‘Nigeria must avoid policy that undermines domestic refining,’ Dr. Yusuf warns

The Centre for the Promotion of Private Enterprise [CPPE] yesterday expressed concerns over what it called the “growing advocacy for unbridled importation of petroleum products.”

The Chief Executive Officer of the CPPE, Dr. Muda Yusuf, noted that such advocacy is particularly of concern especially at this period when the country should be consolidating domestic refining capacity and accelerating its industrialisation journey.

According to him, prosperous economies are built on production, refining, manufacturing, value addition and the strengthening of domestic productive capacity, noting that countries that become excessively dependent on imports inevitably export jobs, weaken domestic industries, erode local investments and mortgage their economic sovereignty.

The CPPE boss warned that excessive import dependence was one of the major factors that pushed Nigeria’s foreign exchange market dangerously close to systemic distress before the recent reforms of the current administration restored stability and improved investor confidence. He therefore said it would be economically imprudent to recreate the very conditions that previously weakened the economy.

“This debate goes far beyond petroleum products. It speaks to the very architecture of Nigeria’s economic philosophy, the future of industrialisation, the resilience of the macroeconomy and, ultimately, the preservation of the country’s economic sovereignty. No nation has ever imported its way to industrial greatness. Nigeria must therefore avoid drifting into a policy regime that undermines domestic production in the name of competition or liberalization,” Dr. Yusuf warned.

Yusuf, an economist and financial analyst, said that import dependence carries profound economic consequences. He recalled that for decades, Nigeria’s dependence on imported petroleum products created deep distortions within the economy, exerting enormous pressure on foreign reserves, weakened the naira, accelerated the collapse of domestic refineries, entrenched a rent-seeking ecosystem, worsened FX illiquidity, fuelled corruption within the subsidy regime and imposed severe fiscal burdens on public finances.

At the height of the fuel subsidy era, he further argued, the country spent trillions of naira annually subsidising imported fuel, thereby effectively transferring national wealth, jobs, industrial opportunities and value creation to foreign economies and their local collaborators. “The country was also spending over $10 billion annually on petroleum product imports. The consequences were severe and far-reaching- persistent pressure on the exchange rate; widening trade deficits; weak industrial competitiveness; massive fiscal leakages; investor uncertainty and macroeconomic fragility,” he noted.

According to him, the current policy conversation around petroleum product imports appears fundamentally inconsistent with Nigeria’s industrial aspirations. Nigeria, he said, has just witnessed one of the most consequential industrial investments in Africa through the establishment of the Dangote Refinery, alongside growing investments in modular refineries across the country.

These investments, he argued, should ordinarily be strategically supported, celebrated and strengthened, instead of the mounting pressure for unrestricted importation of refined petroleum products- a policy orientation capable of undermining domestic refining investments and discouraging future industrial commitments.

“What message are we sending to investors if a multi-billion-dollar refinery investment of continental significance is confronted with regulatory uncertainty and policy headwinds? The pathway to competition is not the promotion of imports. The pathway to competition is the encouragement of additional domestic refining investments. A country that cannot refine its own petroleum products despite being a major crude oil producer exposes itself to profound economic vulnerability. Energy security is national security. A nation that persistently imports what it should ordinarily produce locally gradually weakens its productive base, destroys industrial capabilities and compromises long-term economic stability,” Dr. Yusuf argued.

Buttressing his position further, he noted that advocacy for fiscal protection of domestic refining is neither unusual nor extraordinary because every serious economy protects its strategic sectors. For instance, he cited the United States is deploying tariffs and industrial subsidies to support manufacturing competitiveness. China aggressively protects strategic industries. Europe is increasingly embracing industrial policy intervention. India continues to deepen domestic manufacturing through its “Made in India” agenda.

“Industrialisation has never been built on extreme liberalisation. No nation develops by turning itself into an attractive destination for imported goods. Self-reliance is not economic isolationism. It is economic pragmatism anchored on national interest. It is the deliberate strengthening of domestic productive capacity in order to reduce vulnerability to external shocks and reinforce long-term economic resilience,” the CPPE argued.

He noted that Nigeria already provides varying degrees of tariff and fiscal protection to several manufacturing subsectors under existing fiscal policy frameworks. For instance,there is currently an Import Adjustment Tax covering 192 tariff lines designed to support domestic industries, including: Pharmaceuticals, Textiles, Chemicals and allied products, Iron and steel, Cement, Ceramics and sanitary wares, Furniture, Food processing, Automobile assembly, Wires and cables, Soap and detergents and many more.

“The same strategic policy support should naturally extend to domestic refining because refining is not merely a commercial activity; it is a critical industrial, economic and national security investment,” Dr. Yusuf submitted.