Nigeria: Crude Oil Futures and Lessons from History

AS OIL DROPS BELOW $27, SPEEDILY NEARING THE PSYCHOLOGICAL $25 MARK - HISTORY MAY BE ABOUT TO REPEAT ITSELF.

Oil futures today fell below $27, as it traded at $26.30 as at 12 noon Eastern time on January 20, 2016 - the lowest it has seen since 2003. In the last two weeks alone, we have witnessed the free-fall of Crude Oil prices with the announcement that Iran is set to pump over 500,000 barrels into the market following the lifting of sanctions - adding another venomous bite to the inability of OPEC members to agree on the need to slash production quotas. Given the over-supply situation currently prevailing in the market, it does not appear that the price level has bottomed-out yet. So prices may be yet on a roller-coaster ride southwards.

BITTER SWEET BEGINNINGS - RENT-TAKING IS SET TO GIVE WAY TO HARD RIGOR AND SMART IDEAS

Now our Governors will act more as Managers than Monarchs.
Now our National Assembly will assemble to discuss serious policies and not assemble to share money. Now the Public Service will truly be about service and not kickbacks. Now Presidency will have to move beyond Anti-Corruption rhetoric, to strategy on revamping the economy and social re-engineering.

ORDINARILY, WHAT DOES NOT KILL YOU, SHOULD MAKE YOU STRONGER - NIGERIA APPEARS TO BE DIFFERENT.

Given that we have a penchant for not learning from history, history is repeating itself in a very mischievous way. In 1984, when General Buhari took over government, Oil futures averaged $28.75. It continued its free fall in 1985 and bottomed-out in 1986 at $14.44. This forced the Babangida administration, the successor to the Military government of General Buhari, to implement structural reforms - starting with the Second-tier Foreign Exchange Policy and the Structural Adjustment Programme. Had the Babangida administration not frustrated its own reforms through unbridled corruption and enthronement of a culture of rent-taking, ending in its refusal to hand-over government to the winner of the election it conducted, things may probably have been different today. I pray we look back to history in solving this current problem. ‪#‎LearningFromHistory‬