EU Eyes Nigeria and Urges Efforts to Increase FDI
It is no secret that Nigeria is heavily dependent on the exportation of oil, specifically the exportation of crude oil. The country currently does not have the infrastructure to refine the crude oil it produces. Despite the opening of oil depots in Port Hartcourt, Lagos, and Abuja, much needs to be examined in the analysis of foreign development and trade.
Businesses don’t feel secure investing in Nigeria and among those businesses are many that are based in the European Union (EU). Although, the EU aims to help aid the Nigerian government in strengthening ties with foreign businesses in order to increase foreign direct investment or FDI, the steep drop in the country’s oil exportation, a big reason for the drop in FDI, has been a huge cause for concern.
FDI is an investment made by a company or entity based in one country, into a company or entity based in another country. FDI from the EU to Nigeria has dropped from 5.6bn dollars in 2013 to 4.9bn in 2014 according to the Organization for Economic Co-operation and Development (OECD), it has made an even steeper drop from 8.9bn in 2011 to last year’s 4.9bn. As a result Nigeria is no longer the EU’s top FDI partner. However, it should be mentioned that there has been an overall reduction in crude oil prices in the international market.
The country will have to work on its continuously disparaging image in order to reign as the giant investors once knew and to remain competitive.
No Fuel at the Pumps
Essentially the dependence on crude oil exposes Nigeria to economic frailties. Governor of Kaduna State; Nasir Ahmad el-Rufai reported “oil and gas account for about 96% of foreign exchange earnings and 86% of the total revenue of the Federal Government. Compared to other oil-producing nations, Nigeria’s excessive dependence on oil is clear and present.
Take Indonesia which was at the same level of development (and oil-dependence) as Nigeria in the 1960s, oil now accounts for less than 10 percent of its GDP, 25 percent of government revenue and only 15 percent of exports.
This over-dependence on oil exports for both foreign exchange and revenues is partly responsible for poor program implementation, continuous boom-bust cycles, and abandonment of development projects”.
Over the past year fuel prices at the pump have been steadily increasing. This past June the states that recorded the highest average fuel prices included: Niger at N138.3, Kogi, N128.3 and Adamawa, N122.5 per liter. Citizens on the ground stand in long lines at the fuel pump because of frequent oil scarcities specifically in Lagos, Nigeria.
Gas stations across the country have been selling fuel over the official pump price. It is not as if the owners of the petroleum stations want to cheat the system, they simply would not be able to sell and turn profit at the average official pump price of N87 per liter. Roughly estimating, an individual currently pays about .50 cents for every .26 gallon of fuel.