Benedict Oramah’s Naira-for-crude idea has pushed Nigeria’s external reserves to a six-year high of $42 billion dollars, marking one of the most transformative economic interventions in recent years.
The initiative, conceptualised by Oramah, the outgoing president of the African Export-Import Bank (Afreximbank), has been hailed as a landmark innovation in economic management and local currency stabilisation.
Eric Intong, acting managing director of client relations at Afreximbank, disclosed this while speaking on the “Innovative Naira-for-Crude Initiative” at the Afreximbank Legacy Conference and Investiture in Cairo. He said the initiative reflects the vision and practical solutions for which Oramah and Afreximbank have become known across Africa.
“We have done so many initiatives, and some of us have had the privilege to work directly with Professor Benedict Oramah, or as I always call him, President,” Intong said.
“We chose to highlight one of those initiatives to bring to the fore the kind of intervention for which the bank was set up.”
Intong explained that the Naira-for-Crude initiative was born out of a need to address the pressure on Nigeria’s foreign reserves and the rising inflation caused by the importation of petroleum products. He said over 30 African countries depend heavily on imports and commodity exports, which make up about 80 percent of their foreign exchange earnings, exposing them to global commodity shocks.
“In 2024, when we made this proposal to the Federal Government, about one-third of Nigeria’s foreign reserves was being used to import petroleum products. This put enormous pressure on the Central Bank’s reserves, with inflation at over 34 percent and the cost of living extremely high,” he recalled.
“Fuel queues were long, and as the regional chief operating officer in Abuja at the time, I often stayed up at night issuing trading letters to ensure fuel availability. It was very challenging.”
He said Oramah examined the problem and saw a solution within the Petroleum Industry Act (PIA) of 2022, which provided that 445,000 barrels of crude oil produced by Nigeria be reserved for domestic consumption. Oramah questioned why crude meant for domestic use was sold in dollars and the refined products also bought in dollars. Since both were domestic transactions, he proposed that they be traded in Naira, thereby saving scarce foreign exchange and strengthening the local currency.
Afreximbank, working with the Ministry of Finance and the Federal Inland Revenue Service, presented the idea to President Bola Tinubu, who embraced it and secured the Federal Executive Council’s approval on July 29, 2024. An implementation committee was immediately set up, with membership drawn from Afreximbank, NNPC, the Central Bank of Nigeria, refineries including Dangote Refinery and Warri Refinery, and other modular refineries, under the chairmanship of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. A sub-technical committee was chaired by FIRS chairman and presidential adviser on revenue mobilisation, Zacch Adedeji.
