Economic Recession: Paradigm Shift As a Remedial Mechanism

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Carl Umegboro reasons that the government should put actions in place to suspend its export of crude and work towards a diversion to export of crude finished and by-products

Nigeria’s economic downturn is no longer strange with many economic activities grounded and unprecedented job losses in banks, multinationals and other key sectors. To combat the predicament, the federal government since inception of President MuhammaduBuhari’s administration prioritized anti-corruption and diversification of the economy to agriculture and mines. No doubt, the actions are long overdue; however, a paradigm shift from export of crude oil to that of its by-products and finished products as preliminary policy against the anomaly is indomitable. The reason is not far-fetched; the global crash in the price of crude oil did not affect the prices of its by-products and finished products.

From OPEC’s chart on Thursday 8th September, 2016, daily basket price of crude stood at $44.61 a barrel against a benchmark grudgingly proposed by the Nigerian government. Deductively, since the price of crude oil, the nation’s major source of revenue crashed and remains on decline, meanwhile the country is endowed with crude oil in huge magnitude, strategically, the focus should have been to divert to export of its by-products and finished products like petroleum, kerosene, naphtha, gasoline, diesel, asphalt base, heating oil and liquefied petroleum gas (LPG) by setting up refineries and processing-plants which apart from keeping the economy buoyant will overwhelmingly boost employment rather than the insufferable downsizing in all sectors and even absolute winding up of multinationals who couldn’t cope with the adverse condition. Government’s directive mandating banks to shun retrenchment of workers amidst economic crisis but overlooked cutting down expenditures especially remunerations of the legislators and executive excesses, particularly Presidential-Air-Fleets is awkward. Besides, employers only maintain a workforce vis-à-vis resources at its disposal.

Imperatively, the colossal element; imbalance of trade has not been measured. To continue to export crude-oil which the country solely depends on at low prices only to import on high demand, its finished and by-products at exorbitant prices is illogical and a gaffe, and naturally will lead to economic depression in any country, even if a developed nation. Interestingly, despite the global crash on crude, all its by-products and finished products have remained vendible with stable rise in prices. This ought to invoke a state of emergency on oil sector to fix the existing refineries and set up new ones across the nation, and above all, a comparative advantage since the country has crude oil; the major raw materials it needed.

The present hullabaloo in the midst of plenty is uncalled for. Admitted, the previous administrations failed woefully in taking sensible actions in the midst of plenty, nevertheless, the change mantra should imply the present administration taking the bull by the horns by doing things rightly and differently for desirable results.

On meeting the refineries mostly in coma and inadequate, the rightful action prior to diversification or perhaps alongside ought to be diverting to export of crude oil-finished and by-products. Conclusively, government should straightaway put actions in place to suspend its export of crude and work towards a diversion to export of crude finished and by-products. If not, the continued exportation of crude at this agonizing state is wasteful and devoid of economic know-how and foresightedness. The present challenges should generate sustainable opportunities instead of more calamities or the blame mantra going on. To solely diversify the economy to agriculture and others but persistent export of our crude oil at pitiable prices is not far from what the previous administrations did, hence untenable, inefficient and may remain counter-productive.