Home News The economic danger signals are here, let us act now

The economic danger signals are here, let us act now

by Business News Report

Occupy Nigeria was a novel experience in Nigeria. It has come and gone but the memory will linger in the minds of Nigerians for a long time to come. It has opened the eyes of those governing and the governed to a lot. A clear message was passed to Nigeria leaders that it is no longer business as usual. Those in power now know that the people can hold them accountable. From the federal to the local government, people now know they can collectively call leaders to account for their stewardship.

Equally, Nigerians demanding for government functionaries to account for their actions and inactions must also come to terms with the fact that they owe the nation some responsibility. The Nigeria state also has the right to ask its citizenry to show some level of responsibility. The government will soon begin to demand for Nigerians to pay appropriate taxes. Occupy Nigeria was made possible because every Nigerian felt the pain of the increase in the pump price of petrol. If it was not the direct pain, the action of government would have passed as one of those things.
This has been so Nigerians have lived on rents from the resources called oil for a long time. Look at what is happening around the world, Nigerians are endangered species. Oil which is the mainstay of the economy is in jeopardy globally. The Americans have vowed to find an alternative to this depleting resource. Many researches are going on to replace oil as the engine of western technology. The Obama administration has committed huge resources to this. It is not that there is no alternative to oil as such but those available are not price-competitive.

Already, research into electric cars is on and some have been tested and very soon, electric cars will come on stream. As soon as they are commercially viable and their uses are price competitive with the use of fossil fuel, the demand for crude will plunge. This will take a toll on the resources coming to oil-exporting countries like Nigeria. Those who gathered at the Ojota Liberation Park had just the pains of the subsidy removal as their focus; beyond the pain is the economic future of all Nigerians.

Besides, bio-fuel has long been discovered but the choice of using product meant for feeding the ever growing population of the world has set the limit for its commercial usage. But soon who knows when it will add to the ever increasing alternative to petrol. It may be the very first. These are taking away the market for fossil fuel.
What the Occupy Nigeria did not also note is the fact that more oil is being discovered across the globe where crude was not found before. In places like Ghana, Gabon, Guinea, Congo and many others, crude oil has been found in commercial quantity. As more oil is being found, the supply is for the same market, very soon, there may be a market glut for crude and the price of the commodity will respond to economic law of demand and supply. Where supply outstrips demand, price will fall. The implication of this is that countries producing crude who are not members of the OPEC cartel will want to flood the market with their oil output as there is no restriction on them as to the volume they can produce for the market. If this happens in the near future and the Nigerian economy remains as it is today, Occupy Nigeria will be a child’s play as resources available to the country will be so lean that the Buhari import licensing regime will not save the country.

Already, the World Bank has warned that developing countries should brace up for a growth slowdown stemming partly from Europe’s debt woes, as it sharply scaled back its estimates for expansion. “Europe appears to have entered recession, and growth in several major developing countries (Brazil, India and to a lesser extent, Russia, South Africa and Turkey) has slowed. What this means is that demand for crude will plunge in the coming years and the amount of resources coming into the country will drop considerably, then it will be difficult for the government in power at that time to make any adjustment.
The World Bank has predicted that the global economy will expand by only 2.5 per cent in 2012 and by 3.1 per cent in 2013, well behind the 3.6 per cent growth for each year that the bank had projected in June. Developing countries’ economies will continue to outpace those of richer, developed countries. But the World Bank also lowered its forecasts for growth in these countries to 5.4 per cent in 2012 and 6 per cent in 2013.

That was down from previous estimates of 6.2 per cent and 6.3 per cent respectively for growth in developing countries. “The downturn in Europe and weaker growth in developing countries raises the risk that the two developments reinforce each other, resulting in an even weaker outcome,” it said. It also cited failure so far to resolve high debts and deficits in Japan and the United States and slow growth in other high-income countries, and cautioned those could trigger sudden shocks. Again, political tensions in the Middle East and North Africa could disrupt oil supplies and add another blow to global prospects.

The World Bank pointed out that since last August, risk aversion to Europe has shot up and “changed the game” for developing countries that have seen borrowing costs escalate sharply coupled with decrease in capital flow. “No country and no region will escape the consequences of a serious downturn,” the World Bank said. Nigerians, let us all learn and plan for the future before it is too late.

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