Economic shock and uncertainty are the two most unfavourable economic phenomena that have greatly bedeviled the Nigerian economy in recent years. Nigeria has, indeed, seen it all; and the awfully discomforting economic experience has not been palatable to the generality of the citizenry. The diverse afflictions from these economic impacts that had suddenly and unexpectedly come with unbearable hardship, hunger, and high inflation, among other variables like unemployment and very slow GDP growth rate, were all pointing at a single source in the nation’s oil and gas sector. This was clearly identified when the pronouncement on “fuel subsidy removal” was made. It has been analysed as an action taken without proactive preparation, including properly planned measures and buffers to absorb any impending impact and other possible macroeconomic consequences.
Those consequences suddenly manifested with all kinds of uncertainties in the system. These ranged from economic conditions whose future could not have been predicted, to not envisaging uncontrollable appearances, ab initio. Such chaotic economic conditions made it difficult for decisions to be taken on virtually most businesses, by entrepreneurs, the affected individuals, as well as the already overwhelmed government.
However, the impact off the initial confusion in the economy, cataloged as growing poverty in the land, the age-long visible underdevelopment within the system, the pronounced manifestation of food insecurity that resulted from the growing farmers’ protection phobia based on recorded cases of social injustice about those that had lost their precious lives to assailants and bandits in their own farmlands, and the generally perceived unfriendly style in governance, was aggressively brought to a controllable position eventually, by the government’s finance team through certain fiscal disciplinary measures and economic reforms. Those fiscal measures recently started strengthening and stabilising economic growth in the system, as evidenced by the decline in inflation, reasonably stabilised exchange rate, and the noticeable current increase in foreign reserves. Another important aspect of the fiscal measures is a strategy to improve on the debt to productivity growth ratio metrics.
The country’s external loans’ servicing speed (how slow or fast the economy pays off her debts) portrays the financial strength of all the captured domestic economic activities that go on in the system, which further determines its capability based on her productivity profile/GDP rate. This runs alongside the debt to revenue ratio indices for the economy; sending a direct signal on how healthy the economic performance is faring.
In the case of looking at the current scheme of things in the economy, the energy sector appears where there are opportunities to fast track growth, vis-a-viz the economic activities in the energy market with the enormous opportunities (where demand far outweighs supplies) in developing and growing the energy market for power supply in the economy. The seemingly energy insecurity in the economy is not caused by non availability of the capital stock but by a very poor productivity profile in the entire energy mix portfolio (the renewable energy sources and the cleaner energy substrates that are sourced from fossil fuels). It is therefore, on this premise that investors are persuaded to establish shops in the nation’s power market, where the returns on investments are very attractive with high earning probability in the obviously observed virgin energy market. Looking at the gas value chain with the abundant natural gas reserves for production of the compressed natural gas (CNG) and the liquefied petroleum gas (LPG), the market is vast and very attractive for prospective investors. In the same vein, the renewable energy products that are sourced from biomass, wind, hydropower and the solar, are also very attractive in the energy market, considering the abundance of their sources within the economy (although the hydropower particularly appears to be tidal with low and high seasonal records within the year).
Energy investments in a huge market like Nigeria demands government’s extra push and focus, especially on the abundant opportunities it offers for rapid economic growth, in marketing and promoting the energy sector, as a low hanging fruit to compliment the efforts being made by the finance team through economic reforms, towards achieving unprecedented and great macroeconomic performances for the nation’s rapid recovery, growth and development.
The huge capital stock of non-renewable energies (surplus natural gas reserves within the economy) is a great plus for the country to aggressively exploit before the global energy transition programmes and the battle to mitigate climate change (the impact of global warming) completely tightens its noose, globally. Now is the great opportunity the nation could exploit to greatly improve the economy through production and absolute utilization of the nation’s natural gas reserves.
