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Ethanol Mandate Revisited: A Practical Path to Curbing Inflation through Fuel Price Relief

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Ethanol

Ethanol mandate Nigeria could reduce petrol costs, create jobs, and boost energy security as global oil prices surge again

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On August 29, 2023, at the height of the fuel subsidy removal crisis in Nigeria, I published an article in The Nation Newspaper titled “Achieving Pump Price Relief Through Ethanol Mandate.”

Also read: Dangote Refinery Boosts Petrol Prices to N874, Pump Costs May Hit N1,000

In that piece, I argued that Nigeria should begin exploring ethanol as an alternative fuel option to cushion the effects of rising gasoline prices on ordinary citizens. Recent global developments make it necessary to revisit that argument.

Across the world, the price of petroleum products has surged once again, partly due to geopolitical tensions involving Iran and the growing risks to maritime shipping routes in critical oil transit corridors.

Whenever crude oil prices rise, gasoline prices inevitably follow. Transportation costs increase almost immediately, triggering a ripple effect that spreads through the entire economy.

Nigeria, unfortunately, remains extremely vulnerable to these shocks. When fuel prices increase, transportation costs rise sharply. Food prices soon follow.

The cost of essential goods escalates, and inflation deepens the economic hardship faced by millions of Nigerians. This cycle has become painfully familiar in recent years.

Nigeria today is undergoing a difficult but necessary phase of economic reform under President Bola Ahmed Tinubu.

Policies such as the removal of fuel subsidies and the equalization of the foreign change rates were intended to correct long-standing distortions in the economy and restore fiscal sustainability.

While these reforms are necessary for long-term economic stability, their short-term effects have placed significant pressure on households.

Thus providing relief without increasing the deficit or defeating the purposes of the reforms make adoption of ethanol an indispensable option.

The dividends of reform will take time to materialize. In the meantime, policymakers must urgently consider practical strategies that can provide relief to Nigerians while supporting broader economic transformation.

One such strategy is the adoption of ethanol as a national fuel alternative.

 

Learning from Global Examples

Many countries already blend ethanol with gasoline to reduce fuel costs and strengthen energy security.

In the United States, gasoline typically contains around 10 percent ethanol, a policy that has helped reduce petroleum dependence while supporting domestic agriculture.

An even more striking example is Brazil. Despite being a major oil producer, Brazil began reforming its fuel system in the 1970s to incorporate ethanol derived primarily from sugarcane.

Today, most Brazilian vehicles are designed as flex-fuel engines, capable of running on gasoline, ethanol, or a mixture of both. In many cases, vehicles run entirely on ethanol. Nigeria can pursue a similar path.

 

Why Ethanol Makes Sense for Nigeria

Nigeria sits on vast crude oil reserves, yet paradoxically struggles with high fuel prices due to limited refining capacity and heavy reliance on imported refined products.

Ethanol blending offers an opportunity to reduce this dependency while simultaneously creating economic opportunities at home. Ethanol can be produced from crops that Nigeria already grows in abundance, including:
• Cassava
• Sugarcane
• Corn

These crops could become the foundation of a thriving biofuel industry capable of supplying domestic fuel demand while creating new markets for Nigerian farmers.

 

A Catalyst for Job Creation

The economic impact of a national ethanol program could be profound.

Unlike crude oil extraction, which is capital-intensive and geographically concentrated, ethanol production spreads economic activity across multiple sectors and regions. A robust ethanol industry would generate employment in:
• Farming and crop cultivation
• Agricultural supply chains
• Biofuel processing plants
• Logistics and transportation
• Commodity brokerage and trading

At a time when youth unemployment remains a major challenge, the ethanol value chain could provide meaningful opportunities for thousands of young Nigerians—particularly graduates seeking productive engagement in agriculture and agribusiness.

 

Complementing Existing Energy Policies

The federal government has recently introduced initiatives to promote Compressed Natural Gas (CNG) as an alternative fuel for vehicles.

This effort is commendable and represents an important step toward diversifying Nigeria’s energy mix. However, CNG alone cannot address Nigeria’s fuel challenges.

Ethanol offers an additional pathway that complements existing initiatives. While CNG focuses on natural gas resources, ethanol builds an entirely new economic ecosystem rooted in agriculture and manufacturing.

The two policies can work together to gradually reduce Nigeria’s dependence on gasoline.

 

A Policy Proposal

To begin this transition, the federal government should consider introducing legislation that mandates a 10–20 percent ethanol blend in gasoline.

Such a mandate would create immediate demand for ethanol production while allowing the automotive industry and fuel distribution networks time to adjust.

In addition, government policy should include:
• Incentives for investors to build ethanol refineries
• Financial support for farmers cultivating ethanol feedstock crops
• Regulatory frameworks for fuel blending and distribution
• Partnerships between government, agribusiness, and the private sector

With the right policy framework, Nigeria could build a thriving biofuel industry within a decade.

 

Addressing Structural Inefficiencies

At the same time, Nigeria must confront persistent inefficiencies in its petroleum sector.

For decades, state-owned refineries under the Nigerian National Petroleum Company Limited have absorbed enormous public resources while producing little output.

These facilities have failed to function effectively and should be privatized, restructured, or decommissioned if credible investors cannot be found.

No nation can afford to sustain public institutions that consume resources without delivering results.

 

A Strategic Opportunity

Nigeria’s economic reforms are both necessary and inevitable. But reform must also be accompanied by innovation and forward-looking policies that expand opportunity.

Ethanol represents more than just an alternative fuel. It is a strategic economic opportunity, one capable of lowering fuel costs, strengthening energy security, revitalizing agriculture, and creating jobs.

At this critical moment in Nigeria’s economic journey, embracing ethanol could provide a pathway not only to energy diversification but also to broader national development.

Also read: Dangote Refinery Boosts Petrol Prices to N874, Pump Costs May Hit N1,000

The time has come for Nigeria to seriously consider an ethanol mandate as part of its long-term energy strategy.

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Economy

FG Urges Investment in Youth, SMEs and Local Industries to Grow Economy

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Investment

Nigeria investment in youth and local industries is vital to job creation, says FG, urging public-private partnerships and regional industrialisation

The Federal Government has called for increased investment in youth development, small and medium-sized enterprises, technology and local industries to create jobs and strengthen Nigeria’s economic competitiveness.

Also read: Osun amotekun dismisses officer over gross misconduct

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The Minister of State for Foreign Affairs, Ambassador Sola Enikanolaiye, made the call during a panel discussion titled “From Trade to Value Chains: Building Regional Industries to Compete Globally” at the 32nd Nigerian Economic Summit, held under the sub-theme, “Invest Nigeria”.

In a statement issued on Tuesday and signed by his Special Assistant on Digital Media and Public Diplomacy, Raphael Oni, Enikanolaiye said Nigeria needed stronger partnerships between the public and private sectors to mobilise the capital required for sustainable economic growth.

He argued that the country must move beyond trading raw materials towards building industries that process local resources into finished products for domestic consumption and export.

According to the minister, investment from both domestic businesses and foreign sources would be necessary to expand industrial capacity, create employment opportunities and improve living standards.

“In advancing our country, we don’t talk enough to one another in terms of constructive conversation and dialogue. We believe that partnership which allows government to engage deeper and stronger with the private sector is critical. Government alone cannot alone raise the resources needed for shared prosperity,” he said.

Enikanolaiye added that domestic capital mobilisation was as important as attracting foreign investment.

He identified Nigeria’s youthful population as a major asset that could accelerate industrialisation if supported by investments in education, skills development, innovation and entrepreneurship.

“Our youth population is very critical – a vibrant population. We need to invest more in human capital, focusing on Small and Medium Scale Enterprises, technology, innovation and creativity. By so doing, we will be able to generate more employment for the youth and also raise more wealth and income,” he said.

On foreign policy, the minister said the administration had reordered its four-point 4D doctrine to place the welfare and prosperity of Nigerians at the centre of the country’s international engagements.

The framework focuses on Demography, Development, Democracy and Diaspora.

Enikanolaiye said democratic governance should produce tangible economic benefits for citizens rather than remain an end in itself.

“Democracy is good, but it is a means to an end, not an end in itself. Democracy must deliver on core priorities of economic development and economic prosperity to our people,” he said.

The minister also emphasised the importance of macroeconomic stability and reliable economic data in helping businesses assess investment opportunities and make long-term plans.

He said Nigeria had recorded improvements in macroeconomic stability and that inflation was coming down, although he did not provide supporting figures in the statement.

Enikanolaiye further called for reforms to make the Ministry of Foreign Affairs more responsive to Nigerians and strengthen its engagement with businesses.

He said cooperation between the government and private sector, alongside partnerships with neighbouring countries and other international markets, could help Nigeria expand its industrial base and improve its access to regional and global markets.

Also speaking at the summit, the President of the Economic Community of West African States Commission, General Birame Diop, called for greater emphasis on industrialisation to create jobs and strengthen regional trade.

His remarks were delivered by the ECOWAS Commissioner for Economic Affairs and Agriculture, Dehpue Yenpea Zuo.

Diop argued that trade agreements alone could not deliver widespread employment and economic growth without industries capable of processing raw materials and producing goods.

“Trade agreements do not create jobs; industries do,” he said.

He noted that intra-African trade accounted for about 15 per cent of the continent’s total trade, compared with more than 60 per cent in Europe and Asia.

He attributed the gap partly to the limited scale of regional industries.

According to Diop, the regional market, with more than 300 million consumers, provides an opportunity for West African manufacturers to expand production before competing across the continent under the African Continental Free Trade Area.

He outlined four priorities for advancing regional industrialisation: implementing existing trade agreements, including commitments on border management; developing value chains in sectors where West Africa has a competitive advantage; improving access to finance for businesses and producers; and measuring progress through jobs created and goods processed within the region.

Also read: Osun amotekun dismisses officer over gross misconduct

Diop said converting trade commitments into productive industries would be essential to expanding employment, increasing regional economic activity and strengthening West Africa’s competitiveness in global markets.

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Economy

Cash Outside Nigerian Banks Rises to N4.92tn

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Cash outside Nigerian banks rose to N4.92tn in September 2026 as Nigeria’s broad money supply increased to N146.6tn, CBN data show

Cash outside Nigerian banks rose to N4.92tn in September 2026, an increase of N48.73bn from the N4.87tn recorded in August, according to monetary data published by the Central Bank of Nigeria.

Also read: UCL: Nico Paz Scores Twice as Como Crush Man United

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The latest figures also showed an expansion in Nigeria’s broad money supply, which increased to N146.6tn in September from N139.09tn in the previous month.

The growth represents an increase of N7.51tn within one month, reflecting a broader expansion in the amount of money circulating across the economy.

The CBN data further showed that narrow money, which consists of currency in circulation and highly liquid deposits, rose to N44.05tn in September from N43.11tn in August.

Cash held outside banks refers to physical currency kept by individuals and businesses rather than within the banking system.

Broad money, by contrast, covers a wider range of monetary assets, including cash, demand deposits, savings and time deposits, as well as foreign currency deposits.

Nigeria’s broad money supply increased by 18.3 per cent between January and September, rising from N123.95tn to N146.6tn, the data indicated.

The latest increase followed the CBN’s decision in September to reduce its benchmark interest rate by 350 basis points, bringing it down from 26.5 per cent to 23 per cent.

The reduction was reported as the largest cut in the benchmark rate since December 2006.

Despite the rate cut, the Monetary Policy Committee retained the Cash Reserve Requirement for commercial banks at 45 per cent and merchant banks at 16 per cent.

The committee also maintained the 75 per cent reserve requirement on non-Treasury Single Account public-sector deposits.

The Cash Reserve Requirement determines the proportion of eligible deposits that banks must hold as reserves with the central bank.

It is one of the monetary policy tools used to influence banking-sector liquidity and credit conditions.

The rise in cash outside Nigerian banks formed part of the broader increase in money supply.

Also read: UCL: Nico Paz Scores Twice as Como Crush Man United

However, the figures alone do not establish why households and businesses held more physical cash or how much of the increase was driven by spending, savings behaviour or other economic factors.

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Economy

Obasanjo: Policy is meaningless without entrepreneurs like Wale Tinubu

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Obasanjo

Olusegun Obasanjo says government policies require entrepreneurs like Wale Tinubu to translate economic plans into investment, industrial growth and jobs (more…)

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