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General News

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

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Austin Okere
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By Austin Okere

“Oil prices hit three-year high as gas crunch starts to affect crude market” was the screaming headline in the Financial Times of September 27, 2021, with a rider ‘Goldman Sachs lifts year-end Brent forecast to $90 a barrel on widening ‘supply-demand deficit’.

The surge in crude oil prices, surpassing $82 a barrel on October 11, 2021, presents Nigeria with another golden opportunity that should not be floundered. I wrote this article on April 20, 2016, after the colossal collapse in Oil prices below $37 a barrel – It is as relevant now as it was then – probably more crucial now given our dire circumstances.

The article is in two parts hereunder:

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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General News

FG Launches Virtual Privacy Academy

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The Nigerian government has launched the Virtual Privacy Academy, a new digital training platform designed to deepen data protection and privacy policies in the private and public sectors.

Dr. Bosun Tijani, Minister of Communications, Innovation, and Digital Economy, unveiled the initiative during the 8th annual conference of the Network of African Data Protection Authorities, which began yesterday in Abuja.

The three-day conference, titled “Balancing Innovation in Africa: Data Protection and Privacy in Emerging Technologies,” drew attendees from over 30 African countries, as well as Europe, Asia, the Middle East, and the United States.

Dr. Tijani emphasised that the academy is part of Nigeria’s strategy to capitalise on the benefits of the digital economy by providing actors with the tools they need to navigate hazardous data governance landscape.

According to Tijani, this project would provide Nigerians with the opportunity to gain practical skills in data protection.

Dr. Vincent Olatunji, National Commissioner of the Nigeria Data Protection Commission, highlighted Nigeria’s recent data governance milestones during his address.

He stated that the Commission had completed over 5,000 compliance assessments, opened 223 investigations, and assisted 12 organisations with rehabilitation.

Dr. Olatunji urged African countries who have yet to pass data protection laws to do so, emphasizing that “strong data protection frameworks are not barriers to innovation, but enablers of a resilient and inclusive digital economy.”


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General News

Afreximbank to Fund African Energy Bank with $19bn 

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The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said that the Afreximbank would invest $19 billion to fund the African Energy Bank.

He said the $19 billion would go a long way toward tackling and overcoming energy poverty, driving economic growth, and improving the lives of millions of people.

The minister disclosed this while speaking at the opening ceremony of the Nigerian Pavilion, hosted by the Petroleum Technology Association of Nigeria (PETAN), at the ongoing Offshore Technology Conference (OTC) in Houston, Texas, U.S with the theme “Africa’s Energy Renaissance: Leveraging Innovation and Natural Gas for Sustainable Development.”

He said that by pooling resources, African countries can invest in large-scale energy projects.

Also, the minister stressed the need for Africa to develop cohesive policies tailored to its unique circumstances, warning that fragmented approaches would be ineffective in addressing the escalating energy deficit.

“This conference is not a jamboree. It is a platform for Nigeria, and by extension, Africa — to showcase its vast potential,” Lokpobiri said.

He underscored the importance of regional collaboration, highlighting the Africa Petroleum Producers Organisation (APPO) as a strategic entity established to devise shared solutions for the continent’s energy challenges.

According to him, the prevailing global discourse on energy transition is largely influenced by geopolitical considerations.

In response to this challenge, he announced that APPO is in the process of establishing the African Energy Bank to bridge funding gaps and ultimately free the continent from energy poverty.

During a meeting with his Ghanaian counterpart, Lokpobiri advised Ghana to draw lessons from Nigeria’s past experiences in the energy sector, particularly in avoiding early missteps.

In his address, Ghana’s Minister of Energy and Green Transition, Mr John Abdullahi, acknowledged Nigeria’s leading role in the region.

He stated that while Ghana is a relatively new player in the oil and gas sector, it is eager to learn from Nigeria’s experiences and reforms, especially in the areas of local content development and climate policy.

“We will continue to consult Nigeria as we build a successful oil and gas industry. The collaboration between both countries remains strong. For his part, PETAN Chairman Wole Ogunsanya emphasised the significance of Nigeria’s presence at OTC.

He said: “This year’s event, under the Nigerian Pavilion, is set to highlight Africa’s growing role in the global energy sector.

“OTC 2025 promises to bring together top-tier industry leaders, policymakers, and stakeholders at the world’s largest energy event.”


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NIPOST Suspends Cash Transactions Nationwide

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Nigerian Postal Service (NIPOST) has declared July 1, 2025, as the deadline for phasing out cash transactions across all its offices nationwide.

NIPOST Suspends Cash Transactions Nationwide

This was disclosed in a statement issued on Monday by Frank Alao,  director of Corporate Communications,NIPOST.

The move is part of a broader reform initiative aimed at transforming NIPOST into a more innovative, efficient, and digitally driven organisation.

The management explained that the reforms are aligned with global best practices and tailored to meet the demands of Nigeria’s rapidly evolving digital economy, as well as the Renewed Hope Agenda of President Bola Ahmed Tinubu.

Alao stated, “We are assuring Nigerians of a revitalised NIPOST that delivers superior service and embraces the future.

“A major highlight of the reform package is the transition to a fully cashless system. Beginning July 1, 2025, all post office counters nationwide will no longer accept cash payments for their services. Customers will be required to use approved electronic channels for all transactions.

“This is a crucial step in our modernization journey, one that ensures safer, faster, and more transparent service delivery.”


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