- Forex Inflow Drops by $447m on Oil Facility Attacks
The persistent attacks on the country’s oil installations by militants in the Niger Delta have resulted in a decrease of about $447m in foreign exchange inflows from $1.4bn in September to $957.3m in October.
Figures obtained from the Central Bank of Nigeria show that the $447m decline represents a drop of 31.85 per cent.
Investigation also revealed that the total outflows also decreased during the period, dropping significantly by $1.44bn or 58.68 per cent from $2.46bn to $1.02bn during the same period
The price of crude oil currently hovers between $53 and $54 per barrel and the country may be losing much in terms of volume as a result of the persistent attacks on oil installations.
This, according to findings, has resulted in a decline in oil production to about 1.6 million barrels per day as against the budgeted production volume of 2.2 million bpd.
Based on the current daily crude oil output of 1.6 million bpd at the price of $51 per barrel, the country is currently earning a total of $81.6m as against $112.2m, which it could have earned had 2.2 million bpd been produced.
Speaking on the drop in oil production, finance analysts told our correspondent during separate interviews that the Federal Government should allow states to develop their untapped resources, stating that the current economic downturn had provided a platform to carry out the exercise.
They contended that while the country had been badly hit by the decline in oil production and revenue as a result of the activities of militants in the Niger Delta, there were a lot of untapped resources at various states, which could be developed for the purpose of economic prosperity.
Those who spoke to our correspondent on the issue included the Head of Banking and Finance Department, Nasarawa State University, Keffi, Uche Uwaleke; and a former Managing Director of Unity Bank Plc, Mr. Rislanudeen Muhammed.
Uwaleke, an associate professor of finance, stated that once the federating units were given the powers to control their resources, it would help promote healthy economic competition.
He said with competition, the federating units would come up with innovative ways of stimulating their respective economies.
He said, “The seemingly endless crises in the Niger Delta region will substantially abate if the country is restructured in a way that allows greater control of resources by the federating units.
“The present economic recession is a direct consequence of the drastic fall in government revenue, which has been blamed in part on militancy in the Niger Delta.
“The good news is that every state in this country is endowed with human and material resources. Economic restructuring will enable states to develop their competitive advantages, which can bring about multiple revenue streams and fast track the much needed diversification of the Nigerian economy.”
Muhammed said there was a need for the government to push all the states into making them to develop their economies in a sustainable manner.
He said, “Nigeria has huge economic potential outside oil sector, largely untapped due to the Dutch disease that has for years made us lazy and always relying on oil as a source of income, notwithstanding the fact that oil constitutes only 10 per cent of our Gross Domestic Product.
“There is potential for growth in non-oil export in most states and virtually every state has one form of economic competitive advantage or the other.
“The states do not have to grow at the same pace but hard work will make all the difference. For example, virtually the whole of Zamfara State is sitting on gold and diamond, largely untapped with little going to illegal miners.
“The current economic reality is a good opportunity for all the states to wake up and diversify their incomes but current tax laws need to be amended to ensure more percentage of the resources is controlled by them.”
But the Minister of Budget and National Planning, Udo Udoma, said although the government was focused on diversification of the economy, it needed oil revenue to effectively diversify the economy.
He said Nigeria’s immediate priority was to get oil production output back to the desired level to secure the revenue needed to diversify the economy.
Udoma explained that though the global slump in oil prices introduced some shocks that affected the country’s economy, the immediate reason for the slump into recession was massive reduction in output caused by militancy in the oil-bearing Niger Delta region.
The minister said the government was currently exploring a number of engagements that would ensure return of normal production activities in the region.
He added that the government was intensely focused on a long-term economic agenda that would ensure sustainable economic growth and revenue development.