The Lagos Chamber of Commerce and Industry and experts on Thursday the 23rd of April, 2020 outlined economic adjustment models that would help cushion the effects of global oil price crash on the Nigerian economy. According to them, the plunge in crude oil price would continue to hit Nigeria badly if the Federal Government fails to adjust its economic management models.
Brent, the crude against which Nigeria’s oil is priced, had crashed below $20 per barrel earlier this week but moved up marginally to $22.39 per barrel as at 10am Central Standard Time on Thursday. Nigeria reviewed its oil price projection in the country’s 2020 budget from $57 per barrel to $30 per barrel, but oil prices have continued to plummet. The Director-General, LCCI, Dr. Muda Yusuf, told our correspondent that the situation required urgent action.
He said, “The gloomy oil price outlook presents a very frightening scenario. The Nigerian economy is extremely vulnerable to external shocks, especially from commodity prices. “Regrettably, the opportunities we had to build buffers were frittered away. There would be considerable dislocations in the economy, both in the public and private sectors in the face of stumbling macroeconomic fundamentals.”
He added, “The situation calls for urgent and fundamental adjustments in our economic management model. We should develop a model of an economy without oil revenue. “This is perhaps the most realistic thing to do at a time like this so that we can confront the stack realities.” The LCCI boss, who listed other measures that could help manage the economy, also stressed that stakeholders should be involved in the process.
Yusuf said, “We should address issues of cost of governance, enabling environment for investors, liberalisation of the foreign exchange market and stimulating foreign capital inflows beyond portfolio investments. “We should address policy and regulatory regimes impacting investments. We should deepen stakeholder engagements to enhance the quality of economic and investment policies.” A former President of the Association of National Accountants of Nigeria, Dr. Sam Nzekwe, said experts had often called for the diversification of the Nigerian economy because of times like this.
He said, “Before now, experts have been talking to government to diversify the economy. Let the revenue from oil be secondary. Explore other areas to make sure we can survive without oil. “It is now obvious that the time has come for them (government) to think very hard. But unfortunately, the critical infrastructure in Nigeria is in poor shape.” Nzekwe said government must look at how to develop adequate programmes that would enable the private sector to thrive.
“They should look at the industries, production, and agriculture. Our refineries should start refining crude oil and exporting refined products,” he said. Nzekwe added, “The entertainment industry, hospitality sector, culture and tourism, these are sectors with potential to generate revenue for us as a country.” The Group General Manager, Group Public Affairs Division, Nigerian National Petroleum Corporation, Kennie Obateru, said operators in the oil sector were observing developments in the oil sector and consultations were ongoing.