with agency reports
05 February 2016, Sweetcrude, Abuja — Respected Washington Post columnist and host of CNN’s Global Public Square, Fareed Zakaria, has said Nigeria’s economy may have a hard time succeeding if oil prices remain low, and if the insurgent militancy in the Niger Delta and on-going attacks by Boko Haram militants are allowed to fester.
He stressed that the declining oil prices has hit the country hard, and things could get worse as militants in the oil-producing Niger Delta have resumed bombings of oil pipelines.
In his latest article posted on Washington Post yesterday entitled: ‘From Iran to Nigeria, cheap oil means perilous politics’, Zakaria noted that the impact of falling oil prices has been more devastating on countries like Nigeria with undiversified economies and weak structural reforms.
He said, “When asked recently what keeps her up at night, IMF chief Christine Lagarde cited petro-states such as Nigeria, where 90 percent of exports and 60 percent of government revenue come from oil sales. Surging on the back of this crisis is Boko Haram, which surpassed the Islamic State as the world’s deadliest terrorist group in 2014, killing 6,644 people that year.”
Zakaria further noted that, “As Nigeria’s government battles Boko Haram in the north, it also faces the possibility of renewed violence in the south in the Niger Delta, home to much of the country’s oil.
“At its worst, the southern insurgency there shut down half of Nigeria’s oil production. The insurgency ended with a fragile peace and amnesty for the insurgents in 2009.
“But the government does not have the cash to follow through on many of its promises. Now it could end up struggling against two brutal movements that could tear the country apart.”
Zakaria posited that there are other oil states, not quite as challenged as Nigeria, but most of them with problems. “The answer, economists say, is to embrace structural reforms, wean economies away from national resources, and invest in other industries and human capital.
That’s hard to do anytime, but especially when your country is in free fall,” he wrote.
He noted that, “Elsewhere, Venezuela, long mismanaged by Hugo Chávez and his successor, is on the verge of default and worse. The economy shrank 10 percent last year. It is expected to shrink an additional 8 percent this year, and inflation will run at a Weimar Republic-like 720 percent, according to the International Monetary Fund. As The Post’s Matt O’Brien wrote, ‘The only question now is whether Venezuela’s government or economy will completely collapse first.’
“In any event, the governments of oil-producing nations everywhere desperately need cash, simply to pay salaries and meet basic obligations. That means they will pump out as much oil as they can, which adds to supply and keeps prices low. Welcome to the new world of cheap oil and perilous politics,” he added.