While oil has no doubt been a good fortune for Nigeria, the over-dependence on the resource to the neglect of other sectoral potentials however, has been an eyesore, portending adverse effects on the Country’s economy with devastating blows recorded most recently. According to the Nigerian National Petroleum Corporation (NNPC) in its latest data on the Federal Government’s export lifting, it was disclosed that the Country’s crude oil sales revenue contracted by 74.89 per cent in July to an ebbing record of $55.29 million. Amidst the backdrop of collapse in global crude oil prices and demand, Nigeria’s crude oil revenue fell from $336.65 million recorded in January to $281.14 million, $184.59 million and $148.86 million in February, March, and April respectively. In April the international oil benchmark for Brent crude, had ebbed to as low as $15.98 per barrel compared to $70 per barrel in January. However, it was disclosed that the proceeds of crude oil sales in June stood at $219.58 million, up from $120.50 million in May.
The shortfall was indeed a huge blow on Nigeria’s mono-reliant economy, which is hugely dependent on oil proceeds. The contraction was therefore a straw that rendered the Government broke. The prevailing oil market reality now pegs the Brent to hover between $40 and $45 per barrel. NNPC’s latest monthly report had revealed: “A total export sale of $84.63 million was recorded in July 2020, decreasing by 66.95 per cent compared to last month. Crude oil export sales contributed $ 55.29m (65.34 per cent) of the dollar transactions compared with $219.58 million contribution in the previous month. The July 2019 to July 2020 crude oil and gas transactions indicated that crude oil and gas worth $3.91 billion was exported.”
The manifestations of clumsy outcomes protruding from the strains of COVID-19 pandemic are apparently setting themselves in clustered chains, posing unpalatable conditions in the Country. The downturn on economic activities and a corresponding shortfall in Government revenue, are unsavoury indications that reflect looming socio-economic and political troubles, with attendant negative lines of reactions. The shrink in government revenue is tantamount to shortfall in capital projects which themselves are presently in deep deficits. The attendant effects of this on the economy is outright negative, with little or no propensity for appreciable growth.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, recently on Monday, September 14, said that Nigeria’s revenue has contracted by about 65 per cent. According to her, this necessitated the decision of the President Muhammadu Buhari-led government, to terminate the payment of petrol subsidy. The Minister who spoke on NTA’s ‘Good Morning Nigeria’ programme, had mentioned that if the petrol subsidy returns, it would lead to fuel scarcity because the government would not be able to pay marketers.
The Minister had said in quote: “What we have been doing is not sustainable. If we bring back fuel subsidy, we will fail because we will not be able to pay it and the problem of disputes with marketers will come back, then we will have queues again. We just cannot afford it and therefore this deregulation must be made to work. We appeal to Nigerians to understand that in the past when subsidy was done, we could afford to do it but right now, we cannot pay. Remember that right now our revenue has gone down by about 65 per cent. So, it is not business as usual. We cannot do what we used to do anymore.”
The present conditions posed before the Government is increasingly reflecting the manifestations of the years of rot left to worsen over time. The parochial economic outlook and malnourishment, backed with gross lack of political will by successive government to look beyond oil, has reduced the Country to the present state of lamentation where the Government is grappling with acute challenges over shrinking resources.
Nigeria by now, would have emerged one of the greatest nations of the world, if the potentials of both the great human and natural resources, have well been organised and galvanised for productive patterns of usefulness. The teeming youthful population of the Country is a source of economic strength in particular. This is in addition to the socio-political potentials of such population strength. It is however, lamentable that while Countries of the world like China, India, and the United States among others, have exploited the benefits of their population strength in their drive for development, Nigeria is only succeeding in devaluing and debilitating her human capital as time goes by. The narrative on the exploitation of natural resources in the Country is no less distasteful. While Nigeria is home to numerous resources which on their own are great potentials capable of placing Nigeria globally on the fore as a world power, it is saddening that the blind eye turned to these resources are the recipe for the acute economic hardhip and the attendant socio-political defects in the Country.
The insensitivity of successive governments for preparedness towards the dry days such as being experienced, is a pitiful disposition that is now leaving majority to continuous finger-biting conditions. The inability of the Government to provide comprehensive palliative to the citizens during the lockdown occasioned by the COVID-19 pandemic, is a show of shame and irresponsibility.
The importance to initiate a virile system of structures viable for socio-economic and political response to emergencies cannot be over emphasized. As the Government is mulling efforts to diversify the economy from the major focus on oil, it is important that it should begin to bear in mind that the need to take the agenda serious is alarming. The shortfall in government revenue is a huge blow with capital losses particularly, as the coffers of the Government continue to suffer deep shrink. The Government should institute the process of progressive savings for quick intervention during future emergencies.
The experience of the COVID-19 lockdown has brought to bear the reality of the significance of developing a virile domestic economy. While global oil price may begin to shore up, it is prudent for the Government not to see the rise as a fortune that will inform relapsing into the enclosed circle of full reliance on oil, thereby more or less forfeiting the quest for diversification or systematically neglecting it and/or pursuing it with insignificant impetus.
The need to sustain stability for the Nigerian economy cannot be over emphasized. Setting relatively stable conditions on the basis of which the Country’s economy can grow virilely is essential. Making growth friendly policies needed to drive growth in fledgling sectors with huge economic potentials is very key. The need for a shift from the sole dependence on oil is a significant subject of note. Spreading development across sectors of the economy is highly essential to cushion the macro-effects that strains in certain sectors cause at some particular times. The overconcentration on oil which market by nature is unstable, has the strong inclinations to continuously subject the Country’s economy to corresponding vagaries. To change the tide of such instability which is hostile to growth, it is essential that the Government work with existing stakeholders in other non-oil sectors of the economy, while coming up with essential and mild policies attractive to new investors and as well encouraging existing investors to expand the scale of their investments in the relative sectors of concern.