Following the collapse of crude oil prices from 2014 to date , which triggered unpleasant memories to Nigerian government which found itself in unchartered waters. Since then Nigeria continues to struggle to revive the economy amidst dwindling oil revenues compounded by unemployment, poverty and insecurity all due to over dependant on one major government revenue, the country remains weak and fragile -being outstripped by population growth.
Who is to be blamed for this mess ? Provocative policy of the Nigerian government is the dependence on oil resources as a source of foreign exchange earnings to the detriment of agriculture despite the fact that the country is blessed with untapped mineral resources. With outbreak of the coronavirus, which has puts global economy in uncertainty again, Nigeria’s economy is being caught in the cross-hairs.
Nigeria the so called Africa’s largest economy cannot currently fund its budget due to Covid – 19 because the budget passed with a benchmark oil price of $57 per barrel—nearly double its current price of around $28, knowing fully well that the government relies heavily on petrodollars. It is now unarguably, the collapse of oil prices not only pose a strategic danger to the global economy but it has been danger to Nigeria’s economy development and also a catalyst behind national domestic predicaments.
Absolutely there is lack of foresight from our leaders for not save as much as possible especially when the crude oil price reached its peak but Nigeria Forex reserve is about $37billion and can finance 4months of imports max. Even before Covid -19 pandemic Saudi threw OPEC members under the bus because Russia refuses to cut production to prop price up.
Saudi flooded the market and offered discount to buyers. Russia refused production costs because it thinks; cuts empower Shale producers in America. Now Nigeria have about more than 50cargoes of oil floating on international waters without buyers. A cargo contains about 2 million barrels of oil.
Now Nigeria is facing severe challenges. Oil price volatility is accentuated by rising commodity prices, possibly the devaluation of the naira against the U.S. dollar. It s time for economy diversification.
Regards to diversification of the economy there is need for Federal government to develop the country untapped minerals. Despite this huge opportunity still domestic mining industry is underdeveloped, leading to Nigeria having to import minerals that it could produced domestically. With recent economy woes federal government should, as a matter of fact shift from mono economic policy to ensure that non-oil sector growth has translated to improvements in government revenue.
Had it been that past and present leadership prioritise other non oil sectors with the way the nation’s telecommunications sector liberalize definetly the country economy will improve because there is no state in Nigeria with less than 10 untapped different mineral resources.
Had it been that they did the needful for long the country will set itself free unless federal government develop the country untapped mineral industry, modernise the agricultural sector and develop the tourism industry. Just from iron ore , expert says Federal Government can make $280 billion from the mineral annually more than what the country earned from crude oil.
According to 2018 report of geology and mineral resources of Nigeria estimated Nigeria’s iron ore deposit to reach three billion tonnes, coal, three billion tonnes while lead and zinc are to reach 10 million tonnes each. Federal Government can make a lot of money from mining, if it is exploited and invest into coal, gold, tantalite, and cassiterite to shore up revenue.
Dukawa, a public affairs analyst, writes from Kano
