By Michael Eboh
THE Nigerian economy is increasingly becoming fragile due to the inability of the country to effectively manage its oil and gas resources and its inability to effectively utilize revenue from the sector for the betterment of its citizens over the years, according to a report, titled, ‘Oil and Gas Sector Management and Quality of Life in Nigeria.’
The report was authored by renowned energy economists, Professor Adeola Adenikinju, of the Department of Economics, and Centre for Petroleum, Energy Economics and Law, University of Ibadan Ibadan and Professor Aderoju Oyefusi, of the Department of Economics, University of Benin.
The report noted that the current episode of low crude oil prices, had more than the previous episodes, exposed the vulnerability of the Nigerian economy and people to shocks in the international environment that affect the oil and gas industry.
It argued that if the often-cited intention of the Federal Government to lift 80 to 100 million Nigerians out of poverty over the next five to 10 years is to stand any chance of being realized, the leadership of the country would need to address the problems in the country’s oil and gas sector and the management of oil and gas wealth.
According to the report, with its huge oil and gas reserves, abundant solid minerals, vast arable land and a large and youthful population, Nigeria certainly has the potentials to do better than what obtained presently in terms of development and to give her citizens a higher quality of life than they presently enjoy.
It stated that, “It is not surprising that Nigeria has witnessed an increase in fragility over the last decade. From a global ranking of 18 in 2008, the country climbed up the scale to the 14th position in 2018.
“Four factors significantly contributed to the increase in fragility. They include greater fractionalization among the country’s elites, economic decline, deterioration in public services, and increased demographic pressures.
“The economy was hit hard by downward trends in oil prices in 2015, leading to an economic recession in which growth declined for more than two consecutive quarters. The effects of the recession were felt by citizens around the country who bore the brunt.
“Between January 2016 and January 2018, unemployment doubled while inflation rose by over 50 per cent. Within a space of about five years, between 2013 and 2018, Nigeria moved from being ‘one of the fastest growing economies in the world’ to ‘the world’s poverty capital’ with almost half of the population in poverty and another six of its citizens standing in danger of falling into poverty every minute.”
According to the report, these developments clearly brought to light a reality that had been quite often ignored; that is, developments in the oil and gas sector impact on all aspects of the Nigerian economy and all groups in the society: the farmer in the rural community, students, civil servants, government contractors, traders in rural and urban markets, the typical household, big businesses, small and medium scale enterprises, and Nigeria’s middle class.
The report identified, at least, six policy failures in the Nigerian oil and gas industry that had made the economy vulnerable and made it difficult for the sector to positively impact on the living standards of Nigerians.