Nigeria needs to increase oil production to boost FX supply, says Wale Edun

Wale Edun, the minister of finance and coordinating minister of the economy, says Nigeria needs to raise oil production to address foreign exchange (FX) supply issues.

Edun spoke to journalists on Tuesday at the G24 news conference held on the sidelines of International Monetary Fund (IMF)/ World Bank annual meetings in Washington DC.

As an oil-dependent economy, Nigeria relies on the oil and gas sector for its FX receipts and strengthening its external reserves.

However, due to infrastructural challenges and crude theft, the sector has been underperforming — contributing only 5.7 percent to the total real gross domestic product (GDP) in Q2 2024.

On October 14, the Organisation of Petroleum Exporting Countries (OPEC) said Nigeria’s average daily crude oil production dropped to 1.32 million barrels per day (bpd) in September 2024.

“…regards to Nigeria, the key about the foreign exchange market really is supply. Of course, as you know, we are an oil-producing country. We just need to get our oil production up [and] that will deal with the issue of foreign exchange supply and pressure on foreign exchange every time there are large flows,” he said.

“In terms of single digit inflation, the rich countries, they have effectively defeated inflation, and that’s why their interest rates can come down.”

Edun said the governor of the central bank in Nigeria, in the context of high inflation, is continuing with monetary tightening, which is the orthodoxy of the day.

Speaking on key lessons learnt from implementing structural programmes in Nigeria, the minister said what is important — because the benefits are over the longer term and the costs are front-loaded — is the social safety net that will help the poor and the vulnerable cope with the upfront costs, with a spike in their cost of living adequately planned for and dealt with.

“There needs to be certain poverty alleviation initiatives,” he said.

“Link to that focus on helping the poor and most vulnerable people is communication. I think one of the critical things in carrying out these macroeconomic reforms, is communicating what is being done, what is to be expected and the timing of the various activities and then communicating what actually has been done.”

Edun said if a programme is to give direct benefits, it should be published.

The minister said there should be a dashboard that people can follow, “thereby engendering and building public trust”.