By Raphael Christopher
The global economy is in tatters. The oil economies are in turmoil. Over £160 billion in stocks and shares all over the world trading exchanges have been wiped out virtually overnight.
Ordinary people and families are struggling and Governments and businesses are struggling to manage this unexpected perfect storm and countries are in lockdown.
The prospects of growth and stabilisation for various economies of the world looks bleak.
Against this gloomy backdrop, there are many silver linings which, if taken advantage of, has the capacity to help governments bounce back and come out of this storm, stronger, more resilient and more prosperous than before.
One of such silver linings for Nigeria currently is the golden opportunity for the nairasation of the downstream petroleum sector.
What do I mean by nairasation? I mean that all production, refining, distillation, distribution, purchases, buying, selling and ancillary activities in the downstream sector in so far as it appertains to the petroleum products used in Nigeria alone to be conducted and processed and accounted for in Naira – our local currency. But, for international markets, and for spare parts purchases, since Petroleum, Oil and gas is an international product, the relevant foreign exchange currency of dollars should continue to be used.
Currently, a large percentage of all currency inputs and outflows in the purchases, drillings and sales of petroleum products in the Nigerian oil and gas sectors are conducted in dollars and with the foreign exchange mechanisms in place, has made for disjointed and capricious inflation of prices of petroleum products and the Nigerian economy is suffering when most of these transactions are conducted in dollars and the Nigerian economy does not benefit as much as it should.
The case of Coronavirus and other unexpected negative occurrences have yet, once again, highlighted this vulnerability in our economy. As we have seen, most countries are in lockdown, contemplating lockdown and considering lockdown and many businesses have asked their staff not to come in to work. Production of goods are suspended and uncertainty rules the business world.
Many of the countries that import crude oil from Nigeria use the crude oil as a raw material to use in the process and manufacture of other secondary goods and services. And those countries are in lockdown and are not purchasing the quantities as they normally do, thus affecting our economy.
Moreover, the unexpected current spat between some OPEC countries and Russia has further dampened the market in crude oil.
If all the downstream petroleum sectors are nairaisied, then the Nigerian local economy will benefit by the increase and freeing up the flow of Naira within the economy and if all transactions are conducted in Naira, this will help our economy achieve a measure of insulation from the current and future vagaries of the international markets and reduce its current dependence on the dollar by an estimated 40% – which is a colossal amount when placed in perspective of our current total forecast Gross National Product figures of 420 billion US dollars of which 90% of it is made up of crude oil and petroleum products earnings.
As you know 90% of 420 billion is 378 billion and if we have an opportunity to further increase this 378 billion by 20% that would give us an additional 75.6 billion US dollars which can used to fund and pay for infrastructure developments, research, create jobs, pay outstanding workers salaries and pensions, build Hospitals, provide drugs for the sick, Schools, Roads and fund the reduction of our national debt and borrowings.
What is there not to like?
It is my prayer that the policy makers, decision makers, government functionaries and stakeholders give favourable consideration to my suggestions and dialogue on it to act wisely before things gets too complex and totally out of our control.
Christopher is a lawyer, law lecturer, and has taught mathematics and science for many years.