As international trade dynamics continue to threaten the future of fossil fuels in Europe and America, an economic research company has advised Nigeria to sell and position itself to continental Asia that is heavily dependent on Gulf petroleum supplies which currently experience vulnerabilities.
“India and China are now two of Nigeria’s most important and dynamic trading partners. India for exports and China for imports, and there is sufficient room for growth in these relationships”, SB Morgen said in a report titled: “Economic disruption – How the energy revolution will affect Nigeria”.
“In a competitive energy market, Nigeria cannot merely afford to sell its petroleum, and leave it at that. Other players like the Saudis are working hard to lock themselves in the Indian market, and while the visit of Saudi Arabia’s crown prince, Muhammad bin Salman to India in February this year was of critical importance, Nigeria did not seem to notice, and appears to lack a strategy to take advantage of vulnerabilities in the Gulf to sell itself to an Asia that is heavily dependent on Gulf petroleum supplies”, the report further said..
The report notes that climate change concerns are also poised to severely disrupt the petroleum-based economies of the world as activists push for more focus on renewable energy sources.
Citing recent electoral victories of renewable and green energy paries in Europe, the firm said climate change was popular among the millennials who are rising in economic prominence.
“European and American automakers are now investing heavily in the development of mass-produced electric cars. China, driven by air pollution concerns, is also making large investments in renewable energy”, it said.
While lamenting that the Nigeria’s elite has grown rich on trade in a single commodity despite the oft-stated rhetoric on diversification, the report said the federal government of Nigeria remains addicted to crude oil revenues, and rather than innovate or truly revolutionise its economic base, the political elite only seems capable of focusing on areas in which some small amounts are already demonstrably available and then increasing taxes in those areas.
It would be safe to say, therefore, that Nigeria’s political elite is quite incapable of adjusting to a major disruption in the market for crude oil such as a sudden breakthrough in renewable energy production. What this means is that Nigeria has a fiscal crisis and an internal political architecture that is not optimised to generate enough revenue to make up for the shortfall in exports of that sole commodity.
“ Indeed, the collapse in crude oil prices spurred by shale oil drove the country into a sudden recession, and led to a massive spike in borrowing. The debt profile of Nigeria has doubled in the past four years and there is no apparent end in sight. Meanwhile, there are no major infrastructure or economic investments to show for all the borrowed sums, meaning the debts will be that much harder to repay.