Nigeria running out of foreign exchange amid oil price collapse —Ex-US ambassador, Campbell

THE fall in international oil prices is having a devastating impact on Nigeria’s formal economy, a former United States Ambassador to Nigeria, Mr John Campbell, has said.

Campbell, in a blog posted on the website of the Council on Foreign Relations (CFR), a United States think tank with specialisation in foreign policy and international affairs, stated that the oil price drop, which was made worse by the economic consequences of the coronavirus pandemic, was caused by a price war between Saudi Arabia and Russia.

According to him, oil provides more than 60 percent of the revenue of the Nigerian government and sales, which are denominated in US dollars, account for more than 90 percent of the country’s foreign exchange.

Campbell said: “The oil price drop, while made worse by the economic consequences of the coronavirus pandemic, began thanks to a price war between Saudi Arabia and Russia. Oil closed at about $60 per barrel in December 2019, but has since fallen. It plunged to about $18 per barrel in April, and recovered in May to about $25 per barrel.

“Even with the recovery, the Nigerian government’s revenue, and its access to US dollars through oil exports, is less than half of what it was at the start of the year.

“The governor of the central bank, Godwin Emefiele, says that foreign exchange (mostly US dollars) must be devoted to “strategic imports. That would include medical supplies made necessary by the coronavirus.

“He also says that there will be an ‘orderly process’ by which foreign investors will be able to repatriate their funds. But for now, they must be ‘patient’.

“The Manufacturers Association of Nigeria estimates that the backlog of unmet US dollar demand in Nigeria is $1 billion. Without access to dollars, manufacturers cannot import the raw materials or components they need.

“Driven in part by the need for dollars, the government devalued the Nigerian currency, the naira, to 360 to the US dollar, down from 306. That, apparently, was not enough. As of May 12, the naira is traded at 445 to the dollar on the street, and the one-year forward trading rate is 514 to the dollar, which means traders expect the exchange rate to fall even further.

“The Lagos stock exchange index is down about 12 percent since the start of the year. Because it is denominated in naira, and the naira has been devalued, the loss in value is even greater in terms of international currency. There are anecdotes (impossible to quantify) that rich Nigerians are getting out of the market and doing what they can to shelter their assets abroad—an old song in times of instability, whether economic or political.

“The picture is bleak for the formal economy made up of the small middle class and the oligarchs. With its direct and indirect overreliance on oil, this part of the economy is fragile. But it is estimated that 65 percent of Nigerian GDP is produced by the informal sector.

“Further, another rough estimate is that half of the population continues to be rural. Hence, together with the fact that government has little or no role in the lives of most Nigerians, it is likely that most Nigerians are not significantly directly impacted by oil prices, government revenue, stock indices, and foreign exchange shortages; the ongoing breakdown in security in many parts of the country is likely to be of greater concern.

“Farmers, fishermen, and petty traders will continue to farm, fish, and trade, providing a resilience that outsiders may underestimate. Still, amid the coronavirus pandemic, the ability of the government to provide supplies to medical workers and economic relief to those out of work because of lockdowns may well begin to be felt in the informal sector.”





Buy and read digital replicas of your TRIBUNE titles by subscribing through E-VENDING


COVID-19: We Don’t Know Whereabouts Of Chinese Doctors ― PTF • Don’t ask me where they are ― Health Minister
The Presidential Task Force (PTF) on COVID-19, on Thursday, said that it is not aware of the whereabouts of the Chinese doctors and health professionals who were brought to Nigeria some weeks ago to help the country in its fight against the COVID-19 pandemic… Read full story

Amid Uproar, Lagos Backtracks, Says Dubai Returnee Didn’t Die Of COVID-19
Lagos State government on Thursday night retracted its earlier claim that one of the returnees from Dubai, died of COVID-19. Other returnees, quarantined at an isolation centre in Lekki, had protested in a viral video clip, disproving the earlier official position… Read full story

No Conclusion Yet On ‘Strange’ Deaths In Kano
The Federal Government says there are no conclusions yet with regard to ‘strange’ deaths in Kano State. The Minister for Health, Dr Osagie Ehanire, disclosed this on Thursday in Abuja at the daily briefing of the Presidential Task Force (PTF) on COVID-19… Read full story

FG To Present Revised 2020 Budget Next Week •As Reps uncover documents on illegal virement of MDAs funds to finance COVID-19
Barring last minutes changes, the Federal Government (FG) is expected to formally present the revised 2020 Appropriation bill of N10.58 trillion to the National Assembly. The Minister of Finance, Budget and National Planning, Zainab Ahmed, who disclosed this during high-level meeting held behind closed… Read full story

COVID-19: PTF Warns Against Using Bleach, Ethanol As Cure
The Presidential Task Force (PTF) on COVID-19, on Thursday, warned Nigerians against the use of bleach or ethanol as cure for COVID-19, saying that its usage can result in death. Besides, the PTF also cautioned Nigerians to stop the stigmatisation of people with COVID-19 infection once they recover from it… Read full story

COVID-19 Care Now Available For All Who Need It ― PTF
The Presidential Task Force (PTF) on COVID-19 pandemic on Thursday assured that Nigeria’s testing strategy is yielding results, asserting that the country can now give care to any patient who needs it. Chairman of the task force and Secretary to Government of the Federation (SGF), Mr Boss Mustapha… Read full story

Buhari Makes Plans For Post-COVID-19 Nigeria
The presidency on Thursday outlined its plans to move the country forward after it exits the present COVID-19 pandemic, highlighting actions in the areas of the economy, healthcare, jobs creation, among others. A statement issued by Femi Adesina, Special Adviser to the President (Media and Publicity) in Abuja noted… Read full story

Nigeria Didn’t Ask For Madagascar COVID Solution, The Country Sent Them To Us, Says PTF
The Presidential Task Force of the control of the COVID-19 pandemic has disowned the Madagascar Covid organic solution, which had been reported to have been requested by the Federal Government to fight the virus. Chairman of the task force and Secretary to the Government of the Federation (SGF), Mr. Boss… Read full story

Why Canada Denies Air Peace Right To Evacuate Stranded Nigerians–Onyeama
Minister of Foreign Affairs, Mr Geoffrey Onyeama’s move to patronise local carriers for the evacuation of Nigerians abroad has suffered a setback. The Canadian government had denied a local airline, Air Peace, landing right to evacuate Nigerian citizens in Ottawa on the ground that it has no license to… Read full story

COVID-19: Pandemic Offers Chance To Reset Critical Sectors ― Osinbajo
Vice President Yemi Osinbajo has observed that even though the Coronavirus (COVID-19) pandemic has affected lives and livelihoods of Nigerians in different ways, it, however, offers an opportunity for the Nigerian people and government to have a reset in critical sectors of the economy and social services… Read full story

13-Year-Old Girl, 23 Other Ladies Used For Prostitution Rescued In Lagos Hotel
The police in Lagos State have rescued 24 ladies including a 13-year-old who were trafficked to Lagos from Akwa Ibom State for prostitution. Four members of the syndicate that brought the girls, most of them from Oron in Akwa Ibom State, have also been arrested… Read full story

Shocking Story Of Man Who Found Out That His Twins Babies Have Two Fathers
A Chinese man is left stunned after finding out that his twin babies have two fathers, the Daily Mail of UK reported on Thursday. The man, who remains unidentified, made the shocking discovery after taking the new babies for a DNA test as part of the standard procedure to register their births in China, a DNA… Read full story

We Deregulated Downstream Oil Sector In March — Sylva
The Minister of State for Petroleum Resources, Chief Timipre Sylva says the downstream oil sector was deregulated on March 19, with the reduction in the pump price of the Premium Motor Spirit(PMS) also known as petrol. Sylva made the clarification at a ministerial briefing giving a scorecard of the… Read full story

EDITORIAL: Governments And The COVID-19 Billions
SINCE the Covid-19 global pandemic touched down in Nigeria in late February, there have been concerted efforts by the private and public sectors to mobilise resources to contain its spread. As early as March 26, the Coalition Against Covid-19 (CACOVID) emerged to mobilise private sector leadership… Read full story

You might also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More