{"id":40337,"date":"2020-05-27T11:31:23","date_gmt":"2020-05-27T10:31:23","guid":{"rendered":"https:\/\/nationalwire.com.ng\/?p=40337"},"modified":"2020-05-27T11:31:23","modified_gmt":"2020-05-27T10:31:23","slug":"post-covid-19-currency-devaluation-amidst-other-economic-challenges-to-befall-nigerian-economy-expert-warns","status":"publish","type":"post","link":"https:\/\/nationalwire.com.ng\/sub\/post-covid-19-currency-devaluation-amidst-other-economic-challenges-to-befall-nigerian-economy-expert-warns\/","title":{"rendered":"Post Covid 19: Currency Devaluation Amidst Other Economic Challenges To Befall Nigerian Economy — Expert Warns"},"content":{"rendered":"

With the economic contraption occasioned by the global coronavirus health pandemic, the Nigeria economy will be bisected with currency devaluation amidst other economic challenges.<\/p>\n

Also, the adverse effect of the global pandemic on the domestic economy, will impact negatively on the banking sector due to their huge exposure to crude oil sales, whose prices has greatly dwindled in the international market.<\/p>\n

Ms. Ronke Onadeko, Principal Consultant drnl consult Limited, made these remarks on Tuesday during a one-day webner lecture organised by the Facility for Oil Sector Transformation (FOSTER) in partnership with the Finance Correspondent Association of Nigeria (FICAN) in Lagos.<\/p>\n

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According to Onadeko, with Nigeria sole reliance on crude oil, which contributes 90 per cent of its foreign earnings and coupled with the decline in oil revenue due to the pandemic, might result to further devaluation of Naira.<\/p>\n

Onadeko whose lecture centers on the effects of international crude crash on Nigeria’s economy amongst others, said “there are excess production by OPEC members and lesser patronage which is a big loss to oil producing countries\/companies. No storage space to store excess production. As at March, Nigeria had over 70 cargoes unsold due to lack of patronage.<\/p>\n

“The ongoing pandemic has an adverse effect on Nigeria’s banking sector. Crude oil is the bigger source of foreign inflow it represent 90 per cent of FX earnings and 60 per cent of government revenue. Nigeria’s crude value is benchmarked against the Brent crude. Presently a barrel of Brent crude is $25 and Nigeria’s Bobby Light grade is sold between $13 to $15\/barrel. This makes it significantly impossible to fund 2020 budget without borrowing.<\/p>\n

\"\"<\/p>\n

Ronke Onadeko<\/p>

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The Principal Consultant who debunked the idea of cartels in the oil industry at fixing prices, said prices of oil is arrived at, based on best global practices, nothing that the vagaries and operation in the oil sector should be well articulated before discussion is exposed about the industry.<\/p>\n

Speaking on the fate of some of the banks, post covid 19, Onadeko explained that based on findings occasioned by research, most of the banks in Nigeria, against the rules of the Central Bank of Nigeria (CBN) have abused the single obligor limit exposure to crude oil.<\/p>\n

\"\"<\/p>\n

She said, ” we are going to see a lot of merger and acquisition. The small player will be thrown out. Just like what happened during the banking consolidation, the weaker banks got bought over, while some became stronger and went ahead to leverage on their balance sheet to acquire the right skills and technology, and went ahead to do international trade banking. That is what I see going forward.<\/p>\n

According to her, “most of the banks breach their single obligor limit for the oil and gas sector. Not for the downstream sector alone. Most of them have loaned money to those companies in upstream doing production and exploration, oil services. People who owned depots and tank farm. And, unfortunately, because of the pandemic most of them are not doing so well, and can’t pay back.<\/p>\n

Onadeko who said not all aftermath of the pandemic is gloomy, said post covid 19, the domestic economy will witness greater market competitiveness, deeper market, even as the industry is going to demand more high people.<\/p>\n

“The industry is going to demand more high people. There will be more people coming. There is no doubt, that, there is going to be job losses. But there is going to be more industry developing as a result of the conavirus pandemic. There will be stronger push for the passage of the Petroleum Industry Bill (PIB)”, she added.<\/p>\n

Further, Onadeko said to jump start the economy, there must be proper structuring of finance, so as make the oil sector attractive again for investors. “Structure the sector to be attractive enough to attract the desired findings. So that, Nigeria becomes number one prime destination for fund, inflow of funds, so that as banks prepare to get out of their incapacitation, the oil industry becomes attractive enough for them. If that is not done, that means we will go back to a situation where only a few will have access to fund. Funds becomes expensive. A situation where some filling stations will have fuel and others don’t have.<\/p>\n","protected":false},"excerpt":{"rendered":"

With the economic contraption occasioned by the global coronavirus health pandemic, the Nigeria economy will be bisected with currency devaluation amidst other economic challenges.<\/p>\n","protected":false},"author":6,"featured_media":27333,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[17],"tags":[7016,6907],"coauthors":[2391],"class_list":["post-40337","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-news","tag-bank-merger-and-acquisition","tag-covid-19-2"],"yoast_head":"\nPost Covid 19: Currency Devaluation Amidst Other Economic Challenges To Befall Nigerian Economy - Expert Warns - National Wire<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nationalwire.com.ng\/sub\/post-covid-19-currency-devaluation-amidst-other-economic-challenges-to-befall-nigerian-economy-expert-warns\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Post Covid 19: Currency Devaluation Amidst Other Economic Challenges To Befall Nigerian Economy - 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