Dwindling oil revenues? Diversification, CSOs Cry.

There is no doubt that petroleum (crude oil) has contributed substantially to Nigerian revenue since its discovery in 1956 and more especially, since 1970 when its price was on the upward trend. However, it is a known fact across the globe that for a country to attain growth and development, its economy has to be diversified. 

Diversification does not occur in a vacuum. Mono-economy needs to give way to the productive development of various sectors of the economy. Following the supply and demand limitation of major importers from the country, which brought about the fall in the price of oil by more than 40% since June 2014 when it was $115 a barrel, which now is below $70, after five years of stability, it is a well-known fact that Nigeria's continuous large earnings or revenue from this sector will be impossible. As a matter of fact, there is an urgent need for the Nigerian government to begin looking into diversification of various sectors of the economy so as to attain solid economic growth.

For President Buhari, forming the cabinet is the easy part for obvious reasons. Getting the economy up and running again won't be a child's play. According to Teriba, the problems he inherited from the past administration is quite intimidating. Among the tests he'll face is the matter of the 2016 budget, whose presentation to parliament is already running late. Crude oil theft and the fuel subsidy trouble, with the fraud associated with it, will be crying out for attention, not to mention the destructive insurgency in the North-East. Government will need to find alternative sources of income to make up for dwindling oil revenues.

Civil society organisations (CSOs) in Nigeria had an unusual meeting in Abuja on October 29. They didn't gather to demand social justice or political reforms. The agitation was over the deplorable state of the economy. Led by Clem Nwankwo of the Policy and Legal Advocacy Centre, the group decried the "steady and continuous decline of the Nigerian economy" since President Muhamadu Buhari reported for duty on May 29. Should we be concerned?

Truth be told, the economic indicators are not looking too good. The Nigerian Stock Exchange's All-Share Index is down 15 percent since the inauguration of the new administration on May 29. In other words, investors have lost about one trillion naira or $5 billion as share prices continue to fall. The naira has also been officially devalued by more than 20 percent against the US dollar in the past year. The National Bureau of Statistics put the gross domestic product in the second quarter of this year at 2.4 percent, down 1.6 percent from 4.2 percent in the same period a year ago. To put this in perspective, GDP averaged about 7 percent annually for almost a decade before the downturn set in this year. The country's foreign exchange reserves have dropped 30 percent since last year to $30 billion, according to data obtained from the Central Bank of Nigeria. It may well be harsh to blame President Buhari for the state of the economy. He took over at a time of falling prices of crude oil - the country's top revenue earner and main export product.