Thursday, 9 July 2015

Five things Muhammadu Buhari must tackle now that he's Nigeria's president

Updated 1513 GMT (2213 HKT) May 29, 2015


Nigerian delegates, the Minister of Education GE Okeke, and Advisor on Education FI Ajumogobia attend a UNESCO Conference in Paris, November 18th 1960.  

(CNN)Disclosure is important: I have been part of a team that worked for the new Nigerian President Muhammadu Buhari -- from building the cache of photos that defined his image to getting fliers across the country in all of our languages.
I have gone from grudgingly voting for him in 2011 (I made up my mind an hour before voting) to enthusiastically putting relationships and business on the line for what seemed like a quixotic quest.
Who is Nigerian President-elect Muhammadu Buhari?

Who is Nigerian President-elect Muhammadu Buhari? 01:33
PLAY VIDEO
But long after Muhammadu Buhari is President of Nigeria's Federal Republic, I will still be a citizen. And as a citizen, I know, that by this evening, the honeymoon will be over.
He knows this more than anyone else, and he certainly doesn't need advice to do what he does best -- work hard, and fast.
Still, these would be my suggestions for his top five priorities.
Set an example:
The cult of personality that led President Buhari to victory was built on a simple premise -- Nigeria, for once, needs a man shorn of greed; who owns less in terms of material, and covets even less. There are those who insist that the fate of a nation cannot lie solely on Buhari's personality, and perhaps they are right. But the 'lau lau' (Nigerian slang for wasteful) lifestyle of the president who is leaving office led to unprecedented waste, and turned corruption into art.
Now, because of Buhari's reputation, governments and corporate Nigeria have begun to tighten their belts. Oil marketers are suspended in terror; people even expect the cost of land in Nigeria to drop. If he steps into power, and changes; then nothing he says and nothing he does will matter. It will ruin everything. And what a darn shame that will be.
Subsidy has to go
There has long been a media and elite consensus that Nigeria's labyrinth of petro-politics -- which swallows at least $4.2 billion yearly in the name of subsidy -- is a scam. Unfortunately, because he lacked both the credibility and the vision to overhaul that system, Nigerians rightly railed against President Goodluck Jonathan when he tried to remove the subsidy in 2012. The argument was simple -- why force us to tighten our belts when you continue to buy new presidential jets? Thankfully, President Buhari has the competence (as former oil minister) and the personal credibility to make that decision now. It will be a bloody billion-dollar fight. But he, frankly, has no choice.
#BringBackOurGirls
Nigeria's President-elect vows to stop Boko Haram

Nigeria's President-elect vows to stop Boko Haram 10:01
PLAY VIDEO
The President-Elect has said he cannot know if the 219 Chibok girls kidnapped by Boko Haram last year will be found, and he is right.
Still, Boko Haram has ravaged this country in many ways, but above all it has stolen our faith in government. The girls stand as a symbol of our hopelessness -- that despite a world unified in horror and haste, our government has yet failed.
To re-inspire a nation to reconnect with its strength and its will, there is no stronger message than for those girls to be found.
Cost of government
The cost of running Nigeria is obscene. The federal wage bill, at $9 billion, currently outstrips the expected revenue from crude oil sales and Nigeria's current budget deficit stands at $5 billion, despite more than three years of crude oil prices averaging over $100 a barrel.
The salary for 469 federal legislators stands at $750 million. It sounds like a cliche, but it is no less true -- simply cutting the obscene amounts we spend on 'public service' will help Nigeria with more money for the things that truly matter -- regenerating industry, creating jobs, unloading the power sector, social security, saving.
Entrepreneurs matter
I am an entrepreneur, and I know that it's incredibly hard to be one in this country. There is no access to finance, there's multiple-taxation and a crippling patronage system that relies on endorsements and kickbacks.
We lack systems that enable us to truly unlock wealth and sustain growth for entrepreneurs. Nigeria is lucky to have a proven entrepreneurial energy proven in new-industry addition (over $552 billion) to our GDP, and a massive influx of foreign direct investment.
It is time for our government to actually connect with the aspiration of an eager youth population that's fired up and ready to go.
As we say in Nigeria, time is going.

The African country helping India feed 1.2 billion people

Updated 1656 GMT (2356 HKT) June 3, 2015

 Antica Restaurants & Farm in Addis Ababa is one institution that has started experimenting with Ethiopian ingredients. Chef Yohannes Hailemariam has created several fusion dishes, including a lasagne made from teff.


In 2008 prices of some foods, including wheat, soared by 130% in a single year and the United Nation's Food and Agriculture Organisation's food price index shot up 40%.
The result was a frenzied scramble that saw countries acquire an estimated 40 million hectares of land in foreign countries, most of it in Africa.
A great deal of attention has been paid to the role of the US, the largest investor in land in the world, China and Middle Eastern countries. Much less attention has been given to the role of India. A global land monitoring initiative, Land Matrix, ranks India as one of the top 10 investors in land abroad. It is the biggest investor in land in Ethiopia, with Indian companies accounting for almost 70% the land acquired by foreigners after 2008.
Indian land deals in Ethiopia are the result of the strong convergence in the two countries' domestic political-economic policies. Both advocate the privatisation of public assets and increasing reliance on free trade and open markets.
India's investment in land has been driven by the need to obviate the effects of spiralling food prices by outsourcing food supply. Ethiopia's decisions are driven by its development policy based on commercialisation of agriculture and reliance on foreign investments.
Rough estimates suggest Indian firms have acquired roughly 600 000 hectares of land in Ethiopia. This is more than ten times the size of land acquired by firms in India under the country's special economic zones policy. India is followed closely by Saudi Arabian firms, with 500 000 hectares of land, in Ethiopia.
Ethiopia's sweet success

Ethiopia's sweet success 00:57
PLAY VIDEO
Ethiopia's love for coffee

Ethiopia's love for coffee 07:23
PLAY VIDEO
A taste of Ethiopia

A taste of Ethiopia 08:06
PLAY VIDEO
Shopping for herbs and spices in Ethiopia

Shopping for herbs and spices in Ethiopia 07:10
PLAY VIDEO

What drives Indian firms to Ethiopia

India's ability to feed its 1.22 billion people is under increasing strain. This is due to a rapidly growing population, low agricultural productivity, reductions in farm sizes, declining water tables, increasing control of the seed sector by multi-nationals and a gradual withdrawal since the 1990s of the farm support system.
India introduced special economic zones in 2005 hoping it would lead to agricultural development through the consolidation of land holdings. The intention was that this would lead to industrialisation.
But the policy exposed the oldest contradiction of capitalism -- primitive accumulation which includes privatisation of land, the forced expulsion of peasant populations and the conversion of common, collective and state property rights to exclusive property rights.
Widespread resistance movements began in many states, stalling some of the biggest zones, most notably in Nandigram. The protests led to the fall of the Left Front state government of West Bengal in 2011 after 34 years in power.
To meet consumption needs the Indian government started encouraging firms to seek land abroad for growing crops. This was driven by two factors: it was struggling to make more land available for investors and the spike in global food price crisis in 2008.

The lure of Ethiopia

The Ethiopian agricultural sector lies at the heart of the government's development strategy. It has set out to attract more foreign investment in large-scale commercial agriculture as outlined in its 1993 policy which was later reformulated in 2005.
The policy marked a move towards a more trade-orientated approach, and a desire to attract foreign investors. Over 3.5 million hectares of land has been earmarked for investment by foreign firms.

Need for caution

Foreign investors need to tread carefully when acquiring land in Africa. This is best illustrated in the Gambela region of Ethiopia which I visited earlier this year. The area has been the centre of large-scale land acquisitions by Indian as well as other foreign investors.
According to the Ethiopian constitution, land is administered by the regional government. However, the federal government's move to govern land investments through a centralized agency called the Agricultural Investment Land Administration Agency has led to discontent among Gambela regional government officials.
The concern is that the behaviour of foreign companies is not being managed adequately. There is a strong sense that land deals in Ethiopia have benefited both the foreign investors and domestic private capitalists with close ties to the ruling party.
A recent study found that foreign investors are farming less than 8% of the land they have acquired. During my visit I learnt that Karuturi Global Ltd, an Indian firm which has 100 000 hectares of land in Gambela, had only 1 000 hectares under production.
A lack of consultation with people living in the area is also a problem. Gambela is an ecological hotspot with Gambela National Park at its centre. It is home to Nuer and Anuak people whose livelihoods are threatened by investors illegally clearing trees in the park. These clearances happen mostly without consultation. This has led to conflict in the region.
Given the political nature of international land deals and the role states play in shaping policy and practice, there must be scrutiny on the role governments play in such deals because of their close alliance with private capital.
This is especially so for India. It can ill-afford to be tainted by accusations of complicity in land deals that disadvantage the people of Africa given the role it sees for itself in promoting co-operation among countries in the south to mitigate the effects of skewed power relations with the north.

Monday, 11 May 2015

Shark Tank's Lori Greiner: This is how to succeed in business

shark tank lori

@jillianeugenios

 

In business, there are no "nos." There is just, "How can I?"


That was the message Shark Tank's Lori Greiner delivered this week to a room of small business owners in New York as part of Chase's Women's Business Symposia.


As one of the investors on ABC's hit show, Greiner is especially adept at bringing products from the concept stage to market in a matter of months. She has also spent nearly 20 years selling products on QVC that she has either invented or invested in.

She has invested in dozens of businesses through her work on Shark Tank, many of which have been phenomenally successful.

She described Scrub Daddy, which makes a special kind of sponge, as the biggest success in Shark Tank history: It's sold more than $50 million in products since debuting on the show three years ago.

But before the show and QVC, Greiner started with her own invention: An earring organizer. After sketching out her idea, she spent $10,000 to get a prototype made.

This was 1996, and there wasn't an Internet like what we have today, so she used the Yellow Pages and a book listing department store buyers to cold call people.

Related: Barbara Corcoran: 'Failure is what I'm best at''

Thanks to her tenacity (and the redial button), JCPenney's (JCP) buyer told her if the product did well in Chicago's stores over the holidays, they'd go national.

The problem was she didn't actually have a product, and it was already August. But that didn't stop her. Design, packaging and manufacturing -- she rushed through it all in four months.

She spent that holiday season doing product demonstrations at JCPenney. Her husband Dan would loiter around, pretending to be a stranger. When a crowd gathered, he'd come over and say, "That looks pretty cool. I think I might buy one of those for my wife."

"We were a little Bonnie and Clyde-like," Greiner said.

She sold about 100 organizers a day, and by the next year her product was in stores across the country.

"When you have a dream, persistence pays off," she said. "You find a way. Whatever it is."

Though Greiner has experienced incredible success in her career, and she's also experienced incredible sexism.

She told the crowd about her first visit to an attorney's office to talk about patenting her product. Her husband came along because they were going to use their savings for the $5,000 patenting fee.

Related: 15-year-old steps down from startup because ... high school

Greiner told the lawyer Dan was there just to listen, and he sat at the far end of the table.

But every time she asked the attorney a question, he would turn to Dan with the answer.

"If steam could be coming out of my ears, it would've been," Greiner said. She told the lawyer, "You need to bring in a female attorney ... we're not going to be a good partnership here."

He brought in a woman named Natalie. "She has been with me for 18 years," said Greiner.

She now holds 120 patents.

Did China's smartphone market just shrink?

Hank Paulson: China key to global growth
Hank Paulson: China key to global growth
  @CRrileyCNN

Is there anyone left in China who doesn't already own a smartphone?


Increasingly, the answer is no -- presenting a major problem for phone manufacturers that depend on the market of 1.4 billion consumers to deliver huge sales.


The latest data, released Monday by research firm IDC, indicate that China's smartphone market contracted by 4% in the first quarter, compared to last year, marking the first such decline in six years. Compared to the previous quarter, smartphone shipments fell by 8%.

While smartphone makers have for years depended on China for growth, the market is now nearing saturation. Simply put, most people in China who want a smartphone already have one. That means manufacturers must now expand beyond first-time buyers, and attract customers looking to upgrade existing phones.

"China is oftentimes thought of as an emerging market, but the reality is that the vast majority of phones sold in China today are smartphones, similar to other mature markets like the U.S., U.K., Australia, and Japan," said Kitty Fok, managing director at IDC China. "Just like these markets, convincing existing users ... to upgrade to new smartphones will now be the key to further growth."

Related: Xiaomi sold 2 million smartphones in a single day

Apple (AAPL, Tech30), a relative newcomer, was the top retailer during the first quarter, capturing an estimated 14.7% of the market.

Beijing-based Xiaomi ranked second, with 13.7% of the market. Founded only five years ago, the company has a rabid fanbase in China, and is expanding to new international markets.

Homegrown tech company Huawei -- better known for its telecom infrastructure equipment -- was third.

Samsung, which used to enjoy a lock on China, held 8.3% of the market, down from 19.9% a year ago.

Friday, 6 February 2015

Implications of falling oil prices on Nigeria’s economy

  • Written by NAN

written by NAN



THE fall in the price of crude oil in the international market is sending economic and political shocks around the world.
The hardest hit has been countries whose economies depend largely on oil for appreciable percentage of their foreign exchange earnings.
According to experts, crude oil accounts for about 95 of Nigeria’s foreign exchange receipts.
The reality of possible crippling budget shortfalls also stares many oil exporting countries in the face as the priced commodity has hit its lowest price level in four years.
Crude oil prices started dropping in the international market from as high as 110 dollars per barrel in January to the current level of 58 dollars.
Nigeria’s reference crude, the Bonny Light, is currently trading at about 62 dollars per barrel.
It is noteworthy that crude oil is not just the principal export commodity of the country, but indeed all aspects of the nation’s economy rely on the commodity as the major source of revenue.
The annual budgets, which define the direction that the country, is based on crude oil price benchmarks.
While the 2014 budget was based on 78 dollars per barrel, the 2015 has been predicated at 65 dollars per barrel.
According to Dr Ngozi Okonjo-Iweala, the Minister of Finance and Coordinating Minister of the Economy, the fall in oil prices has led to new austerity measures.
The minister said the country would begin to feel the negative impact of the fall in global oil prices, cautioning that the country would need to brace up for tougher times ahead by reviewing its expenditures and building economic buffers through budgets based on modest oil prices.
She said that the decline in crude oil prices had assumed a disturbing dimension.
``Without a doubt, this slowdown in global economic activities, coupled with the end in the quantitative easing in the U. S., will affect the sub-Saharan African economy, in addition to regions’ other specific challenges.
``As we all know, many countries on the continent depend on commodity exports as their main sources of revenue.
``Nigeria and other countries on the African continent must step back and learn the lessons of the ongoing economic transformation.
``The Federal Government has set up a strong stabilisation policy, but the most important being that we must be able to sustain the drive”.
But a former Governor of Lagos State Governor, Alhaji Bola Tinubu, in an essay on ``Slump in Oil Prices: A Progressive Way Out’’, has argued that the austerity measures proposed by the government would further enrich the affluent.
He said that the austerity measures would put average Nigerians into more hardship and economic depression.
Tinubu said that the austerity measures embarked by some countries in the Euro zone had not solved their economic problems in the past five years since the global financial crises.
``All that austerity has done is to tighten the grip of the wealthy on the economy, while weakening the position of the middle class and the poor”.
Mr Kazeem Bello, an energy expert, said the impact of Nigeria’s continued dependence on oil as major revenue earner is very grave.
According to him, the glut in the oil market following the discovery of crude oil in many parts of the world and the new wave of alternative energy sources, particularly shale oil, have had adverse effects on Nigeria.
``In the face of such dreadful challenges, we have no option than to put our economy in order. First, we diversify in terms of other viable frontiers of international revenue earning.
``Secondly, we must make the private sector our engine of growth in order to generate more exportable goods and services.
``Thirdly, government should demonstrate the political will to fight corruption and mismanagement which are part of a `lachrymal waste pipe’ of public resources and finally, we should create the enabling environment for direct inflow of foreign investment,” he said.
Mr Idris Simon, Managing Partner, Magnet Oil Company, said that Nigerians should be ready for harsh economic measures in the nearest future as a result of the continued fall in the prices of oil.
Simon said that the current steps by the Federal Government were good, but wondered if the current measures could actually cushion the impact of the fall in oil prices.
He, however, said that the most important thing was the fact that government accepted that it had to do something with respect to the falling oil prices.
``What we are seeing now is not a short-term phenomenon, whether the therapy is adequate is another issue. But I think it is a good move and it has not ruled out other moves’’.
Mr Samuel Kalu, another energy expert, said that government’s resolve to adopt austerity measures was not surprising.
According to him about 80 per cent of our earning is from oil and so it is not a surprise that the government is adopting austerity measures, considering the fast decline in oil prices.
``This is actually the beginning of things to happen, apart from imposing tax on luxuries, they should look at how to diversify the economy by creating the enabling environment so that industries can thrive.
``Increasing or taxing more utilities is not the major solution; the government should now make more effort at diversifying the economy.
``They should make concerted efforts at ensuring that the agricultural sector and a few others are working.
``Nigerians may not worry much about the tax issues because they are expected, but tax revenue should be used wisely.
``It should not end in the pockets of a few individuals because the country’s earnings are mostly from oil, it means that a fall in the price of the commodity will deny the country a lot of income to provide roads, power plants and many other things that will benefit the ordinary Nigerian,’’ he said.
Mr Seyi Gambo, a former National Public Relations Officer of PENGASSAN, advised the Federal Government to tackle the issue of wastages in the economy by slashing the emoluments of members of the National Assembly.
He also called for reduction in the expenses of running the executive arm of government.
According to him, there is no sense in keeping 10 aircraft for the president at a period when revenue is going down.
Gambo, however, expressed fears that although the austerity measures, announced by the government, were bound to trigger panic actions in the money and capital markets, but the long-term measure should be to diversify the economy.
According to him, with the decline in crude oil prices, all things being equal, should translate into reduction in pump prices in the local market too, but this would depend on the level of price decline.
``But the reduction in pump price is unlikely in the Nigerian scenario at this time,’’ Gambo said.
``One has to look at the dynamics of fuel pricing at this moment to ascertain the landing cost from the decline in oil prices at the international markets vis-à-vis the subsidy gap paid by government.
``I think the pricing template should be adjusted to reflect the current price reality. If that is implemented, which I think the PPPRA would have adjusted; we may then see a drop in the amount of subsidy paid by the government.
``So, I think the decline in crude oil prices in the short run will be a big positive for countries that depend largely on oil imports for their oil consumption. But for Nigeria, the situation could be in a dilemma.
``We earn less during a price decline as a producer, which reduces our revenue base.
``On the other hand, we are better off as an importer of refined crude oil, which reduces our import bill and also lowers the subsidy burden for the government which should even make it easier for the government to make case for deregulation of pump prices.
``But the current scenario may not be tenable because of the anticipated public outcry that may follow, particularly as election year approaches.
``Just recently, the government of Rwanda announced a reduction in fuel pump prices by about 4.95 per cent mainly due to reduction in oil prices at the international market.
``Again, this is where the need to fix our refineries or get more private investors to invest in building more refineries in the country just like that of Dangote that is billed to come up by 2018,’’ Gambo said.
Mr Kunle Stenvenson, the Managing Director of Legacy Communications, said the oil glut would remain in the market and oil prices would continue to fall.
``Since the announcement, prices have fallen sharply. As at the time the announcement was made, the reference price was around 76.3 dollars per barrel, few minutes after, it fell to 74.5 dollars, and of course it is not relenting.
``You can understand what this would mean for Nigeria because we just set our 2015 benchmark oil price at 65 dollars. It means there will be no excess crude account if the decline continues,” he said.
Stenvenson said that the country might not see significant growth in production as a result of oil theft, stressing that the contribution from the oil sector to revenue could significantly reduce.
``Oil accounts for up to 95 per cent of foreign earnings, but production has stagnated in the past two years as a result of oil theft and slowdown in investment’’.
The challenge is for government to come with long-term solutions to stave off impending economic depression. (NAN)
- See more at: http://www.ngrguardiannews.com/news/national-news

THE fall in the price of crude oil in the international market is sending economic and political shocks around the world.
The hardest hit has been countries whose economies depend largely on oil for appreciable percentage of their foreign exchange earnings.
According to experts, crude oil accounts for about 95 of Nigeria’s foreign exchange receipts.
The reality of possible crippling budget shortfalls also stares many oil exporting countries in the face as the priced commodity has hit its lowest price level in four years.
Crude oil prices started dropping in the international market from as high as 110 dollars per barrel in January to the current level of 58 dollars.
Nigeria’s reference crude, the Bonny Light, is currently trading at about 62 dollars per barrel.
It is noteworthy that crude oil is not just the principal export commodity of the country, but indeed all aspects of the nation’s economy rely on the commodity as the major source of revenue.
The annual budgets, which define the direction that the country, is based on crude oil price benchmarks.
While the 2014 budget was based on 78 dollars per barrel, the 2015 has been predicated at 65 dollars per barrel.
According to Dr Ngozi Okonjo-Iweala, the Minister of Finance and Coordinating Minister of the Economy, the fall in oil prices has led to new austerity measures.
The minister said the country would begin to feel the negative impact of the fall in global oil prices, cautioning that the country would need to brace up for tougher times ahead by reviewing its expenditures and building economic buffers through budgets based on modest oil prices.
She said that the decline in crude oil prices had assumed a disturbing dimension.
``Without a doubt, this slowdown in global economic activities, coupled with the end in the quantitative easing in the U. S., will affect the sub-Saharan African economy, in addition to regions’ other specific challenges.
``As we all know, many countries on the continent depend on commodity exports as their main sources of revenue.
``Nigeria and other countries on the African continent must step back and learn the lessons of the ongoing economic transformation.
``The Federal Government has set up a strong stabilisation policy, but the most important being that we must be able to sustain the drive”.
But a former Governor of Lagos State Governor, Alhaji Bola Tinubu, in an essay on ``Slump in Oil Prices: A Progressive Way Out’’, has argued that the austerity measures proposed by the government would further enrich the affluent.
He said that the austerity measures would put average Nigerians into more hardship and economic depression.
Tinubu said that the austerity measures embarked by some countries in the Euro zone had not solved their economic problems in the past five years since the global financial crises.
``All that austerity has done is to tighten the grip of the wealthy on the economy, while weakening the position of the middle class and the poor”.
Mr Kazeem Bello, an energy expert, said the impact of Nigeria’s continued dependence on oil as major revenue earner is very grave.
According to him, the glut in the oil market following the discovery of crude oil in many parts of the world and the new wave of alternative energy sources, particularly shale oil, have had adverse effects on Nigeria.
``In the face of such dreadful challenges, we have no option than to put our economy in order. First, we diversify in terms of other viable frontiers of international revenue earning.
``Secondly, we must make the private sector our engine of growth in order to generate more exportable goods and services.
``Thirdly, government should demonstrate the political will to fight corruption and mismanagement which are part of a `lachrymal waste pipe’ of public resources and finally, we should create the enabling environment for direct inflow of foreign investment,” he said.
Mr Idris Simon, Managing Partner, Magnet Oil Company, said that Nigerians should be ready for harsh economic measures in the nearest future as a result of the continued fall in the prices of oil.
Simon said that the current steps by the Federal Government were good, but wondered if the current measures could actually cushion the impact of the fall in oil prices.
He, however, said that the most important thing was the fact that government accepted that it had to do something with respect to the falling oil prices.
``What we are seeing now is not a short-term phenomenon, whether the therapy is adequate is another issue. But I think it is a good move and it has not ruled out other moves’’.
Mr Samuel Kalu, another energy expert, said that government’s resolve to adopt austerity measures was not surprising.
According to him about 80 per cent of our earning is from oil and so it is not a surprise that the government is adopting austerity measures, considering the fast decline in oil prices.
``This is actually the beginning of things to happen, apart from imposing tax on luxuries, they should look at how to diversify the economy by creating the enabling environment so that industries can thrive.
``Increasing or taxing more utilities is not the major solution; the government should now make more effort at diversifying the economy.
``They should make concerted efforts at ensuring that the agricultural sector and a few others are working.
``Nigerians may not worry much about the tax issues because they are expected, but tax revenue should be used wisely.
``It should not end in the pockets of a few individuals because the country’s earnings are mostly from oil, it means that a fall in the price of the commodity will deny the country a lot of income to provide roads, power plants and many other things that will benefit the ordinary Nigerian,’’ he said.
Mr Seyi Gambo, a former National Public Relations Officer of PENGASSAN, advised the Federal Government to tackle the issue of wastages in the economy by slashing the emoluments of members of the National Assembly.
He also called for reduction in the expenses of running the executive arm of government.
According to him, there is no sense in keeping 10 aircraft for the president at a period when revenue is going down.
Gambo, however, expressed fears that although the austerity measures, announced by the government, were bound to trigger panic actions in the money and capital markets, but the long-term measure should be to diversify the economy.
According to him, with the decline in crude oil prices, all things being equal, should translate into reduction in pump prices in the local market too, but this would depend on the level of price decline.
``But the reduction in pump price is unlikely in the Nigerian scenario at this time,’’ Gambo said.
``One has to look at the dynamics of fuel pricing at this moment to ascertain the landing cost from the decline in oil prices at the international markets vis-à-vis the subsidy gap paid by government.
``I think the pricing template should be adjusted to reflect the current price reality. If that is implemented, which I think the PPPRA would have adjusted; we may then see a drop in the amount of subsidy paid by the government.
``So, I think the decline in crude oil prices in the short run will be a big positive for countries that depend largely on oil imports for their oil consumption. But for Nigeria, the situation could be in a dilemma.
``We earn less during a price decline as a producer, which reduces our revenue base.
``On the other hand, we are better off as an importer of refined crude oil, which reduces our import bill and also lowers the subsidy burden for the government which should even make it easier for the government to make case for deregulation of pump prices.
``But the current scenario may not be tenable because of the anticipated public outcry that may follow, particularly as election year approaches.
``Just recently, the government of Rwanda announced a reduction in fuel pump prices by about 4.95 per cent mainly due to reduction in oil prices at the international market.
``Again, this is where the need to fix our refineries or get more private investors to invest in building more refineries in the country just like that of Dangote that is billed to come up by 2018,’’ Gambo said.
Mr Kunle Stenvenson, the Managing Director of Legacy Communications, said the oil glut would remain in the market and oil prices would continue to fall.
``Since the announcement, prices have fallen sharply. As at the time the announcement was made, the reference price was around 76.3 dollars per barrel, few minutes after, it fell to 74.5 dollars, and of course it is not relenting.
``You can understand what this would mean for Nigeria because we just set our 2015 benchmark oil price at 65 dollars. It means there will be no excess crude account if the decline continues,” he said.
Stenvenson said that the country might not see significant growth in production as a result of oil theft, stressing that the contribution from the oil sector to revenue could significantly reduce.
``Oil accounts for up to 95 per cent of foreign earnings, but production has stagnated in the past two years as a result of oil theft and slowdown in investment’’.
The challenge is for government to come with long-term solutions to stave off impending economic depression. (NAN)
- See more at: http://www.ngrguardiannews.com/news/national-news/191553-implications-of-falling-oil-prices-on-nigeria-s-economy#sthash.E1tquUGL.dpuf
THE fall in the price of crude oil in the international market is sending economic and political shocks around the world.
The hardest hit has been countries whose economies depend largely on oil for appreciable percentage of their foreign exchange earnings.
According to experts, crude oil accounts for about 95 of Nigeria’s foreign exchange receipts.
The reality of possible crippling budget shortfalls also stares many oil exporting countries in the face as the priced commodity has hit its lowest price level in four years.
Crude oil prices started dropping in the international market from as high as 110 dollars per barrel in January to the current level of 58 dollars.
Nigeria’s reference crude, the Bonny Light, is currently trading at about 62 dollars per barrel.
It is noteworthy that crude oil is not just the principal export commodity of the country, but indeed all aspects of the nation’s economy rely on the commodity as the major source of revenue.
The annual budgets, which define the direction that the country, is based on crude oil price benchmarks.
While the 2014 budget was based on 78 dollars per barrel, the 2015 has been predicated at 65 dollars per barrel.
According to Dr Ngozi Okonjo-Iweala, the Minister of Finance and Coordinating Minister of the Economy, the fall in oil prices has led to new austerity measures.
The minister said the country would begin to feel the negative impact of the fall in global oil prices, cautioning that the country would need to brace up for tougher times ahead by reviewing its expenditures and building economic buffers through budgets based on modest oil prices.
She said that the decline in crude oil prices had assumed a disturbing dimension.
``Without a doubt, this slowdown in global economic activities, coupled with the end in the quantitative easing in the U. S., will affect the sub-Saharan African economy, in addition to regions’ other specific challenges.
``As we all know, many countries on the continent depend on commodity exports as their main sources of revenue.
``Nigeria and other countries on the African continent must step back and learn the lessons of the ongoing economic transformation.
``The Federal Government has set up a strong stabilisation policy, but the most important being that we must be able to sustain the drive”.
But a former Governor of Lagos State Governor, Alhaji Bola Tinubu, in an essay on ``Slump in Oil Prices: A Progressive Way Out’’, has argued that the austerity measures proposed by the government would further enrich the affluent.
He said that the austerity measures would put average Nigerians into more hardship and economic depression.
Tinubu said that the austerity measures embarked by some countries in the Euro zone had not solved their economic problems in the past five years since the global financial crises.
``All that austerity has done is to tighten the grip of the wealthy on the economy, while weakening the position of the middle class and the poor”.
Mr Kazeem Bello, an energy expert, said the impact of Nigeria’s continued dependence on oil as major revenue earner is very grave.
According to him, the glut in the oil market following the discovery of crude oil in many parts of the world and the new wave of alternative energy sources, particularly shale oil, have had adverse effects on Nigeria.
``In the face of such dreadful challenges, we have no option than to put our economy in order. First, we diversify in terms of other viable frontiers of international revenue earning.
``Secondly, we must make the private sector our engine of growth in order to generate more exportable goods and services.
``Thirdly, government should demonstrate the political will to fight corruption and mismanagement which are part of a `lachrymal waste pipe’ of public resources and finally, we should create the enabling environment for direct inflow of foreign investment,” he said.
Mr Idris Simon, Managing Partner, Magnet Oil Company, said that Nigerians should be ready for harsh economic measures in the nearest future as a result of the continued fall in the prices of oil.
Simon said that the current steps by the Federal Government were good, but wondered if the current measures could actually cushion the impact of the fall in oil prices.
He, however, said that the most important thing was the fact that government accepted that it had to do something with respect to the falling oil prices.
``What we are seeing now is not a short-term phenomenon, whether the therapy is adequate is another issue. But I think it is a good move and it has not ruled out other moves’’.
Mr Samuel Kalu, another energy expert, said that government’s resolve to adopt austerity measures was not surprising.
According to him about 80 per cent of our earning is from oil and so it is not a surprise that the government is adopting austerity measures, considering the fast decline in oil prices.
``This is actually the beginning of things to happen, apart from imposing tax on luxuries, they should look at how to diversify the economy by creating the enabling environment so that industries can thrive.
``Increasing or taxing more utilities is not the major solution; the government should now make more effort at diversifying the economy.
``They should make concerted efforts at ensuring that the agricultural sector and a few others are working.
``Nigerians may not worry much about the tax issues because they are expected, but tax revenue should be used wisely.
``It should not end in the pockets of a few individuals because the country’s earnings are mostly from oil, it means that a fall in the price of the commodity will deny the country a lot of income to provide roads, power plants and many other things that will benefit the ordinary Nigerian,’’ he said.
Mr Seyi Gambo, a former National Public Relations Officer of PENGASSAN, advised the Federal Government to tackle the issue of wastages in the economy by slashing the emoluments of members of the National Assembly.
He also called for reduction in the expenses of running the executive arm of government.
According to him, there is no sense in keeping 10 aircraft for the president at a period when revenue is going down.
Gambo, however, expressed fears that although the austerity measures, announced by the government, were bound to trigger panic actions in the money and capital markets, but the long-term measure should be to diversify the economy.
According to him, with the decline in crude oil prices, all things being equal, should translate into reduction in pump prices in the local market too, but this would depend on the level of price decline.
``But the reduction in pump price is unlikely in the Nigerian scenario at this time,’’ Gambo said.
``One has to look at the dynamics of fuel pricing at this moment to ascertain the landing cost from the decline in oil prices at the international markets vis-à-vis the subsidy gap paid by government.
``I think the pricing template should be adjusted to reflect the current price reality. If that is implemented, which I think the PPPRA would have adjusted; we may then see a drop in the amount of subsidy paid by the government.
``So, I think the decline in crude oil prices in the short run will be a big positive for countries that depend largely on oil imports for their oil consumption. But for Nigeria, the situation could be in a dilemma.
``We earn less during a price decline as a producer, which reduces our revenue base.
``On the other hand, we are better off as an importer of refined crude oil, which reduces our import bill and also lowers the subsidy burden for the government which should even make it easier for the government to make case for deregulation of pump prices.
``But the current scenario may not be tenable because of the anticipated public outcry that may follow, particularly as election year approaches.
``Just recently, the government of Rwanda announced a reduction in fuel pump prices by about 4.95 per cent mainly due to reduction in oil prices at the international market.
``Again, this is where the need to fix our refineries or get more private investors to invest in building more refineries in the country just like that of Dangote that is billed to come up by 2018,’’ Gambo said.
Mr Kunle Stenvenson, the Managing Director of Legacy Communications, said the oil glut would remain in the market and oil prices would continue to fall.
``Since the announcement, prices have fallen sharply. As at the time the announcement was made, the reference price was around 76.3 dollars per barrel, few minutes after, it fell to 74.5 dollars, and of course it is not relenting.
``You can understand what this would mean for Nigeria because we just set our 2015 benchmark oil price at 65 dollars. It means there will be no excess crude account if the decline continues,” he said.
Stenvenson said that the country might not see significant growth in production as a result of oil theft, stressing that the contribution from the oil sector to revenue could significantly reduce.
``Oil accounts for up to 95 per cent of foreign earnings, but production has stagnated in the past two years as a result of oil theft and slowdown in investment’’.
The challenge is for government to come with long-term solutions to stave off impending economic depression. (NAN)
- See more at: http://www.ngrguardiannews.com/news/national-news/191553-implications-of-falling-oil-prices-on-nigeria-s-economy#sthash.E1tquUGL.dpuf
THE fall in the price of crude oil in the international market is sending economic and political shocks around the world.
The hardest hit has been countries whose economies depend largely on oil for appreciable percentage of their foreign exchange earnings.
According to experts, crude oil accounts for about 95 of Nigeria’s foreign exchange receipts.
The reality of possible crippling budget shortfalls also stares many oil exporting countries in the face as the priced commodity has hit its lowest price level in four years.
Crude oil prices started dropping in the international market from as high as 110 dollars per barrel in January to the current level of 58 dollars.
Nigeria’s reference crude, the Bonny Light, is currently trading at about 62 dollars per barrel.
It is noteworthy that crude oil is not just the principal export commodity of the country, but indeed all aspects of the nation’s economy rely on the commodity as the major source of revenue.
The annual budgets, which define the direction that the country, is based on crude oil price benchmarks.
While the 2014 budget was based on 78 dollars per barrel, the 2015 has been predicated at 65 dollars per barrel.
According to Dr Ngozi Okonjo-Iweala, the Minister of Finance and Coordinating Minister of the Economy, the fall in oil prices has led to new austerity measures.
The minister said the country would begin to feel the negative impact of the fall in global oil prices, cautioning that the country would need to brace up for tougher times ahead by reviewing its expenditures and building economic buffers through budgets based on modest oil prices.
She said that the decline in crude oil prices had assumed a disturbing dimension.
``Without a doubt, this slowdown in global economic activities, coupled with the end in the quantitative easing in the U. S., will affect the sub-Saharan African economy, in addition to regions’ other specific challenges.
``As we all know, many countries on the continent depend on commodity exports as their main sources of revenue.
``Nigeria and other countries on the African continent must step back and learn the lessons of the ongoing economic transformation.
``The Federal Government has set up a strong stabilisation policy, but the most important being that we must be able to sustain the drive”.
But a former Governor of Lagos State Governor, Alhaji Bola Tinubu, in an essay on ``Slump in Oil Prices: A Progressive Way Out’’, has argued that the austerity measures proposed by the government would further enrich the affluent.
He said that the austerity measures would put average Nigerians into more hardship and economic depression.
Tinubu said that the austerity measures embarked by some countries in the Euro zone had not solved their economic problems in the past five years since the global financial crises.
``All that austerity has done is to tighten the grip of the wealthy on the economy, while weakening the position of the middle class and the poor”.
Mr Kazeem Bello, an energy expert, said the impact of Nigeria’s continued dependence on oil as major revenue earner is very grave.
According to him, the glut in the oil market following the discovery of crude oil in many parts of the world and the new wave of alternative energy sources, particularly shale oil, have had adverse effects on Nigeria.
``In the face of such dreadful challenges, we have no option than to put our economy in order. First, we diversify in terms of other viable frontiers of international revenue earning.
``Secondly, we must make the private sector our engine of growth in order to generate more exportable goods and services.
``Thirdly, government should demonstrate the political will to fight corruption and mismanagement which are part of a `lachrymal waste pipe’ of public resources and finally, we should create the enabling environment for direct inflow of foreign investment,” he said.
Mr Idris Simon, Managing Partner, Magnet Oil Company, said that Nigerians should be ready for harsh economic measures in the nearest future as a result of the continued fall in the prices of oil.
Simon said that the current steps by the Federal Government were good, but wondered if the current measures could actually cushion the impact of the fall in oil prices.
He, however, said that the most important thing was the fact that government accepted that it had to do something with respect to the falling oil prices.
``What we are seeing now is not a short-term phenomenon, whether the therapy is adequate is another issue. But I think it is a good move and it has not ruled out other moves’’.
Mr Samuel Kalu, another energy expert, said that government’s resolve to adopt austerity measures was not surprising.
According to him about 80 per cent of our earning is from oil and so it is not a surprise that the government is adopting austerity measures, considering the fast decline in oil prices.
``This is actually the beginning of things to happen, apart from imposing tax on luxuries, they should look at how to diversify the economy by creating the enabling environment so that industries can thrive.
``Increasing or taxing more utilities is not the major solution; the government should now make more effort at diversifying the economy.
``They should make concerted efforts at ensuring that the agricultural sector and a few others are working.
``Nigerians may not worry much about the tax issues because they are expected, but tax revenue should be used wisely.
``It should not end in the pockets of a few individuals because the country’s earnings are mostly from oil, it means that a fall in the price of the commodity will deny the country a lot of income to provide roads, power plants and many other things that will benefit the ordinary Nigerian,’’ he said.
Mr Seyi Gambo, a former National Public Relations Officer of PENGASSAN, advised the Federal Government to tackle the issue of wastages in the economy by slashing the emoluments of members of the National Assembly.
He also called for reduction in the expenses of running the executive arm of government.
According to him, there is no sense in keeping 10 aircraft for the president at a period when revenue is going down.
Gambo, however, expressed fears that although the austerity measures, announced by the government, were bound to trigger panic actions in the money and capital markets, but the long-term measure should be to diversify the economy.
According to him, with the decline in crude oil prices, all things being equal, should translate into reduction in pump prices in the local market too, but this would depend on the level of price decline.
``But the reduction in pump price is unlikely in the Nigerian scenario at this time,’’ Gambo said.
``One has to look at the dynamics of fuel pricing at this moment to ascertain the landing cost from the decline in oil prices at the international markets vis-à-vis the subsidy gap paid by government.
``I think the pricing template should be adjusted to reflect the current price reality. If that is implemented, which I think the PPPRA would have adjusted; we may then see a drop in the amount of subsidy paid by the government.
``So, I think the decline in crude oil prices in the short run will be a big positive for countries that depend largely on oil imports for their oil consumption. But for Nigeria, the situation could be in a dilemma.
``We earn less during a price decline as a producer, which reduces our revenue base.
``On the other hand, we are better off as an importer of refined crude oil, which reduces our import bill and also lowers the subsidy burden for the government which should even make it easier for the government to make case for deregulation of pump prices.
``But the current scenario may not be tenable because of the anticipated public outcry that may follow, particularly as election year approaches.
``Just recently, the government of Rwanda announced a reduction in fuel pump prices by about 4.95 per cent mainly due to reduction in oil prices at the international market.
``Again, this is where the need to fix our refineries or get more private investors to invest in building more refineries in the country just like that of Dangote that is billed to come up by 2018,’’ Gambo said.
Mr Kunle Stenvenson, the Managing Director of Legacy Communications, said the oil glut would remain in the market and oil prices would continue to fall.
``Since the announcement, prices have fallen sharply. As at the time the announcement was made, the reference price was around 76.3 dollars per barrel, few minutes after, it fell to 74.5 dollars, and of course it is not relenting.
``You can understand what this would mean for Nigeria because we just set our 2015 benchmark oil price at 65 dollars. It means there will be no excess crude account if the decline continues,” he said.
Stenvenson said that the country might not see significant growth in production as a result of oil theft, stressing that the contribution from the oil sector to revenue could significantly reduce.
``Oil accounts for up to 95 per cent of foreign earnings, but production has stagnated in the past two years as a result of oil theft and slowdown in investment’’.
The challenge is for government to come with long-term solutions to stave off impending economic depression. (NAN)
- See more at: http://www.ngrguardiannews.com/news/national-news/191553-implications-of-falling-oil-prices-on-nigeria-s-economy#sthash.E1tquUGL.dpuf
THE fall in the price of crude oil in the international market is sending economic and political shocks around the world.
The hardest hit has been countries whose economies depend largely on oil for appreciable percentage of their foreign exchange earnings.
According to experts, crude oil accounts for about 95 of Nigeria’s foreign exchange receipts.
The reality of possible crippling budget shortfalls also stares many oil exporting countries in the face as the priced commodity has hit its lowest price level in four years.
Crude oil prices started dropping in the international market from as high as 110 dollars per barrel in January to the current level of 58 dollars.
Nigeria’s reference crude, the Bonny Light, is currently trading at about 62 dollars per barrel.
It is noteworthy that crude oil is not just the principal export commodity of the country, but indeed all aspects of the nation’s economy rely on the commodity as the major source of revenue.
The annual budgets, which define the direction that the country, is based on crude oil price benchmarks.
While the 2014 budget was based on 78 dollars per barrel, the 2015 has been predicated at 65 dollars per barrel.
According to Dr Ngozi Okonjo-Iweala, the Minister of Finance and Coordinating Minister of the Economy, the fall in oil prices has led to new austerity measures.
The minister said the country would begin to feel the negative impact of the fall in global oil prices, cautioning that the country would need to brace up for tougher times ahead by reviewing its expenditures and building economic buffers through budgets based on modest oil prices.
She said that the decline in crude oil prices had assumed a disturbing dimension.
``Without a doubt, this slowdown in global economic activities, coupled with the end in the quantitative easing in the U. S., will affect the sub-Saharan African economy, in addition to regions’ other specific challenges.
``As we all know, many countries on the continent depend on commodity exports as their main sources of revenue.
``Nigeria and other countries on the African continent must step back and learn the lessons of the ongoing economic transformation.
``The Federal Government has set up a strong stabilisation policy, but the most important being that we must be able to sustain the drive”.
But a former Governor of Lagos State Governor, Alhaji Bola Tinubu, in an essay on ``Slump in Oil Prices: A Progressive Way Out’’, has argued that the austerity measures proposed by the government would further enrich the affluent.
He said that the austerity measures would put average Nigerians into more hardship and economic depression.
Tinubu said that the austerity measures embarked by some countries in the Euro zone had not solved their economic problems in the past five years since the global financial crises.
``All that austerity has done is to tighten the grip of the wealthy on the economy, while weakening the position of the middle class and the poor”.
Mr Kazeem Bello, an energy expert, said the impact of Nigeria’s continued dependence on oil as major revenue earner is very grave.
According to him, the glut in the oil market following the discovery of crude oil in many parts of the world and the new wave of alternative energy sources, particularly shale oil, have had adverse effects on Nigeria.
``In the face of such dreadful challenges, we have no option than to put our economy in order. First, we diversify in terms of other viable frontiers of international revenue earning.
``Secondly, we must make the private sector our engine of growth in order to generate more exportable goods and services.
``Thirdly, government should demonstrate the political will to fight corruption and mismanagement which are part of a `lachrymal waste pipe’ of public resources and finally, we should create the enabling environment for direct inflow of foreign investment,” he said.
Mr Idris Simon, Managing Partner, Magnet Oil Company, said that Nigerians should be ready for harsh economic measures in the nearest future as a result of the continued fall in the prices of oil.
Simon said that the current steps by the Federal Government were good, but wondered if the current measures could actually cushion the impact of the fall in oil prices.
He, however, said that the most important thing was the fact that government accepted that it had to do something with respect to the falling oil prices.
``What we are seeing now is not a short-term phenomenon, whether the therapy is adequate is another issue. But I think it is a good move and it has not ruled out other moves’’.
Mr Samuel Kalu, another energy expert, said that government’s resolve to adopt austerity measures was not surprising.
According to him about 80 per cent of our earning is from oil and so it is not a surprise that the government is adopting austerity measures, considering the fast decline in oil prices.
``This is actually the beginning of things to happen, apart from imposing tax on luxuries, they should look at how to diversify the economy by creating the enabling environment so that industries can thrive.
``Increasing or taxing more utilities is not the major solution; the government should now make more effort at diversifying the economy.
``They should make concerted efforts at ensuring that the agricultural sector and a few others are working.
``Nigerians may not worry much about the tax issues because they are expected, but tax revenue should be used wisely.
``It should not end in the pockets of a few individuals because the country’s earnings are mostly from oil, it means that a fall in the price of the commodity will deny the country a lot of income to provide roads, power plants and many other things that will benefit the ordinary Nigerian,’’ he said.
Mr Seyi Gambo, a former National Public Relations Officer of PENGASSAN, advised the Federal Government to tackle the issue of wastages in the economy by slashing the emoluments of members of the National Assembly.
He also called for reduction in the expenses of running the executive arm of government.
According to him, there is no sense in keeping 10 aircraft for the president at a period when revenue is going down.
Gambo, however, expressed fears that although the austerity measures, announced by the government, were bound to trigger panic actions in the money and capital markets, but the long-term measure should be to diversify the economy.
According to him, with the decline in crude oil prices, all things being equal, should translate into reduction in pump prices in the local market too, but this would depend on the level of price decline.
``But the reduction in pump price is unlikely in the Nigerian scenario at this time,’’ Gambo said.
``One has to look at the dynamics of fuel pricing at this moment to ascertain the landing cost from the decline in oil prices at the international markets vis-à-vis the subsidy gap paid by government.
``I think the pricing template should be adjusted to reflect the current price reality. If that is implemented, which I think the PPPRA would have adjusted; we may then see a drop in the amount of subsidy paid by the government.
``So, I think the decline in crude oil prices in the short run will be a big positive for countries that depend largely on oil imports for their oil consumption. But for Nigeria, the situation could be in a dilemma.
``We earn less during a price decline as a producer, which reduces our revenue base.
``On the other hand, we are better off as an importer of refined crude oil, which reduces our import bill and also lowers the subsidy burden for the government which should even make it easier for the government to make case for deregulation of pump prices.
``But the current scenario may not be tenable because of the anticipated public outcry that may follow, particularly as election year approaches.
``Just recently, the government of Rwanda announced a reduction in fuel pump prices by about 4.95 per cent mainly due to reduction in oil prices at the international market.
``Again, this is where the need to fix our refineries or get more private investors to invest in building more refineries in the country just like that of Dangote that is billed to come up by 2018,’’ Gambo said.
Mr Kunle Stenvenson, the Managing Director of Legacy Communications, said the oil glut would remain in the market and oil prices would continue to fall.
``Since the announcement, prices have fallen sharply. As at the time the announcement was made, the reference price was around 76.3 dollars per barrel, few minutes after, it fell to 74.5 dollars, and of course it is not relenting.
``You can understand what this would mean for Nigeria because we just set our 2015 benchmark oil price at 65 dollars. It means there will be no excess crude account if the decline continues,” he said.
Stenvenson said that the country might not see significant growth in production as a result of oil theft, stressing that the contribution from the oil sector to revenue could significantly reduce.
``Oil accounts for up to 95 per cent of foreign earnings, but production has stagnated in the past two years as a result of oil theft and slowdown in investment’’.
The challenge is for government to come with long-term solutions to stave off impending economic depression. (NAN)
- See more at: http://www.ngrguardiannews.com/news/national-news/191553-implications-of-falling-oil-prices-on-nigeria-s-economy#sthash.E1tquUGL.dpuf