Nigeria could slip back into recession if the current market dynamics negatively affects the price of crude oil. This warning was handed down by the Nigeria Natural Resource Charter (NNRC) blaming the gloomy outlook on the depletion of the country’s Excess Crude Account (ECA), which is supposed to serve as a cushion in lean times.

According to NNRC, a nonprofit policy institute that promotes the effective management of natural resources for public good, Nigeria currently appears not to have a buffer or stabilisation fund to help her through the rainy days if oil prices suddenly drop as the ECA stands at a miserly $183 million.

Issuing the warning in a recent statement, Programme Coordinator of NNRC, Tengi George-Ikoli, said: “A little dip in oil prices is all that is required to transition us back into a recession. With savings in our Excess Crude Account of $183 million as reported by the Director, Funds in the Office of the Accountant General of the Federation, Mohammed Usman, Nigeria has no ‘rainy day’ fund to stabilise her economy when; and it is ‘when’ and not ‘if’ the monsoon hits.

“Nigeria must therefore, use all her natural resources to develop other sectors of her economy such that her revenue base is independent of cyclical nature and fluctuations associated with commodities like crude oil.”

George-Ikoli noted that it is necessary for Nigeria to consider the situation in Venezuela which has one of the world’s largest oil reserves, and push for reforms in the industry which could unlock her enormous natural gas potential.

“Let’s not only have the best jollof rice in Africa, let’s be the ‘best’, in reality. Let’s drag those 187 million estimated poor Nigerian’s out of poverty. Countries like the United Arab Emirates have reduced their dependence on crude oil such that its services sector is so developed, that it has become a top holiday destination where many Nigeria’s are seen to visit.

“Qatar has moved from being an oil producing nation to a gas producing nation, focusing more on harnessing its huge natural gas resources to produce renewable energy and also building the world largest natural gas hub. It even left the Organisation of Petroleum Exporting Countries (OPEC),” she said.

According to George-Ikoli, Shell, ExxonMobil, Chevron, Total, British Petroleum (BP) and Eni have embraced alternative energy resources at Silicon Valley by backing energy-technology start-ups to signal that they are, “casting around for a new strategy outside oil”.

“The biggest investor-owned oil companies are putting their money into ventures probing the edge of energy technologies. The investments will go beyond wind and solar power into projects that improve electricity grids and brew new fuels from renewable resources. They are poised for the inevitable transition. Are we?” George-Ikoli asked. She highlighted that if the Nigerian government embarked in the much needed reforms in the sector, it will create a well-functioning energy sector which will bring a wider range of resources and technologies into play, providing some of the capital and know-how that can support more diversified growth. The reform process will be complex and challenging, but change in the energy sector is a prerequisite for the development of more productive, innovative and sustainable economies.

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