With the sudden fall in crude oil price laid at the door step of the dreaded corona virus pandemic among other factors, the CEO of Mascot Consult Limited, Mr. Marcel Okeke, has urged the Nigeria’s Federal Government Nigeria to strategically devise other reliable avenues for the generation of a regular stream of national revenue.
According to The Sun Newspaper report, the chief executive officer of the company asserted Nigeria’s continued dependence on crude oil as the main source of foreign exchange earnings is not going to help her attain Eldorado in the long term.
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Diversifying the Nigerian Economy
Mr. Marcel Okeke, an erstwhile chief economist with a leading multinational financial service provider based in Nigeria, made this declaration over the weekend, while attending the Financial Correspondent Association of Nigeria (FICAN) Webinar Series tagged: “Nigeria Without Oil.”
He spoke in favour of an immediate exploration of other sustainable revenue-yielding opportunities. To diversify the economy, Nigeria should have some form of overhauling of her economy to bring about the creation of a regular stream of revenue either through never-before-heard or long-abandoned businesses.
In the words of Marcel Okeke who turns out to also be FICAN’s founding chairman, our nation has to engage economic strategists with a mandate to transform Nigerian from a mono economy into a multiple revenue-earning nation with thousands of opportunities for her massively-growing population.
Current Situation in the Crude Oil Market
The renowned economist noted that since the beginning of March 2020, there has been a surplus supply of crude oil in the international market. This he said has made the demand to go far below crude oil supply alongside a crash in the price of the product.
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He confirmed many oil-laden cargoes and ships originating from Nigeria and other crude oil-rich nations have been navigating the high sea for several weeks without any potential buyer approaching them for a business deal.
He said this bizarre situation is still likely to persist as many oil-consuming countries are under lock down and cannot come out to negotiate business deals in their usual fashion because several of their production-related businesses needing large metric tons of oil have temporarily closed because of a sustained strategy to minimize the community spread of the dreaded corona virus.
He further asserted crude oil production in Nigeria was now seriously threatened with production cost per barrel of crude oil now about $22, while the price per barrel of the product goes for between $10-$15.
This suggests crude oil is now selling at a price lower than its cost of production. If this unpleasant situation persists, oil production companies might be left without any option than to completely shut down their production. A decision like this would really mean the loss of a means of livelihood for thousands of people across Nigeria.
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Nigeria’s Over Reliance on Crude Oil
Nigeria heavily relies on foreign exchange earnings generated through crude oil. The reality we are faced with is that, oil revenue is no longer guaranteed to come as usual. This emphasizes why Nigeria has to urgently revisit the drawing board find and come up with strategies to create businesses that would generate mega bucks for her national needs.
The renowned economic strategist opined the time had come for our dear country to focus on the generation of a regular pipeline of revenue from viable sources such as mining, value chain commercial-scale agriculture, tourism, textile production and a host of others.
Marcel Okeke noted one of the very important economic lessons Nigeria and other smart nations should learn from the unfortunate outbreak of corona virus is the need to strategically create alternative revenue sources and prevent the untimely collapse of their national economies.
He warned that an over reliance on crude oil is no longer sustainable for the Nigerian economy as the current nose-dive in the oil market has made a mess of all the previous projections in the 2020 budget so much that our expected economic development might never see the light of day.
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