Omodele Adigun
As crude oil price is ravaged by the COVID 19 pandemic, the Chief Executive Officer of Mascot Consult Limited, Mr. Marcel Okeke, has advised the Federal Government to continuously explore other means of generating incomes.
According to him, dependence on oil as the major source of foreign exchange earner for the country has come to an end, ‘therefore, other items or revenue sources must be urgently explored and exploited.’
Okeke, a former Chief Economist of Zenith Bank Plc, made this statement on at the weekend, during the Financial Correspondent Association of Nigeria (FICAN) Webinar Series Lecture titled: :Nigeria Without Oil.”
He explained that one of the economic lessons of the COVID-19, “is that dependent on oil as the major earner has come to an end. And so other items or revenue sources must be urgently explored and exploited. This points to an urgent restructuring of the economy of the country such that substantial revenue must come from either new or neglected sources.”
According to Okeke, who was also the founding Chairman of FICAN, Nigeria must begin to develop an alternative economy and end the debate on whether crude oil is a ‘curse or blessing’ to Nigeria, which has been raging on since the 1980s.
“The utilisation of our oil revenue has been our challenge for the economic development of the country. It can, therefore, be said that the Dutch disease and the paradox of resource curse has been with Nigeria for a long time. And now that we are where we are now, there is need for paradigm shift to having a country that does not depend on oil,” he said.
Okeke argued that reliance on oil is no longer sustainable for the Nigerian economy as the current slump in the oil market has negated all the projections in the 2020 budget to the extent that economic development would be a mirage and anything contrary would be a magic
“Since March 2020 there has been a glut of crude oil in the global market. Demand has been remarkably outstripped by supply. Indeed, it has been reported that several oil laden cargoes and ships belonging to Nigeria and other oil producing countries have been hovering in the sea for months without seeing anybody to buy them. This situation is likely to linger because economies that consume oil are in no situation to utilise oil due to the gravity of the impact of COVID-19 that has practically shutdown all productive and production activities.
“Let me give you a little idea about Nigeria. Oil production in Nigeria is now seriously endangered. Production cost of a barrel of crude oil in Nigeria is around$22 per barrel and now the price of the product is around $10 to $15 per barrel, it means that it is selling, that is if it is selling at all, below the production cost. If this continues, oil production companies would fold up, contract their activities and leave the sector in job losses and lack of new investments. You know the implications for this country.
“So, for Nigeria that has solely depended on oil for its revenues, the reality is that oil revenues are no longer be forthcoming. Therefore the country has been sent back to the drawing board.”
He said that time has come for Nigeria to resort to its previously neglected sources of revenue like agriculture, taxation and non-oil mineral exploration that the country is richly endowed and blessed with.