Nigeria Switches to Selling Oil in Naira Instead of Dollars

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3 hours ago

Nigeria, Africa's largest oil producer, transitions from selling oil in dollars to naira. This decision by the Federal Executive Council aims to enhance the nation's economic stability.

Federal Executive Council's Decision

The Federal Executive Council of Nigeria has moved to sell oil in Nigerian naira instead of foreign currencies, notably the dollar, to decrease reliance on foreign exchange. Mohammed Manga, spokesperson for the Ministry of Finance, explained that this strategic shift could improve the nation's economic growth and stability. With approximately 37 billion barrels of oil reserves, Nigeria accounts for about 3.1% of global reserves. This shift coincides with global geopolitical instability, including Middle East tensions and the Russia-Ukraine war, making the timing rather favorable.

Oil Prices Rise Amid Geopolitical Instability

The ongoing conflict between Iran and Israel has led to a sharp increase in oil prices. Nigeria's Bonny Light crude rose from $73 to $78 per barrel. Meanwhile, the international benchmark Brent crude has climbed to $79 per barrel, over 10% higher than before. This price surge presents Nigeria with an unexpected economic opportunity as their 2024 budget benchmark is currently set at $78 per barrel. Economist Dr. Abdulsalam Muhammad Kani stated that sustained high oil prices could aid with Nigeria's budget deficit and debt servicing.

If the prices remain high and production stays consistent, Nigeria could see some relief in its debt servicing and public project funding.Dr. Abdulsalam Muhammad Kani

Nigeria's Internal Challenges: Oil Theft and Corruption

Despite the increase in oil prices, Nigeria faces significant domestic challenges. Energy expert Engr. Sani Yabagi highlighted corruption and theft as major issues impacting the nation’s revenues from oil. According to the Nigerian National Petroleum Corporation (NNPC), there were 188 theft incidents in the Niger Delta from August 24 to 30, severely limiting the volume of oil sold despite rising prices.

The money Nigeria should be making from its crude ends up in the hands of thieves. This is a huge problem, and it stops the country from fully enjoying the rise in global oil prices.Engr. Sani Yabagi

Nigeria has taken a significant step by transitioning its oil sales to naira. However, for substantial economic improvements, the country must address its internal challenges, such as corruption and oil theft, to fully capitalize on the rising oil prices.

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