Nigeria, others betting on crude oil are living in fool’s paradise – Rewane

Crude oil price followers like Nigeria, Angola and Iran betting on crude oil as main source of sustenance are living in fool’s paradise as they profit little or nothing from the venture.

Bismarck Rewane, chief operating officer of Financial Derivatives Company (FDC) Limited instead said, the price leaders are the ultimate beneficiaries.

In the case of Nigeria, while the country sees oil as its mayor export earning, oil contributes very little to the country’s Gross Domestic Product (GDP).

In 2010, crude oil accounted for 70.4 per cent of total exports earnings, but contributed a mere 9.61 per cent to GDP. In 2015, crude exports was 71 per cent of total exports, but contributed 8.66 per cent to economic growth and in 2020 crude oil export was 88.5 per cent of total exports but contributed only 8.16 per cent to GDP.

But non-oil exports which was just 29.65 per cent of total exports contributed 90.84 per cent to GDP in 2010. In 2015 non-oil accounted for only 12 per cent of total exports, but contributed 91.32 per cent to GDP, and in 2020 contributed 91.84 per cent to GDP with non-oil exports accounting for a mere 11.5 per cent of total exports.

Rewane, in the FDC monthly publication showed further that it is only the price leaders that are beneficiaries of the industry.

Price leaders like Saudi Arabia has an oil reserve of 258.6 billion, Russia (107 billion and U.S (69 billion. But price followers like Nigeria has oil reserves o 36.89 billion, Angola (7.7 million) and Iran (208.6 billion).

Leaders like Saudi Arabia has external reserves if $441.22 billion, Russia (586.27 billion and U.S (143.41 billion). But the price followers like Nigeria has external reserves of $36.89 billion, Angola (&8.68 billion) and Iran ($86 billion).

Whereas Saudi Arabia has an income per capita of $20,542, Russia ($12,011), and U.S ($55,809). But Nigeria has income per capita of $2,386, Angola ($3,103) and Iran ($55,809).

In Nigeria, other commodities contributing to GDP are LNG, sesame seeds, cashew nuts, cocoa. Oil revenue is closely related to the value of the naira and exchange rate has depreciated by 35 per cent in the past three years.

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