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Nigeria and Oil: Looking Beyond Price Collapse Towards Post Recovery Savings (Part 1)

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By Austin Okere

On April 20, 2020 the screaming headlines on CNN was that the price of WTI crude oil had fallen by 306% to $-37.63 per barrel, the first time on record that oil price has hit negative territory. It is surreal how things come around.

I wrote this article on April 20, 2016 after the colossal collapse in Oil prices – and surprised how relevant it is even today.

What was our experience as a country, what did we learn from it and how is it that we have once again been caught desperately unawares?

Below is the first part of the article.

The recurrent mistake we keep making as a Nation is failing to anticipate and plan for our oil windfalls. There have been many boom opportunities since Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971; Oil prices increased by 400% in six short months after the Yom Kippur War following the Arab Oil Embargo. Crude prices doubled from $14 in 1978 to $35 per barrel in 1981 following the Iran/Iraq war.

The price of crude oil spiked in 1990 with the uncertainties associated the Iraqi invasion of Kuwait and the ensuring Gulf War – the so called ‘Gulf War windfall’ under then Head of State Ibrahim Babangida. Data from the U.S. Energy Information Administration shows that the latest windfall happened between February 2011 and August 2014, under the Goodluck Jonathan presidency, when oil prices were much in excess of $100 per barrel.

Another golden opportunity was squandered, characterised by organised kleptocracy of epic proportions as has now come to light.

During this same period Saudi Arabia has amassed a whopping $593b in foreign exchange reserves and has recently announced that it is creating a $2 trillion mega-sovereign wealth fund, funded by sales of current petroleum industry assets, to prepare itself for an age when oil no longer dominates the global economy.

Coming closer home, Algeria, the second biggest African oil producer, with 1.9mbpd has accumulated foreign reserves of $156b and a sovereign wealth fund of $50b. Nigeria, by far the biggest producer in Africa with 2.5mbpd has only managed foreign reserves of $28b and a sovereign wealth fund of a paltry $2.9b – about 5% that of Algeria.

The major difference being that while the Algerians saved for a rainy day during the boom years, Nigeria was busy squandering her wealth, with nothing to show by way of infrastructure or any solid investments.

Yet Nigeria was able to balance her budget, pay off her debts and save over $62b in foreign reserves during the Obasanjo presidency from 1999 to 2007, even though the price of crude was mostly under $40 per barrel, except for the two years between 2005 and 2007 when it hovered between $50 and $75 dollars per barrel.

It is bothersome that with the same level of oil price, Nigeria today is struggling to balance her budget and has resorted to aggressive borrowing to finance the deficit, inadvertently driving us back to where we were before escaping from the huge burden of sovereign debt and the attendant debilitating impact of debt servicing.

I believe that Nigeria can save as much as $36.5b in the coming year if oil prices recover towards the end of 2016 and through 2017 to the projected $80 per barrel. This assumes we have all agreed that the current crises is much too painful and too precious to waste.

It can actually be a blessing in disguise, affording us the much needed leverage to deliberately diversify our economy away from the over dependence on oil, and attempt to become self-sufficient in every low hanging opportunity such as feeding ourselves.

There is a reason why the Chinese use the same word for challenge and opportunity; behind every challenge is an opportunity. We must seize this golden opportunity with both hands and make the structural changes that will lead us to true prosperity as a nation.

Almost every third Nigerian businessman you come across claims to be into Oil and Gas; usually, briefcase contractors who manage to have their ‘papers’ stamped, and proceed to collect money from the treasury of our commonwealth. Yet oil contributed only 6.4% to GDP growth in 2015.

An often overlooked area for rapid economic growth is telecoms, entertainment and media. At a recent event in Lagos, Dr. Doyin Salami, lecturer at Lagos Business School, remarked that ‘The telecommunication sector grew Nigeria’s GDP by 8.7% in 2015, generating spill overs, with uptakes in financial transactions technology and payment systems, e-commerce facilitation and proliferation of transport services, while making the offering of the burgeoning entertainment industry ubiquitous’.

Quite simply, if each of the 34 million MSME’s in Nigeria could be supported with technology to improve their businesses through online presence and seamless bookkeeping to the point of employing one more staff, they would create an additional 34 million jobs, much more than the government can ever provide.

I totally agree with Dr. Salami that Nigeria’s economy has systematically and strategically diversified along the lines of technology and other services sector without Nigerians noticing.  The services sector today contributes as much as 52% of Nigeria’s GDP.

Agriculture is also another sector that could do with special attention. If we strive to produce what we eat, we will not only be saving a whopping $6b from our import bill, but also provide the opportunity for inclusive growth, with the spill over effects down the value chain, from logistics and transportation to light manufacturing. But we need to make the right investments in infrastructure such as roads and rail transport linking farms with their food processors and markets.

The change that will make all this happen is not the ‘outsourced variety’ where we believe that we can carry on with business as usual, or sit back and fold our arms while only the President delivers the promised change. All hands must be on deck, and we each have to be the change we desire.

The elephant in the room question is; who says oil prices will reach $80 per barrel?

Austin Okere is the Founder of CWG Plc, the largest ICT Company on the Nigerian Stock Exchange & Entrepreneur in Residence at CBS, New York. Austin also serves on the Advisory Board of the Global Business School Network, and on the World Economic Forum Global Agenda Council on Innovation and Intrapreneurship. Austin now runs the Ausso Leadership Academy focused on Business and Entrepreneurial Mentorship.


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E-Business

Cybersecurity Firm Warns of Phishing Threats Targeting Telegram Premium

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Kaspersky has warned that fake Telegram Premium offers have been spreading globally, targeting users with phishing scams and malware disguised as alternative app versions.

These attacks aim to steal account credentials or compromise devices. The scams capitalise on Telegram Premium’s popularity and gifting feature, making it crucial for users to remain vigilant.

Telegram Premium is a subscription that offers exclusive features, such as faster download speeds, voice-to-text conversion, premium stickers, an ad-free experience, and more. Users can gift a subscription, and scammers capitalise on this gifting feature and the Telegram Premium topic in general.

One of the tricks begins when a user receives a message that appears to come from someone in their contact list, whose account may have been hacked. The message claims: “You’ve been sent a gift — a Telegram Premium subscription”.

Below, there’s a link that looks legitimate but actually redirects the user to a phishing page, prompting them to log in to Telegram. If victims scan the code or enter their credentials, their account is immediately compromised, giving scammers access to their login details, password, and potentially their authentication code.

There are other tricks referencing the Telegram Premium theme, and not all of them necessarily start with messages on Telegram. Attackers may also use other methods to send phishing links, for example, email.

For instance, perpetrators host fake “giveaways” for Telegram Premium subscriptions. Victims are lured into participating, and in a series of steps, they are directed to a phishing site where they are prompted to enter their Telegram account credentials, ultimately resulting in their account being compromised.

Another machination involves cybercriminals sending victims an invitation to download a ZIP archive that claims to contain a version of the messenger service with a “Premium” subscription. The download link redirects users to a phishing page where they are once again asked to log in to Telegram.

Yet another fraud involves distributing malicious software disguised as an alternative version of the Telegram app with a “built-in” Premium subscription. Scammers send victims links to download APK files claiming they are modified versions of the app, but they turn out to be malware.

“Phishing schemes capitalising on the Telegram Premium topic has been observed in several languages, suggesting that the perpetrators operate globally. Even if these scams haven’t yet reached a specific region, there is a probability they could eventually make their way there.

Therefore, it’s always important to remain cautious and skeptical of offers that seem too good to be true. Additionally, make sure your Telegram security and privacy settings are up to date, and your device has a robust security solution,” advises Olga Svistunova, security expert at Kaspersky.


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FG to Add Iris Biometrics to Digital ID for more Inclusion

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National Identity Management Commission of Nigeria (NIMC) has said that it is looking at ways of streamlining and expanding the rollout of digital ID in Nigeria and one of the options on the table is adding iris biometrics to its digital ID enrollment.

FG to Add Iris Biometrics to Digital ID for more Inclusion

Iris biometrics is a biometric authentication technology that uses the unique patterns of the iris to identify a person

The hint was dropped recently by Abisoye Coker-Odusote, director general and chief executive officer, NIMC, during a Digital Public Infrastructure (DPI) Journalism Fellowship training which took place in Abuja.

Speaking through a representative, the NIMC boss said this idea is among a litany of innovations which they are planning to introduce to the digital ID system in order to make it more inclusive, The Sun reports.

At the moment, biometric enrollment for the National Identification Number (NIN) in Nigeria involves face and fingerprints.

Adding the iris modality, according to the official, will make it possible for citizens with disabilities to be equally issued the important credential which is necessary to access a wide range of services in the country.

“We are exploring the use of iris recognition technology to cater to the specific needs of individuals with disabilities,” the representative was quoted as saying. Uganda is one other African country which has announced the addition of iris biometrics to its new generation biometric national ID card.

The NIMC CEO said despite the challenges the ID authority faces, its commitment to build an inclusive ID system and expand coverage remain unwavering.

She emphasized the important of the NIN as an essential tool in getting access to several services.

In order to streamline access to services, Odusote said they have been working tirelessly with their partners to enhance interoperability among government agencies to facilitate identity verification.

This, she says, will save Nigerians the stress of having to register many times with government agencies to obtain services.

The innovations envisaged by the NIMC are part of a broader reforms plan which aims to give the ID authority a new legislative framework for more efficient identity management.

It also comes at a time when the World Bank has extended its support for the country’s digital ID program by another two years, with a target to issue 180 million digital IDs by the close of the extension.

The Nigeria ID4D has pledged in the past to create the enabling environment to the issuance of NINs to persons living with disabilities.

A recent investigative report however suggests that many aged and physically challenged citizens in Nigeria go through tough times seeking the NIN.

Some have reportedly had their SIM cards blocked while others have been locked out of their bank accounts for their inability to register for a digital ID.

 

 

 

 

 

 


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Kaspersky Reviews Main Business Headache Related to IT Security

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According to the recent Kaspersky IT Security Economics report, the majority of companies surveyed globally find the loss of productivity, securing complex tech environments, and enabling data protection to be the most concerning business issues, driven by growing IT security needs and requirements.

The Kaspersky IT Security Economics report is released every year to analyse the changes in budgets, breaches and business challenges affecting IT Security decision makers.

This report is compiled from interviews with IT and IT security professionals from organisations of different sizes and industries. The survey was carried out in 27 countries across Europe, the Asia-Pacific region, Latin America, North America, the Middle East, Turkiye and the Africa (META) region, including in Egypt, KSA, Pakistan, South Africa, Turkiye, UAE.

According to the report, downtime and lost productivity are the most concerning business problems caused by ineffective IT security, an opinion expressed by 38% of companies globally and 34% in the META region. They encounter this problem mainly because of the long-time taken to detect and remediate threats.

Data protection is another important concern that was expressed by 33% of companies globally and 34% in the META region.

Respondents were worried about this because they regularly encountered the physical loss of devices by employees and experienced leakage of data from corporate systems caused by both external and internal reasons.

Securing complex technology environments and ensuring data connectivity were also on the list of key concerns, according to 33% of respondents globally and 26% in the META region.

Among the main IT issues that cause this challenge, respondents pointed to the rising number of incidents involving non-computing connected devices and incorrect operations of cybersecurity solutions that leave systems exposed.

Additionally, difficulties in managing security across different computing platforms play a crucial role in their inability to build a reliable all-encompassing cybersecurity system.

“It is crucial for organisations to safeguard every aspect of their operations from potential breaches. Attackers no longer solely rely on zero-day exploits, as a simple click on a malicious link or a vulnerability in a contractor’s infrastructure can lead to devastating consequences.

“This underscores the idea that information security should be based on a comprehensive and systematic approach, rather than being limited to the implementation of individual point-specific measures,” comments Alexey Vovk, Information Security Director at Kaspersky.


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