Advice for Nigerians a word is enough......Reality is upon us all


The oil price is at $13 today and it's not looking like it will go up soon. I understand our cost of production per barrel is around $23. The implication is that Nigeria is now producing at a loss. Even at that, Nigeria is still unable to sell its oil.

The oil tankers bearing our oil cargoes are stranded on the seas with no buyers picking up cargoes. Yet, we are paying the oil tankers for every day the cargoes remain unsold. With half of the world shut down, because of Covid-19, the demand for energy may not go up soon.

If this trend continues, oil producers will soon stop producing and start declaring staff redundant. As the days go by, many state governments in Nigeria will be unable to pay salaries and contractors.

The Federal government may be able to continue to issue sovereign debt instruments to fund its operations, but FAAC cheques to states may become very light.

So, if you're a worker, conserve cash, do some currency hedging, if you have the skills. If you can liquidate some peripheral assets and increase your cash holding, please do so.

Avoid unnecessary spending and act like you are earning half salary.

If you have land that you can farm on, it may be a good idea to plant some foodstuff. It may help you and your family in the coming months. If things improve, you lose nothing.

If you're a trader, you may want to diversify into trading necessary goods.

If you're a contractor be very selective about which company, govt agency, or individual's contract to accept. Better to demand cash advance from contract principals. The point is, please assess every contract from the point of view of certainty of prompt payment.

I don't know all the answers but I hope this helps someone. These are not ordinary times. God dey, but use the sense wey Him give you.