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Nigeria’s economy is exiting a painful recession period; a time marked by a historic collapse in oil prices, exacerbated by falling oil production and inadequate policies which took a major toll on the economy at the wake of Muhammafu Buhari administration. The situation became so challenging coupled with the wreckage which the entire nation had gone through as a result of acute and miasmic misrule engineered by some parasitic leaders who were having unhindered access to the proceeds of the nation's lifeblood.
Per chance it eludes us, Organization of Petroleum Exporting Countries, OPEC remains the main influencer of fluctuations in oil prices. OPEC is a consortium that, as of 2020, is made up of 13 countries: Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates, and Venezuela. According to 2018 statistics, OPEC controls almost 80% of the world's supply of oil reserves. The consortium sets production levels to meet global demand and can influence the price of oil and gas by increasing or decreasing production. OPEC vowed to keep the price of oil above $100 a barrel for the foreseeable future, but in mid-2014, the price of oil began to tumble. It fell from a peak of above $100 a barrel to below $50 a barrel as OPEC refused to cut oil production, leading to the tumble in prices and eventual recession we delved into.
However, Crude oil prices have risen higher after the International Energy Agency (IEA), in its May oil market report, had predicted lower global inventories in the second half of 2020. Oil prices rose as new data pointed to a rebound in crude demand around the world. Following the rising oil prices, there would be new foreign exchange measures, attractive yields on government securities, and a tighter monetary policy that will make foreign exchange more readily available and help contain inflation. Consequently, this will also influence the return of investors to Nigeria. With this recent rise in oil prices, there is serious need to invest in the reduction of unemployment and address poverty in Nigeria. Already the IMF has warned that policy implementation needs to move quickly and comprehensively to facilitate economic recovery and help the country reap its longer-term potential.
For some observers like myself, the recent rise in oil price may not be too good a news for Nigeria. At the period we were hard hit by low oil prices, we were forced to look at ways to diversify our economy away from oil and consider other areas of livelihood. The huge investment made by President Buhari in the area of Agriculture is a proof of this diversification. Much of Buhari's Agro lofty feats were itemized in his 96 paragraph Democracy message of June 12, 2020. However, with oil price going up now, we may be losing the narrative. There is a tendency of returning to the 'dutch disease', an expression which was first coined by Economist in 1977 to describe the decline in Netherlands manufacturing after the discovery of gas fields in the early 1960s. Ever since this time, many African countries have also struggled to enable rising living standards after the discovery of oil. Nigeria has been guilty of this disease especially during the years of PDP regime when oily affairs were forcefully moved from economic to politics.
However, there is a sense of optimism that the economy may not collapse again soon. We have witnessed 11 quarters of consecutive GDP growth since exiting recession. According to the President, the GDP grew from 1.91% in 2018 to 2.27% in 2019 but declined to 1.87% in the first quarter of 2020 as a result of the decline in global economic activities due to the COVID-19 pandemic. Every single economy in the world has suffered a decline, ours has been relatively moderate. May God bless Nigeria.
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