissioned by mid-2023. Dangote has also affirmed that the commissioning will be before the end of Buhari’s term.
However, while this move will be beneficial in aiding the country’s growth, Mathias Althoff, a funding partner at Tundra Fonder, a Swedish asset management firm, believes that Dangote’s refinery will not be enough to cover up the failures of Buhari as a President.
Nigeria’s high dependence on oil refineries has made other sectors in the country suffer deficits. This has also hindered foreign investments in the country.
The US Department of State reports that foreign direct investment inflows decreased from over $1 billion in 2020 to $699 million in 2021. Foreign exchange supplies from central banks frequently fall short of demand.
Tundra Fonder, a Swedish investor in frontier markets, launched itself in Nigeria in 2011 with the goal of establishing the fund’s greatest African exposure.
The fund seeks out populous nations that are developing from a weak starting point. There was a firm belief that Nigeria would surpass Egypt with the same policy framework.
However Buhari has scared off foreign investors, according to Althroff. He adds, “We’re very disappointed in Nigeria.
President Muhammadu Buhari has left the fund that had a five-star rating from Morningstar, leaving with Nigeria only 3% exposure.
Egypt had a score 8%, Sri Lanka where the economy has collapsed had a 6%, and 3% for Kazakhstan, with a population that is less than 10% of Nigeria.
Althoff adds that Buhari should have been constructing ports and roads to upgrade infrastructure instead of subsidising imports and doing the opposite to Egypt by trying to keep the naira at an artificially high level.
Buhari has also overlooked the most crucial aspect of economic growth that is necessary to provide jobs in a nation where 110 million people are below 18.
He continues by saying that because progress hasn’t been attained, the risks of youth radicalism and disengagement from society have escalated.
“The net benefit is not as large as some people think,” Althoff says. It is necessary to promote much greater private sector investment overall. The Nigerian economy cannot be boosted solely by the government.
Althoff contends that investors must be allowed to place their money. “What foreigner are they expecting to come and help them?”
The 2023 elections
Althoff maintains that under Buhari, the people of Nigeria have become impoverished. He has no reason to believe that the results of the presidential election in February will result in improvements.
Although all the contenders appear to be more market-friendly than Buhari, and they won’t have heavy depandance on Dangote’s refinery.
He claims that they will likely make any promises necessary to win the election.
To prove their performance they will need to be tested. They can’t be judged beforehand.
On the positive, Althoff states that Nigeria is rich in resources and human capital, and Lagos’ economy runs quite smoothly.
Infrastructure problems can be resolved if the government in power let’s it. Politicians can’t ruin the value Nigeria has, he says.
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