Henry Boyo

Crude oil price has steadily increased beyond $50/barrel after OPEC agreed to cut output by about 1.2 million barrels/day in November 2016. Nigeria’s export revenue prospects will consequently be boosted, if this price trend is sustained, particularly if restiveness is minimised in the Niger Delta. However, much against popular expectation, the more bountiful the export dollars, the bigger also will be our economic headache!

President Muhammadu Buhari must be disturbed that the naira exchange rate has suffered so poorly under his watch, particularly after he promised parity between the naira and dollar, if he won the election. Unfortunately, the worst has yet to come, because, if crude oil price further rises while output remains favourable, the dollar will paradoxically spike well above N500=$1 and may approach N1000=$1 before December 2017! Any attempt to bridge the widening gap between official and parallel market exchange rates will devalue the naira and trigger a steep rise in fuel price to shoot inflation well beyond 20 per cent and make Nigerians poorer still.

Advisedly, patriotic Nigerians should alert Mr. President that his legacy will be characterised by mass poverty if he remains in denial of this reality. Hereafter, an interview format will be adopted, to explain the chain of cause and effect that will induce the horrifying realities foretold above.

Why are you so pessimistic and why should increasing dollar revenue make Nigerians poorer? Isn’t this a contradiction?

Yes, it would indeed seem a contradiction for a weaker naira and deepening poverty to be products of increasing dollar revenue, but interestingly, this has been our economic experience lately. For example, Nigerians became listed amongst the world’s poorest, despite the stupendous income from oil for several decades. Ironically, in retrospect, when crude oil prices hovered about $10/barrel, N1 exchanged for about US$2.

Read more@http://punchng.com/nigerians-will-become-poorer-rising-oil-prices/