The Nigeria Extractive Industries Transparency Initiative (NEITI) Monday advocated a policy shift that would see the Nigerian government embrace a series of buffers and revenue generation reforms that would fortify the economy against the ravages of the coronavirus crisis.
The bulk of Africa’s largest economy fiscal base is propped on oil receipts, which provides 90 per cent of government’s revenue and about 65 per cent of its export earnings.
At the release of its policy brief named “Insulating Nigeria from Perennial Oil Price Volatility” in Abuja on Monday, NEITI pushed for sustainable strategies that would shore the economy up against headwinds and vulnerabilities during times of cyclical oil price shocks.
“Price volatility is a constant feature of the oil market, exposing oil-dependent countries like Nigeria to regular economic crises when oil prices tumble.”
It noted that although price slumps had always been accompanied by severe pains that linger beyond the price crash, COVID-19 would eventually be tamed.
Read also: Fuel subsidy gulped N722.3bn of govt’s spending in 2018 – NEITI
“Oil prices will go up again. So the pain of the moment shall pass. But the next slump in oil prices is not a matter of if but when,” NEITI said.
The document investigated the impact of the pandemic outbreak on reliance on natural resources and made recommendations on how to address the conundrum.
In the 33 years between May 1987 and May 2020, the world economy had seen eight oil price shocks, the NEITI report showed.
“A look at oil revenue as a percentage of total federation revenue showed that from 1981 to 2014, oil revenue consistently accounted for about 65 to 85 per cent of total federation revenue.
“It is only in recent years (2015 – 2018) that oil revenue was below 60 per cent of total revenue. And this can be attributed to low oil prices and increased efforts to boost non-oil revenue.”
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