The Nigerian economic crisis is getting deeper and there seems to be no succinct plans in sight to curb the continuous degradation of the economy. Nigeria is one of the largest crude oil producing nations and 90 percent of its foreign exchange earnings are generated from crude oil sales.

In June 2008, crude oil peaked at $147.42 a barrel, the highest in the history of the world. Nigerian foreign reserve likewise grew from $45 billion to $63 billion in September 2008 before the global economic situation hit the embattled nation in November 2008, when oil price dropped to $32.40 a barrel.

The problems of Nigeria’s economy was further compounded when U.S oil production increased, and therefore stopped importation from Nigeria in 2014. In December 2014, India (who had replaced the U.S) also reduced its importation by 38 percent to 5.3 million barrels — from 13.7 million in October and 12.4 million in November. China did not import a single barrel for the said month after initially reducing its importation by 50.3 percent.

There were several effects on the economy of Nigeria (home to over 170 million people) for two reasons: Firstly, Nigeria only had contractual agreements with a few countries and as such sell on “spot”, two, the country overly depends on crude oil to finance capital expenditures and with crude oil price currently $48.08 a barrel from last year’s peak of $107.64 on June 13th. The question is how would Nigeria avert her economy rout with falling oil price?

Since the drop in oil price globally, the Central Bank of Nigeria (CBN) has adjusted its exchange rate five times, even after the introduction of tight forex controls in February; the latest on Thursday ahead of a Monetary Policy Committee meeting. The currency exchange rate is presently 197 to the United States dollar and CBN promised it would be sold to customers through interbank at 198. It’s a different story at the parallel market where Naira is 244 to a U.S dollar.

In the past months, over 20 states has reportedly failed to pay their worker’s salary, a situation termed disgrace by the president Muhammadu Buhari who was forced to devise a bailout of $3.4 billion to offset the deficit of the affected states — in an effort to curtail further civil actions from civil servants.

The Nigeria GDP rose to $594.3 billion for the first time in 2014 and became the biggest economy in the whole of Africa. According to report from National Bureau of Statistics (NBS), the service sector contributed the most, 42.6 percent to the total GDP, while industry was 25.6 percent, agriculture and oil sectors made up 20.6 and 11.2 percent respectively. The report shows that service is the fastest growing sector followed by industrial sector. The agricultural sector growth rate has been hindered by lack of finance and limited skilled labour — many preferring to work in the lucrative oil sector of the country.

The economy has been impeded by lack of a diversification strategy that could leverage its vast resources and unlimited man-power for growth. Excessive focus on crude oil has created a one way foreign revenue channel, that any slight fluctuation in global oil price (beyond Nigeria’s control) impacts the entire nation. It is obvious that Nigeria cannot continue to depend on oil for growth. The NBS report has shown that oil growth was only 6.3 percent and contributed only 11.2 percent to the entire GDP —the lowest among the sectors. The truth is Nigeria is currently surviving on sectors with less focused attention, but one wonder why due diligence is not done to elevate those sectors in order to create a permanent solution to oil’s unpredictable nature?

http://investorsking.com/nigeria-oil-a-curse-or-a-blessing/

Its a blessing. Every good thing is a blessing until it falls into the hands of ignorant, selfish and(or) greedy people. Even then its still a blessing in the hands of unfit people.

The oil is a blessing and we shall soon see that.
The curse has always been the few people who mismanage our oil wealth for selfish and greedy personal gains. We don't have a single problem with the oil or any other natural resources. We are the problem.....

delishpot:
Its a blessing. Every good thing is a blessing until it falls into the hands of ignorant, selfish and(or) greedy people. Even then its still a blessing in the hands of unfit people.

That is true but our problem has always been over concentration on this oil. I think it is high time we focus on resource we can control in entirety

Abugab:
The oil is a blessing and we shall soon see that.
The curse has always been the few people who mismanage our oil wealth for selfish and greedy personal gains. We don't have a single problem with the oil or any other natural resources. We are the problem.....

I think its because oil money is easy, extract, sell and follow by sharing process. If it is agricultural sector, no politician will wait for five years palm tree require for harvest .

Truth234:


That is true but our problem has always been over concentration on this oil. I think it is high time we focus on resource we can control in entirety

See, greedy and wicked people can still manipulate and abuse everything. From tissue paper to garri. Cos what you have, others have it too and all parties can be pitched against each other to influence prices.
One can never be in total control of anything not even ones life.
I agree that we are over dependent on oil. Branching out into other ventures will make a lot of sense for Nigeria

Both

It was a curse mehn

delishpot:


See, greedy and wicked people can still manipulate and abuse everything. From tissue paper to garri. Cos what you have, others have it too and all parties can be pitched against each other to influence prices.
One can never be in total control of anything not even ones life.
I agree that we are over dependent on oil. Branching out into other ventures will make a lot of sense for Nigeria

As a nation, there are resources you can control and if any mismanagement occur due to financial recklessness, we will know who to pin down. In a global sphere it is completely different. Crude price is determine by external factors that our government can't do anything about. It is just high time we diversify into other sectors with vigor and if we must negate possible future catastrophe due to oil price fluctuation.

THE OIL IS NEVER A CORSE RATHER THE LEADERS ARE FULL OF EVIL MINDS BUT ONLY GOD CAN SAVE US [url][/url]

Ok. Nigeria oil, what of Lagos Nigeria? Are u sure the later is for all Nigerians? Plunder republic!