Nigeria’s Oil Curse and the Value of Delay
By Umar Farouk Bala,
Amid international oil market turmoil triggered by U.S. President Donald Trump’s sweeping tariffs and the following commerce conflict, Nigeria as soon as once more finds itself grappling with a disaster that many noticed coming.
Brent crude costs tumbled by over 20% in only one week, plunging from $74.95 on April 2 to $58.46 by April 9, earlier than rebounding barely to round $65 per barrel by April 15.
Nonetheless, this stays nicely beneath Nigeria’s 2025 “Price range of Restoration” benchmark of $75 per barrel, exposing the nation’s fragile financial place.
Oil stays the spine of Nigeria’s economic system, accounting for 90% of export earnings and 56% of projected 2025 authorities income. But this heavy dependence on a unstable commodity has as soon as once more confirmed perilous.
The Federal Authorities is already grappling with a manufacturing shortfall of 21.6 million barrels within the early a part of the yr, alongside a staggering fiscal deficit of N13.08 trillion—equal to 23% of the nationwide price range.
With N14.32 trillion allotted for debt servicing, the nation has misplaced an estimated $1.62 billion in gross income this yr alone.
The Central Financial institution of Nigeria (CBN) has been pressured to promote almost $198 million to stabilise the naira amid dwindling oil revenues. However the difficulty is greater than fiscal—it’s structural.
Nigeria’s cussed oil dependency shouldn’t be coincidental, however the consequence of years of negligence and ineptitude by a self-seeking political class. Successive administrations have paid lip service to financial diversification whereas doubling down on oil dependence.
The result’s a rent-seeking, fragile economic system—prone to international shocks and stifled by inefficiency, corruption, and underperformance.
The Extra Crude Account, established beneath President Olusegun Obasanjo to offer a fiscal buffer throughout oil worth downturns, has been all however deserted by much less prudent financial managers in recent times. The implications are actually clear—and dire.
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Diversification should transfer from rhetoric to actuality. Agriculture, strong minerals, and digital companies supply actual options for sustainable progress. Agriculture alone employs over 60% of the inhabitants and contributes 22% to GDP.
With investments in mechanisation, know-how, and worth chains, its potential might be considerably expanded. Nigeria can also be endowed with huge mineral assets, but their contribution to nationwide income stays negligible.
Unlocking this sector may very well be a game-changer. The tech trade, powered by a youthful, modern inhabitants, is already displaying promise. During the last decade, Lagos has emerged as a alternative vacation spot for Enterprise Capital funding, internet hosting among the most modern and worthwhile tech corporations throughout Africa.
With strategic authorities initiatives and a supportive regulatory setting, info and know-how may evolve into a significant financial driver within the coming years.
Tax reform is equally essential. Nigeria’s tax-to-GDP ratio—simply over 10%—is among the many lowest on the earth. A contemporary, digital-first tax system that brings the casual sector, property, and wealth into the online can broaden the income base with out unfairly burdening the poor.
Most urgently, the federal government should handle its sample of extreme spending. The N13.64 trillion allotted to recurrent expenditure is symptomatic of deep-rooted inefficiencies. Nigeria’s federal paperwork is bloated, duplicative, and ill-suited for a contemporary economic system.
Furthermore, the nation’s rising dependancy to debt is unsustainable. With debt servicing swallowing over 25% of the price range, Nigeria dangers plunging deeper right into a fiscal quagmire.
There are fashions to study from. Oil-rich Gulf nations, significantly Qatar, the United Arab Emirates (UAE), and Saudi Arabia, are actively transitioning to multidimensional economies by investing in tourism, finance, know-how, and actual property to safe long-term prosperity. Nigeria should chart an identical path.
It’s time oil costs stopped dictating Nigeria’s future. The nation’s future ought to be steered by the creativity of its folks, the abundance of its assets, and the knowledge of its management.
Umar Farouk Bala is a serving corps member at PRNigeria Centre, Abuja. He might be reached at: [email protected]
