A renowned businessman and CEO of Ittihad Energy, Abdulhafiz Umar Barau, has said that oil price volatility is a significant challenge faced by Nigeria’s economy, which heavily relies on its oil and gas sector for revenue. As the country’s largest oil producer in Africa and one of the world’s top exporters of crude oil.
The Diaspora businessman however said that the volatility of oil prices on the international market has had a significant impact on Nigeria’s economy and its oil and gas sector.
“The oil and gas sector accounts for over 90% of Nigeria’s export revenue and 60% of the government’s revenue.
Barau reiterated that the volatility of oil prices has resulted in fluctuations in the country’s revenue, leading to budget deficits and a reliance on foreign loans to finance government expenditures.
Speaking further, the Ittihad Energy CEO said, “The impact of oil price volatility on Nigeria’s economy is further compounded by the lack of investment in downstream industries. The country’s oil and gas sector mainly focuses on upstream activities, such as exploration and production, with little investment in the refining and petrochemical industries.
“This results in Nigeria exporting crude oil and importing refined petroleum products, leading to a loss of revenue and a dependence on foreign countries.
“The current oil benchmark can potentially boost Nigeria’s economy in several ways. Firstly, if global oil prices remain high, Nigeria, a major oil-producing country, can benefit from increased revenues from oil exports.
“The government can then use this additional revenue to invest in infrastructure development, social welfare programmes, and other initiatives to stimulate economic growth.
He added, “Higher oil prices can lead to increased foreign exchange earnings for Nigeria, which can help stabilize the country’s currency and improve its balance of payments. This, in turn, can attract foreign investment and boost confidence in Nigeria’s economy.
“Furthermore, the increased revenue from oil exports can be used to diversify the economy away from its heavy reliance on oil by investing in other sectors such as agriculture, manufacturing, and technology.
Barau said that diversification can help create more sustainable and inclusive economic growth, reducing the country’s vulnerability to fluctuations in global oil prices.
“Overall, a strong performance in the oil market can provide Nigeria with the resources needed to address various economic challenges and drive sustainable development across the country.