Nigeria's major problem right now is mostly with uncertainty over the coming general elections, a significant drop in crude oil prices, the ability to contain terrorism and a serious insurgency. For any people or country, an insurgency from within can be difficult to contain. Overall, I believe that President Jonathan and his economic team have done well, by being able to generate an economic growth rate as high as it is, averaging around 6 percent of the past 4 years, in spite of continued insurgency and terrorism. However, can the country easily overcome the effects of a rapid drop in crude oil prices at this time? The truth is that in the short term, Nigeria's capacity to withstand a rapid drop in oil prices is quite limited. As of today, Nigeria's fortunes are clearly and inextricably tied to the vicissitudes of the oil industry, because Nigeria did not continue to aggressively diversify the economy. This evidence is clear. This must begin to happen. The economy has to be diversified and with active government involvement, not in the nationalization of enterprises but in catalytic funding and investments. I also believe that Nigeria should carefully reevaluate its continued membership in OPEC. Of the 12 largest crude oil producers world wide, only six are members of OPEC. Nigeria needs increased capacity and flexibility in the production of crude oil. However, most of all, what we need now for steady economic progress through this period is stability in prices, including stability in the exchange rate, especially since our foreign reserve level is still high at around $38 billion and can support about 8 months of imports. It is clear therefore that psychology is the primary culprit in the weakness of the NAIRA. I think that with proper economic guidance, the bumpy road may not be undrivable after all. However, we are in an election season. I am Magnus Kpakol and that's my view.
Posted: Nov 24th, 2014 @ 09:21:04 AM