The past few weeks have been very challenging for global economies, especially for the crude oil-exporting countries, amid COVID-19 outbreak and crude oil price crash. The latter challenge brings back the unsavoury memories of the 2016 recession, which was induced by the slump in global crude oil price and domestic production. Though the economic recovery in 2017 was spurred by the improvement in global crude oil prices and domestic production, the recession birthed the launch of the Economic Recovery Growth Plan (ERGP) and the Investors & Exporters Window (I&E).
Commendably, the government appears to be taking advantage of the reform opportunities in the 2020 crisis, as it quickly adjusted its budgeted estimates for the year to reflect the new realities, removed petroleum subsidy, allowed the partial adjustment of the naira, and seek funding from the IMF.
However, like the 2016 crisis, Nigeria risks leaving money on the table amid the current absence of any concrete policy guideline/plan on how to diversify the country’s revenue and unlock new growth sectors, post-COVID-19. Clearly, the fact that the Nigerian government had to revise her projection for revenue from crude oil in 2020 (which normally contribute above 50.0% of FG’s revenue) downwards from c. N2.6tn to N254.2bn shows that the nation cannot continue to rely on crude oil revenue, especially amid the expectation for volatilities in the crude market to remain into the foreseeable future.
United Capital Research