A Director of Research and Chief Economist, at Nigeria Economic Summit Group (NESG), Dr. Olusegun Omisakin has said that Nigeria must optimize its crude oil production capacity as well as other natural resources if the country intends to get better economically.
He gave this recommendation on Saturday during the Nairametrics Quarterly Macro-Economic Outlook webinar.
The event tagged “Renewed Hope or Reality Check? Identifying Opportunities in a Volatile Economy,” drew government and private sector experts to brainstorm on the economic landscape and performance of President Bola Tinubu’s administration since he assumed office.
Policies and Nigeria’s economic realities
His comments came after the Organisation of Petroleum Exporting Countries (OPEC) monthly oil market report for June 2024 showed that Nigeria’s average daily crude oil production in the month of June rose marginally to 1.276 million barrels.
The Nigerian economy is largely hinged on its oil revenue, at least, for now.
Omisakin said while the current administration has made some gains in the last one year, opportunities abound that can be explored by the government to turn around current economic volatilities for the benefit of the Nigerians.
He acknowledged that the current government has a better policy environment and clarity than the previous administration, but advised that long-term policies should be considered in other to address core economic issues in the country.
One of the issues he advised the government to address is the low productivity of key sectors in the economy particularly the mining, oil and gas sectors.
According to him, unless natural resources production and transactions are optimized, Nigeria may not make a headway as a nation.
What he said,
“These sectors are dragging the Nigerian economy and it doesn’t matter what type of policy you are introducing, at best, you would achieve the short-term impact but in the long-term, we need serious conversations around these sectors and one of them is oil and gas, mining.
“We are barely touching what we have, you know, for some years now and currently, we are doing below 2 million barrel production per day. We cannot continue to dream of a better country when we don’t know how to optimise our national resources.
“We are just talking about production, we are not even talking about value addition and other petrochemical industrialization along that sector. So I think we need to be very objective. We need to do more than what we are doing.”
He added that one of the challenges facing the Nigerian economy is that several sectors of the economy have a low capacity to create jobs and a low job elasticity rate, meaning the Nigerian economy will continue to grow but on a jobless scale leading to huge unemployment and negative impact on social conditions.
“Most of the sectors that are contributing to our growth cannot create jobs, they don’t have that capacity.
“To move the country from where we are now, we just need to have a more sincere and deep outlook into how the economy itself is structured and how prepared are we in terms of our productivity capacity, ” he said.
He acknowledged the various policy interventions of government at all levels but stressed the need for the combination of long-term and short-term reforms aimed at addressing structural issues across all sectors.
He advised that core structural issues like low production and job creation should be addressed so that whatever policy implementation the government is taking, will have a positive impact on the life of people.
More insights
The 1.27 million barrels average crude oil production in June means that for the first half of 2024, Nigeria has consistently failed to meet its OPEC production quota of 1.5 million barrels daily and its budget target of 1.78 million bpd
The consistent failure to meet the set production quota impedes the revenue mobilisation drive of the President Tinubu administration.
Two weeks ago, the Nigerian National Petroleum Company, Ltd CEO, Mele Kyari declared war against the challenges affecting the country’s crude oil production and further called for collaboration between stakeholders in the oil and gas industry in the fight.
He stated that a detailed analysis of assets revealed Nigeria can produce two million barrels of crude oil per day without deploying new rigs, but the major impediment is the industry’s inability to act promptly.
He added that the “war” will help NNPC Ltd. and its partners swiftly remove all identified obstacles to effective and efficient production, such as delays in procurement processes, which have become a significant challenge in the industry.
