A former Governor of Anambra State, Mr. Peter Obi has said that the ongoing efforts by the federal government to attract foreign investments are being hampered by Nigeriaâ€™s low reserves, saying that the $30 billion reserves is a disincentive to foreign investors.
Obi has also argued that Nigeria plunged into recession as a result of her failure to save oil revenue like other oil-dependent economies, adding that Nigeria was the only country that depends on extractive industries that failed to save during the period of boom.
The former governor, who delivered a thought-provoking speech on â€œChanges in Global Oil Price and Impact on Nigerian Economy â€“ Lessons from the Recessionâ€ at the 35th international conference of the Nigerian Association of Petroleum Explorationists (NAPE), which was held in Lagos recently, said Nigeria had the lowest reserves and GDP among the MINT countries- Mexico, Indonesia, Nigeria and Turkey.
According to him, Mexico with a population of about 130 million has a GDP of 1.3 trillion; Indonesia has a GDP of one trillion and reserves of $102 billion; while Turkey, with a population of 80 million and GDP of 800 million, has reserves of over $100 billion.
Obi noted that Nigeria with a population of over 170 million, has GDP of 400 million and reserves of only $30 billion.
The former governor argued that crude oil remains the major driver of the economy, stressing that oil was also responsible for the recent economic recession, even though oil accounts for only 10 per cent of the countryâ€™s GDP.
He supported his position with statistics, which reveals that the recession started in the first quarter of 2016 when oil sector GDP dropped 4.8 per cent, while the non-oil sector dropped by only 0.8 per cent, with the countryâ€™s overall GDP slumping by 0.67 per cent.
According to him, the recession worsened in the second quarter of 2016 as the oil sector GDP dropped by 11 per cent when the non-oil sector GDP and the countryâ€™s overall GDP dropped by 0.38 per cent and 1.67 per cent, respectively.
In the third quarter of 2016, Obi pointed out that the recession was deepest as oil sector GDP dropped by a whopping 23 per cent even though the non-oil sector GDP was positive.
To further demonstrate the impact of the oil sector on the countryâ€™s economy, Obi said the country started coming out of the recession in the second quarter of 2017 when the oil sector GDP became positive by 3.5 per cent, with overall GDP rising by 0.72 per cent.
In the third quarter of 2017, Obi said the oil sector GDP rose by 25 per cent, pushing the overall GDP further positive by 1.4 per cent, even though the non-oil sector was still negative.
â€œThat shows the impact of oil economy on the overall GDP of Nigeria,â€ he added.
â€œToday, we are coming out of the recession but I can tell you that it is still very fragile. You still have the debts increasing at both national and sub-national at a level that is unsustainable. Our debt-revenue ratio today is about 60 per cent and is still going up. States are borrowing as if there is no tomorrow; Federal is doing the same thing and it is a crisis,â€ Obi said.
He said the countryâ€™s low reserves, which resulted from the federal governmentâ€™s refusal to save, discourages investors.
â€œThe minister (Dr. Kayode Fayemi) was talking about getting investors to come in. You cannot get people to come into this country today with the reserves that we have,â€ Obi added.