Against the backdrop of continued drop of United States’ (US) imports of crude oil from Nigeria as a result of the US shale oil boom, an analyst at PricewaterhouseCoopers (PwC) has urged the government and stakeholders to give more priority attention to the development of the agricultural, manufacturing and power sectors.
Andrew Nevin, partner and West Africa strategy consulting leader, PwC, who spoke at the first PwC organised African Oil and Gas Leadership Conference in Accra, Ghana, weekend, said US imports of crude oil from Nigeria have dropped to the lowest level in the last ten years and month by month the trend is accelerating.
Nigeria earns more than 90 percent of its foreign exchange revenue and 70 percent of budgetary revenue from crude oil. But the country would have to match its supply to global demand if it is to maintain current earnings, Nevin said.
Imports to the US from Nigeria tumbled to a record low in February this year, based on data from Energy Information Administration (EIA), the US Energy Department’s statistical arm.
“China has been seen as a ready substitute for US oil exports but even they have shale plays in development. There is regional competition from countries like Angola who are better placed to serve oil demand in Asia.”
“I think the message from PwC coming out of the shale oil is really not just about oil or energy, it is about the whole economy. We are not the only one saying this, but we would like to add our voice that Nigeria needs to diversify. There is no question about that. And there has been a lot of progress in the last three years,” he told BusinessDay on the sidelines of the conference.
He explained that given the size of the domestic market, the number of people and the growth of the economy, Nigeria should be a manufacturing hub, adding that lack of stable power supply is hampering this.
“We think that Nigeria should be a manufacturing hub. Things that are now manufactured in China should actually be manufactured in Nigeria. What is going to make that happen? The biggest impediment to manufacturing in Nigeria is the lack of power. We see a situation where a lot of people have plans to expand the production of all sort of things and goods despite the power situation. When the power situation improves, just think how rapidly you will see the transformation of the Nigerian economy,” he said, adding that if the country had a diversified economy, it will not matter so much if oil went down.
Uyi Akpata, PwC Africa oil and gas leader, said, “Realistically, I think the government has recognised the need for diversification of the economy.
Information from Business Day was used in this report.