By Austin Okere
On April 20, 2020 the screaming headlines on CNN was that the price of WTI crude oil had fallen by 306% to $-37.63 per barrel, the first time on record that oil price has hit negative territory. It is surreal how things come around.
I wrote this article on April 20, 2016 after the colossal collapse in Oil prices – and surprised how relevant it is even today.
What was our experience as a country, what did we learn from it and how is it that we have once again been caught desperately unawares?
Below is the first part of the article.
The recurrent mistake we keep making as a Nation is failing to anticipate and plan for our oil windfalls. There have been many boom opportunities since Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971; Oil prices increased by 400% in six short months after the Yom Kippur War following the Arab Oil Embargo. Crude prices doubled from $14 in 1978 to $35 per barrel in 1981 following the Iran/Iraq war.
The price of crude oil spiked in 1990 with the uncertainties associated the Iraqi invasion of Kuwait and the ensuring Gulf War – the so called ‘Gulf War windfall’ under then Head of State Ibrahim Babangida. Data from the U.S. Energy Information Administration shows that the latest windfall happened between February 2011 and August 2014, under the Goodluck Jonathan presidency, when oil prices were much in excess of $100 per barrel.
Another golden opportunity was squandered, characterised by organised kleptocracy of epic proportions as has now come to light.
During this same period Saudi Arabia has amassed a whopping $593b in foreign exchange reserves and has recently announced that it is creating a $2 trillion mega-sovereign wealth fund, funded by sales of current petroleum industry assets, to prepare itself for an age when oil no longer dominates the global economy.
Coming closer home, Algeria, the second biggest African oil producer, with 1.9mbpd has accumulated foreign reserves of $156b and a sovereign wealth fund of $50b. Nigeria, by far the biggest producer in Africa with 2.5mbpd has only managed foreign reserves of $28b and a sovereign wealth fund of a paltry $2.9b – about 5% that of Algeria.
The major difference being that while the Algerians saved for a rainy day during the boom years, Nigeria was busy squandering her wealth, with nothing to show by way of infrastructure or any solid investments.
Yet Nigeria was able to balance her budget, pay off her debts and save over $62b in foreign reserves during the Obasanjo presidency from 1999 to 2007, even though the price of crude was mostly under $40 per barrel, except for the two years between 2005 and 2007 when it hovered between $50 and $75 dollars per barrel.
It is bothersome that with the same level of oil price, Nigeria today is struggling to balance her budget and has resorted to aggressive borrowing to finance the deficit, inadvertently driving us back to where we were before escaping from the huge burden of sovereign debt and the attendant debilitating impact of debt servicing.
I believe that Nigeria can save as much as $36.5b in the coming year if oil prices recover towards the end of 2016 and through 2017 to the projected $80 per barrel. This assumes we have all agreed that the current crises is much too painful and too precious to waste.
It can actually be a blessing in disguise, affording us the much needed leverage to deliberately diversify our economy away from the over dependence on oil, and attempt to become self-sufficient in every low hanging opportunity such as feeding ourselves.
There is a reason why the Chinese use the same word for challenge and opportunity; behind every challenge is an opportunity. We must seize this golden opportunity with both hands and make the structural changes that will lead us to true prosperity as a nation.
Almost every third Nigerian businessman you come across claims to be into Oil and Gas; usually, briefcase contractors who manage to have their ‘papers’ stamped, and proceed to collect money from the treasury of our commonwealth. Yet oil contributed only 6.4% to GDP growth in 2015.
An often overlooked area for rapid economic growth is telecoms, entertainment and media. At a recent event in Lagos, Dr. Doyin Salami, lecturer at Lagos Business School, remarked that ‘The telecommunication sector grew Nigeria’s GDP by 8.7% in 2015, generating spill overs, with uptakes in financial transactions technology and payment systems, e-commerce facilitation and proliferation of transport services, while making the offering of the burgeoning entertainment industry ubiquitous’.
Quite simply, if each of the 34 million MSME’s in Nigeria could be supported with technology to improve their businesses through online presence and seamless bookkeeping to the point of employing one more staff, they would create an additional 34 million jobs, much more than the government can ever provide.
I totally agree with Dr. Salami that Nigeria’s economy has systematically and strategically diversified along the lines of technology and other services sector without Nigerians noticing. The services sector today contributes as much as 52% of Nigeria’s GDP.
Agriculture is also another sector that could do with special attention. If we strive to produce what we eat, we will not only be saving a whopping $6b from our import bill, but also provide the opportunity for inclusive growth, with the spill over effects down the value chain, from logistics and transportation to light manufacturing. But we need to make the right investments in infrastructure such as roads and rail transport linking farms with their food processors and markets.
The change that will make all this happen is not the ‘outsourced variety’ where we believe that we can carry on with business as usual, or sit back and fold our arms while only the President delivers the promised change. All hands must be on deck, and we each have to be the change we desire.
The elephant in the room question is; who says oil prices will reach $80 per barrel?
Austin Okere is the Founder of CWG Plc, the largest ICT Company on the Nigerian Stock Exchange & Entrepreneur in Residence at CBS, New York. Austin also serves on the Advisory Board of the Global Business School Network, and on the World Economic Forum Global Agenda Council on Innovation and Intrapreneurship. Austin now runs the Ausso Leadership Academy focused on Business and Entrepreneurial Mentorship.
Sundiata Post Media Unveils Dealboku, eCommerce Platform
Sundiata Post Media Limited, a multimedia news platform, has launched Dealboku, its e-commerce platform.
In a statement, Max Amuchie, founder/CEO of Sundiata Post Media, said Dealboku is an idea whose “time has come”.
Amuchie said Dealboku is different from other conventional online shops where goods are sold at shelf prices, as its e-commerce platform is an online deals marketplace where merchants are made to sell same products and offer same services at a discounted price.
“We have built a robust platform that is unique in its approach to e-commerce. Both buyers and sellers are assured of excellent customer care and quality products and services at discounted prices,” he said.
According to him, “with the establishment of Dealboku, Sundiata Post has made history as the first media platform in Nigeria to go into the full e-commerce business”.
In her remarks, Hannah Atomode, Dealboku’s project consultant, said the goal of the platform is to help customers get good discounted deals to their doorsteps.
“The team has been working very hard to build a beautiful and user-friendly website. This is a platform that comprises various products and services from fashion, automobile, furniture, foods, beauty, food, Spa and wellness, hotels, online training etc,” she said.
“The payment system is not cumbersome, it is so simple and easy to use.”
Atomode added that the e-commerce platform offers three payment options, which are card payment, wallet or bank transfer.
AtaraPay Redefines e-commerce Space
AtaraPay, an online escrow service has reiterated its commitment toward redefining and enhancing cash on delivery service in Nigeria in a way that promotes trust, transparency and protects the interest of both parties.
Yemi Adebiyi, Executive Director of TrustPay Technologies Limited, made this known in a statement in Lagos, where he said the emergence of e-commerce in Nigeria has changed the way Nigerians buy and sell goods.
He said that although bias and skepticism against online shopping persist, over time more consumers have begun to embrace the concept of purchasing items online and getting them delivered at their doorstep.
He said: “The advent of the COVID-19 pandemic has also made it imperative for sellers to diversify their sales channel to include an online, omnichannel strategy.”
He noted that, however, over time increased cases of internet fraud, frequent internet payment transaction failures only served to worsen the perception of customers paying online without physically inspecting the goods.
Adebiyi pointed out that as a workaround, cash-on-delivery options quickly became a popular choice with customers who preferred to double-check items in hand before paying in cash. This served as an approach to address the trust deficit and guarantee quality assurance.
He said that the introduction of escrow service by African start-ups such as AtaraPay, Paylock, Truzo has come in handy in addressing the issue of trust between buyers and sellers in a way that promotes transparency and protects the interest of both parties.
Adebiyi explained that AtaraPay’s business relationship with Consolidated Hallmark Insurance Plc enables it to provide a service that can be trusted and reliable enough to take away the monetary bottlenecks and resolve every crisis during transactions.
“This is a safe way to strike an equilibrium between customer and merchant credibility while eliminating fraud in the process,” he added.
Konga to Employ over 100,000 Nigerians through Konga Affiliate Project
Konga, composite eCommerce giant has revived YUBOSS, a stellar reseller scheme now re-christened as Konga Affiliate through which it is offering millions of smart unemployed and under-employed Nigerians an opportunity to earn unlimited income and ultimately achieve economic freedom by partnering with the company.
Equally important, the Konga Affiliate programme which grants successful applicants instant sign-up at affiliate.konga.com offers a comprehensive partnership to affiliates.
Built upon the very popular YUBOSS scheme which the company floated under Yudala, the central idea behind the revamped Konga Affiliate programme is Konga’s burning ambition to reach the unreached and under-served Nigerians in the hinterlands and other parts of the country through the affiliates whom it has identified as critical partners in this initiative.
This is in addition to the desire to reach more of the growing band of savvy, quality-minded Nigerians in search of a reliable channel for their purchases.
Specifically, the programme affords affiliates who sign up a chance to earn unrestricted income through mouth-watering commissions on every successful sale of products on the Konga platform.
Most importantly, hardworking and successful affiliates can grow through the ranks to ultimately become the owner of a Konga franchise store.
Further setting apart the Konga Affiliate programme is the immense benefits it offers affiliates.
These include access to Konga’s world class assets including its global supply chain, massive warehousing facilities for bulk deals, swift delivery of orders through Kxpress, its in-house logistics company which boasts advanced delivery capabilities, digital payments through KongaPay, a Central Bank of Nigeria-licensed e-wallet as well as round-the-clock customer service support.
Affiliates can also enjoy access to credit facilities and training resources, mentorship opportunities with renowned entrepreneurs and global business leaders as well as sponsorship of mega deals and contracts.
In addition, the programme which has a structured progression path has been touted as a useful way out of the current harsh economic crunch and rising unemployment which has hindered the ambitions of millions of smart Nigerians in search of opportunities to make an honest living.
The dire situation is further compounded by the rampaging COVID-19 pandemic which has hobbled businesses the world over and in Nigeria.
Prince Nnamdi Ekeh, co-chief executive officer, Konga Group, says the company is looking for hardworking, determined Nigerians it can empower and invest in to create wealth through the programme.
‘‘The Konga Affiliate programme which we have relaunched online at affiliate.konga.com is one of the strategies we are deploying in providing creative employment opportunities for millions of Nigerian youths.
“Our target remains the unemployed and under-employed. In fact, we are looking for partners that we can invest in through the programme.
‘‘As it stands, one of our ambitions at Konga is to ensure we reach more of the unreached and under-served Nigerians in majority of the 774 local governments across Nigeria.
‘‘There is no doubt that unemployment is on the rise. However, the efforts of government in creating jobs cannot cater to the army of unemployed and under-employed which is rising by the day.
“Through the Konga Affiliate programme, we are giving many Nigerians a way out of their current difficult circumstances into ultimate economic freedom.
‘‘Our goal is to see each successful affiliate, in turn, become an employer of labour. This is one of the fastest ways of reducing the spiralling unemployment and under-employment rates in Nigeria and giving hope to many,’’ he concluded.
Intending affiliates can register for a chance to join the programme at affiliate.konga.com
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