It is not news that President Muhammadu Buhari did not consent to the Petroleum Industry Governance Biłl (PIGB) Experts are of the belief that the after math of this would be that investors wouldn’t be so eager to invest in the sector anymore.
Nigeria as a country is heavily dependent on oil as a source of revenue neglecting other sectors that could yield as much or even more to the country. Nigeria is blessed with a lot of mineral and natural resources, the agricultural sector also has a lot of offer. But the country focuses more on oil not giving much attention to the others. That being the case it is only wise that the main source of revenue and foreign exchange of the country be maximized. Mr. Muda Yusuf, who is the Director General of the Lagos Chamber of Commerce and Industry (LCCI), explained that despite the fact that oil revenues improved with good oil prices in 2018, the impact was not felt on the economy due to the high foreign exchange commitments to petroleum product importations. Another reason is the subsidy as well as the high debt service obligations. All these resulted in the economy not being as strong as it would.
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He went on to say that given the current circumstances of the country depending mostly on oil as a source of revenue, it is only reasonable that rapt attention be paid to every aspect of it to ensure that the revenue generated from it does not diminish in any way. Experts have estimated that for every $10-per-barrel decrease in oil prices, there will be a 3-5 per cent decline of GDP in majority of the Gulf economies, and a reduction of 1.5-two per cent of GDP in Russia and Nigeria yearly.
That said, all hands should be on deck and no stone left unturned in bringing about policies, reforms and programs that will enhance the productivity of the sector thereby improving the revenue generated. Some of the steps that could be taken include setting up a foreign exchange management that critically observes the market fundamentals, the improvement of the economic diversification program, reforming the petroleum industry bill, cutting down the cost of governance at all levels, and more importantly focusing on diversification and not just depending solely on oil as a source of revenue, etc.
Lukman Otunuga an analyst at FXTM explained that global trade tensions poses as a serious risk to the country, particularly putting into consideration the fact that the United States of America and China are still her biggest trading partners. With a trade war posing as a threat to global economic growth and the general demand for commodities, Nigeria really has to buckle up or face dire economic consequences. Even though there was a chance for the Central Bank of Nigeria to reduce interest rates and in doing so boost growth, the chance was lost in the face of inflationary pressures.
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However, if a look is taken at macro fundamentals, there is actually a silver lining as GDP is expected to increase by two per cent in 2018. The future will look more bright when other sectors of the economy are given the attention they deserve and not sidelined when it comes to generating revenue for the country. Agriculture alone could so much if it is given keen attention, not to talk about other natural and mineral resources that Nigeria has been richly blessed with.