The recent slide in the price of crude oil in the global market has attracted mixed reactions from financial analysts, especially in terms of the implication of the development on the nation’s economy.
The Director-General, Lagos Chambers of Commerce and Industry, Mr. Muda Yusuf, explained that if the oil price remained at a threshold of $49.50, it meant that there was still hope for the country, looking at the budget benchmark, which is $45.
He said, “We still have some headway, provided we don’t have a major disruption in output. It will continue to give us some comfort, because the challenge of unrest in the Niger Delta, which affected out put, appears to be tackled. I think we should be able to carry on.
“What the policy makers should be looking at is how to encourage other sources of supply of foreign exchange to come into the economy, because right now, it is only the Central Bank of Nigeria that is funding the foreign exchange market, and it cannot continue to do that indefinitely.
“If that is not done, the improvement we are witnessing may not be sustainable. We need to urgently put policies in place to inspire the confidence of investors from outside the country.”
He suggested that government needed to review the foreign exchange policy, because it was not investor-friendly, adding that there was no sufficient room for the market to play a role.
“Foreign investors don’t like to be denied freedom to sell their funds and same applies to exporters. Government should encourage them to bring in their proceeds and have free access to their export proceeds,” he said.
However, another economic analyst, the Deputy National Coordinator, Institute of Chartered Economist of Nigeria, Prof. Ganiyu Oladipo, warned that the recent slide in crude oil price might portend doom for the country.
To him, if the government had not been laid back in making efforts to diversify the economy, the sliding oil prices might not have had any significant impact on the Nigerian economy.
He said, “If we are not ready to diversify our economy, we can never get out of the recession. If we look into other key areas, such as infrastructure, then the fall in world oil prices won’t affect us that much. We should learn from the experience of Ghana over 30 years ago, when it had serious economic woes.
“When we look at the trend, getting close to the benchmark for crude oil price at $45 per barrel is a death trap for us. If it drops below the benchmark, then it means we are moving into economic doom. If you look at China and India, they are progressing, because they looked into other things like technology; Nigeria also needs to follow suit and implement what needed to be done to revive the economy.”
