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Oil Discovery Exposed Nigeria’s Economy to Vulnerability –Emefiele

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  • Oil Discovery Exposed Nigeria’s Economy to Vulnerability –Emefiele

The Governor, Central Bank of Nigeria, Mr Godwin Emefiele, has said the discovery of crude oil and the country’s increasing reliance on crude oil revenues have led to a severe downturn in the agriculture and manufacturing sectors.

He said the development exposed the economy to vulnerabilities that normally accompanied an increased dependence on a single commodity for survival.

The CBN governor said given Nigeria’s dependence on crude oil revenues for close to 86 per cent of the country’s foreign exchange earnings and over 60 per cent of government expenditure, the drop in prices in 2014 led to heightened inflationary pressures, depreciation of exchange rate, significant drop in external reserves, and eventually, the recession of 2016.

The apex bank boss said these in his economic blueprint for the economy for the next five years.

Emefiele said if Nigeria had maintained its market dominance in the palm oil industry, which stood at 40 per cent in the 70s, the country would be earning above $20bn annually from the cultivation and processing of palm oil today.

This $20bn earnings, he explained, would have provided a sufficient buffer for the nation, following the drop in crude oil prices.

He said, “At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market.

“Some of these products include cocoa, groundnuts, cotton and palm oil. Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians.

“Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival.

“Our situation is further worsened by the unpatriotic activities of some unscrupulous individuals and businesses who embarked on massive smuggling and dumping of goods that can be produced in the country, thus leading to the demise of our agricultural and manufacturing sectors and hence the attendant high level of unemployment.”

He said the rising volatility in the crude oil market, occasioned by the rapid increase in the supply of shale oil by the United States, which had seen its production rise from 9 million barrels in 2017 to over 12 million barrels, currently posed risks to the Nigerian economy.

The governor said the development finance efforts of the CBN were driven by the need to reduce the country’s reliance on revenues from crude oil.

In order to reduce the reliance on the importation of items that could be produced in Nigeria, he said the bank restricted access to foreign exchange on 43 items while deploying intervention funds to support growth and productivity in the agricultural and manufacturing sectors.

Commenting on the CBN governor’s economic agenda, the Chairman, Chartered Institute of Bankers of Nigeria, Abuja Branch, Prof Uche Uwaleke, said the five-year policy thrust was a good development that would have a lot of positive impact on the economy.

He said the recapitalisation of banks would strengthen financial system stability and put the banks in a stronger position to finance big projects needed for development as well as play in the global scene.

However, the professor of the capital market called on the apex bank to have an alternative plan due to volatility in crude oil prices, which might have a negative impact on price and monetary stability.

He said, “Emefiele’s five-year policy thrust is a good development with a lot of positive impact on the economy.

“The recapitalisation of banks will strengthen financial system stability and put our banks in a stronger position to finance big projects needed for development as well as play in the global scene.

“The major risk I see in the pursuit of price and monetary stability, which is the core function of the CBN, is the volatility in crude oil price, given our dependence on the sector.

“The CBN is, therefore, advised to have a plan B in its five-year plan. It is also vital to get the cooperation of the fiscal authorities, especially when it comes to the task of achieving double-digit growth because, on this very score, the CBN cannot clap with one hand.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS

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India, Spain and the Netherland top Nigeria’s export markets in the final quarter of 2020, according to the latest data from the National Bureau of Statistics (NBS).

The Commodity Price Indices and Terms of Trade Q4 2020 report showed that the United States and China trailed the three.

However, the NBS revealed Nigeria exports mainly crude oil and natural gas during the period under review.

It, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.

“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”

The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.

This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.

The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.

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Onyeama: Qatar To Invest $5bn In Nigeria’s Economy

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The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.

Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.

The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.

According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.

Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.

The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.

He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.

‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”

Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.

Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’

In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.

‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.

Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.

Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.

The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.

Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.

According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.

The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.

He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.

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Economy

France, Nigeria to Build New Partnership

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France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.

Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.

A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.

“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”

It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.

It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.

It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.

It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”

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