Market News

BY Joseph Inokotong

•Says effect on exports would be negligible

The Federal Government has unfolded plans of a meeting by the Economic Management Team (EMT) to review the various scenarios and available options arising from the recent 14 percent tariffs imposed by the United States of America on Nigeria’s exports to that country.

Also, the government highlighted that the tariff’s effect on exports would be negligible if the country sustains its oil and minerals exports volume as the adverse impact on Nigeria will be through oil price plunge.

This was disclosed by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, on Monday at the inaugural Cooperate Governance Forum organised by the Ministry of Finance Incorporated (MOFI) in Abuja.

Edun pointed out that oil and mineral-related exports were exempted in this new tariff imposed on the country, noting that Nigeria had already imposed 27 percent tariff on US exports before now.

“There’s global uncertainty on a huge level. Nobody knows exactly what will happen. Announcements have been made; we’re not sure what will be delayed, what will be reversed, or what will be implemented. So, it is not an announcement that the budget is being reviewed. It is our responsibility to look at the various scenarios and options and advise government accordingly,” Edun said.

Explaining further, the Finance Minister stated, “Trump imposed 14 percent tariff on Nigeria exports to the US. Nigeria already imposed 27 percent tariff on US exports to Nigeria.

However, oil and mineral-related exports are exempted in this new tariff. Trump imposes 34 percent on China’s exports to the US, our major trading partner. For South Africa, 31 percent tariff was imposed.

“Nigeria-US Trade has been in surplus in the last 3 years (2022-2024).

Nigeria’s exports to the US were N1.8 trillion, N2.6 trillion & N5.5 trillion in 2022-2024, respectively.

“Fortunately, oil and mineral exports accounted for 92 percent, implying oil and minerals exports amounted to N5.08 trillion in value while non-oil was just N0.44 trillion.

“Consequently, the tariff effect on exports is negligible if we sustain our oil and minerals exports volume. The adverse effect on Nigeria will be through oil price plunge. We are intensifying efforts to ramp up crude oil production to curtail any price effect. We are also focusing on non-oil revenue mobilization by FIRS and Customs.

Budget adjustment and prioritization where possible, and also innovative non-debt financing strategies”.

The Finance Minister said that notably, State-Owned Enterprises (SOEs) form a critical component of the national economic framework as they wield considerable influence across key sectors including: energy, infrastructure, telecommunications, and financial services.

However, he noted that their potential to drive economic expansion, job creation, and industrial growth has often been constrained by: inefficiencies, poor financial stewardship, and in some instances, governance deficiencies.

“The question, therefore, is not whether SOEs should continue to exist, but rather how they can be repositioned to better fulfill their mandates. Thus, corporate governance assumes an indispensable role. The imperativeness of Corporate Governance cannot be overemphasized.

Corporate governance embodies the principles of: transparency, accountability, efficiency, and ethical leadership, to foster institutional credibility and financial sustainability.

He stressed that for SOEs and government-linked entities, robust governance framework is a prerequisite to ensuring public resources are judiciously managed, financial discipline is enforced, and operational efficiency is enhanced.

Edun stated that the absence of corporate governance best practices has historically led to fiscal leakages, diminished public trust, and an erosion of investors’ confidence.

“The government through MOFI recognised this and has embarked on strategic reforms to reposition SOEs for value creation. Established in 1959 and recently restructured in 2023, MOFI is tasked with serving as an active asset manager of the FGN ensuring the professionalisation, optimisation, and efficient administration of government-owned enterprises,” Edun stated.

He added that with the MOFI Corporate Governance Scorecard initiative, the government is instituting a mechanism to assess, monitor, and enhance the performance of its SOEs.

He stressed that the Corporate Governance Forum, in collaboration with international partners like the World Bank, represents a significant milestone in fostering knowledge exchange, institutional learning, and the adoption of global best practices.

Edun stated that  Nigeria stands at a pivotal moment in its economic journey, and the corporate governance decisions today will determine if SOEs would become liabilities or strategic assets for national development.

The Minister of Power, Adebayo Adelabu said that the sector is facing challenges due to lack of adherence to good corporate governance practices.

According to him, poor governance and performance management practices have eroded value across government owned entities in the power sector value chain.

“Let me give you practical examples of out of about 14,000 megawatts installed capacity that we have across our generating plants. Government owned plants constitute about 30 percent of this capacity, usually of the plants owned by Niger Delta Power Holding Company which is 100 percent owned by the government.

“It will surprise you that all these plants with installed capacity of over 4000 megawatts since inception, have not generated beyond 20 percent of their capacity. They have produced between 500 megawatts and 800 megawatts out of over 1000 megawatts of capacity. You can only imagine if compared to private sector owned plants like Azura, Transcorp, Pacific, all that they have performed the worst, which is why corporate governance of mass government practices must be items on the priority list of the managers of government shares in all these enterprises,” he said.

Adelabu reiterated that improved corporate governance is not only about internal efficiency, it is also central to national development.

The Managing Director/CEO of MOFI, Dr. Amstrong Ume Takang, while responding to question around the audit of the assets and those that would be put up for sale, said asset monetisation exercise where due diligence on each of them are done was ongoing.

Dr. Takang said: “First of all, we are currently undergoing an asset monetization exercise where we are doing due diligence on each of those assets and speaking to the respective managers and the boards of those companies to get a deeper understanding of where they are, where they intend to go in alignment with the agenda of the administration. They will come up with a number of options available for each of those at that point, we would determine what steps need to be taken for each of them”.