In the last 18 months, I have occasionally predicted and written about the likely fall in crude oil prices due to a fall in demand which can be attributed to production of shale in the US, Canada and other developed countries and discovery of new oil and gas deposits around the world. We are additionally yoked by the divestments of the IOCs (Shell, Mobil, Chevron & Total) from onshore Nigeria and by the fact that indigenous E & P companies are more financially challenged in trying to conduct petroleum operations continuously and in a vigorous and businesslike manner and in accordance with good oilfield practice. That day of reckoning has come and the naira has been RIGHTLY devalued in order to preserve or reserves. However, since we are largely an economy dependent on oil prices and we hardly produce any other thing for export, things are going to get much worse before they get better. In view of the fact that we are an importing country and our remunerations or profits are going to be worth less, in actual terms, due to imminent inflation, we have to take personal measures to counter the effects of the austerity pills that will be invariably prescribed by the World Bank/IMF through the federal government. Except you are a crude oil thief or you have your hands in our national treasury, it is advisable that you buy less foreign goods when there are relatively good quality local alternatives, sell off your third, fourth and fifth cars, minimize foreign travels and stop doing things “for show” (Lagosians especially). Should you have large cash reserves in naira, you may wish to exchange it to a more stable currency or invest in assets that usually appreciate in value even during recessions. Does someone have a more ideas to weather the gathering storms?
Posted on: Wed, 26 Nov 2014 10:12:07 +0000
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