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What are the opportunities that exist for the Nigerian economy following the crash in oil prices?
Never let a good crisis go to waste- Winston Churchill
The GDP in Nigeria recently experienced a decline of 0.5 percent year-on-year in the first quarter of 2017. Crude petroleum and natural gas, our main export constitutes only about 11percent of total GDP in first quarter of year 2017. Oil exporting countries of the developing world depend massively on revenue frrom oil for their foreign exchange earnings and for the government budget, in most cases reaching 90% or above.
Since the early 1970's oil has become the major factor of Nigeria's economy, being the most important source of our foriegn exchange and the most attractive sector for international investment opportunities in the 1980's and 1990's, earnings from this investments have been used by the governm
ent in carrying out various developmental projects in the country.
This important role the oil sector has played has led to a great reliance by
the government on the oil sector.The oil boom of the 1970s distracted the government from the huge opportunities in the agricultural sector; the major source of revenue for government in the early fifties and sixties, as well as the industrial manufacturing to a sole dependence on crude oil. in the year 2000 oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue.
However, the sector has not been without attendant challenges, the problems bedeviling the petroleum sector are the disruption to oil operations in Niger Delta and the lower crude oil prices globally. also the misappropriation of revenues acccruing from the oil sector and the poor state of infrastructure in the industry such as the refineries not performing maximally or not even performing at all has led many to judge the positive impact of the oil sector on the economy has very low or even as negative.
The oil sector in Nigeria is also facing a global fall in oil prices due to increasing supply over demand, The United States which used to be our largest customer now exports oil to our markets in Europe and Asia. These should not be seen as a non productive and total crisis but as an opportunity for a great economy revitalization with the below options:
1. The Nigerian economy led by the government must see the falling oil prices globally has a call to strengthen her oil and gas infrastructure as the world economy will no longer condone delays in oil supplies with the presence of more competitors and less demand. the oil and gas sector has positive impact on other sectors such as the cosmetics, plastic, hardware for ICT sector etc as it produces the raw material for production.
2. Investments should also be strengthened in the agricultural sector which Nigeria has great advantage of arable land, good weather and available working population. Food is a basic need and agricultural products will earn the country more foreign exchange. Agriculture was the mainstay of the economy in the fifities and sixties.
GDP from Agriculture in Nigeria in third quarter of 2016 was 5035069.06 NGN Million. Nigeria received highest GDP 3385600.83 from Agriculture in Africa at first quarter of 2017 followed by Tanzania 2929358.00 , South Africa stood at number 4 with 68830.07. source:tradingeconomics.com
3. The industrial sector should be greatly revolutionised with support for ailing industries in various sectors such as textiles etc. Agriculture provides cotton, the basic raw material for the textile industry. The non development of the Agriculture industry adversely affects the textile industry.
The Nigerian Textile industry is the third largest in Africa, after Egypt and South Africa. Nigerians are very fashion conscious people. At a record high of over 140 companies, Nigeria witnessed a boom in the textile manufacturing industries in the 1960s to 1970s with companies such as Kaduna Textiles, Texlon Nigeria Limited, amongst others employing about a million people, contributing about 15% of the manufacturing sector earnings to the GDP of the Nigerian economy and accounted for over 60% of the textile industry capacity in West Africa.
4. The cosmetics production sector (hydrocarbons; by product of oil and gas is its raw materials), is equally important and should be strengtened by the government. Nigerians are very conscious of their looks and are great buyers of these products.
The beauty and personal care sales were estimated to be worth 1,57Bn Euro in 2012, up by 12% over 2011, and are estimated to reach 2,5Bn Euro in 2017 according to Euro-monitor. with such estimated sales, Nigeria is considered as the African rising star for the beauty market.
5. The pharmaceuticals sector an important component of the health sector should be equally strengtened, this sector also needs the oil and gas sector to power her operations and produce the required packaging materials. Nigeria is the most populous country in Africa and one of the fastest growing economies in Africa, coupled with the high incidence of diseases makes the country a vibrant pharmaceutical market.
Health is wealth, the importance of an healthy population can not be over emphasised.
The above stated five options provide the opportunities availed the Nigerian economy despite the crash in oil prices.
Oluseye Oyeniyi wrote in from Lagos. Email:seyeoyeniyi@gmail.com, Mobile no: 09081130218,
What are the opportunities that exist for the Nigerian economy following the crash in oil prices?
Never let a good crisis go to waste- Winston Churchill
The GDP in Nigeria recently experienced a decline of 0.5 percent year-on-year in the first quarter of 2017. Crude petroleum and natural gas, our main export constitutes only about 11percent of total GDP in first quarter of year 2017. Oil exporting countries of the developing world depend massively on revenue frrom oil for their foreign exchange earnings and for the government budget, in most cases reaching 90% or above.
Since the early 1970's oil has become the major factor of Nigeria's economy, being the most important source of our foriegn exchange and the most attractive sector for international investment opportunities in the 1980's and 1990's, earnings from this investments have been used by the governm
ent in carrying out various developmental projects in the country.
This important role the oil sector has played has led to a great reliance by
the government on the oil sector.The oil boom of the 1970s distracted the government from the huge opportunities in the agricultural sector; the major source of revenue for government in the early fifties and sixties, as well as the industrial manufacturing to a sole dependence on crude oil. in the year 2000 oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue.
However, the sector has not been without attendant challenges, the problems bedeviling the petroleum sector are the disruption to oil operations in Niger Delta and the lower crude oil prices globally. also the misappropriation of revenues acccruing from the oil sector and the poor state of infrastructure in the industry such as the refineries not performing maximally or not even performing at all has led many to judge the positive impact of the oil sector on the economy has very low or even as negative.
The oil sector in Nigeria is also facing a global fall in oil prices due to increasing supply over demand, The United States which used to be our largest customer now exports oil to our markets in Europe and Asia. These should not be seen as a non productive and total crisis but as an opportunity for a great economy revitalization with the below options:
1. The Nigerian economy led by the government must see the falling oil prices globally has a call to strengthen her oil and gas infrastructure as the world economy will no longer condone delays in oil supplies with the presence of more competitors and less demand. the oil and gas sector has positive impact on other sectors such as the cosmetics, plastic, hardware for ICT sector etc as it produces the raw material for production.
2. Investments should also be strengthened in the agricultural sector which Nigeria has great advantage of arable land, good weather and available working population. Food is a basic need and agricultural products will earn the country more foreign exchange. Agriculture was the mainstay of the economy in the fifities and sixties.
GDP from Agriculture in Nigeria in third quarter of 2016 was 5035069.06 NGN Million. Nigeria received highest GDP 3385600.83 from Agriculture in Africa at first quarter of 2017 followed by Tanzania 2929358.00 , South Africa stood at number 4 with 68830.07. source:tradingeconomics.com
3. The industrial sector should be greatly revolutionised with support for ailing industries in various sectors such as textiles etc. Agriculture provides cotton, the basic raw material for the textile industry. The non development of the Agriculture industry adversely affects the textile industry.
The Nigerian Textile industry is the third largest in Africa, after Egypt and South Africa. Nigerians are very fashion conscious people. At a record high of over 140 companies, Nigeria witnessed a boom in the textile manufacturing industries in the 1960s to 1970s with companies such as Kaduna Textiles, Texlon Nigeria Limited, amongst others employing about a million people, contributing about 15% of the manufacturing sector earnings to the GDP of the Nigerian economy and accounted for over 60% of the textile industry capacity in West Africa.
4. The cosmetics production sector (hydrocarbons; by product of oil and gas is its raw materials), is equally important and should be strengtened by the government. Nigerians are very conscious of their looks and are great buyers of these products.
The beauty and personal care sales were estimated to be worth 1,57Bn Euro in 2012, up by 12% over 2011, and are estimated to reach 2,5Bn Euro in 2017 according to Euro-monitor. with such estimated sales, Nigeria is considered as the African rising star for the beauty market.
5. The pharmaceuticals sector an important component of the health sector should be equally strengtened, this sector also needs the oil and gas sector to power her operations and produce the required packaging materials. Nigeria is the most populous country in Africa and one of the fastest growing economies in Africa, coupled with the high incidence of diseases makes the country a vibrant pharmaceutical market.
Health is wealth, the importance of an healthy population can not be over emphasised.
The above stated five options provide the opportunities availed the Nigerian economy despite the crash in oil prices.
Oluseye Oyeniyi wrote in from Lagos. Email:seyeoyeniyi@gmail.com, Mobile no: 09081130218,
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