The Secretary-General of the UN Trade and Development (UNCTAD), Rebeca Grynspan, has advised Nigeria to seek alternative sources of revenue away from proceeds from crude oil.
Grynspan spoke during Wednesday’s edition of Channels Television’s Business Morning, citing the country’s growing population.
“Nigeria must diversify. The oil sector is not going to produce the quality jobs required for a more educated generation with middle-class aspirations,” she said.
“While it isn’t bad to have oil to stabilize the economy, without manufacturing and industrialization, it will be difficult to maintain dynamic growth.”
According to her, dependence on “commodity” creates fragile economies.
“We have to move away from commodity dependence, which makes economies fragile. Regional integration is the game-changer here; it allows for economies of scale and better participation in the global market,” the UNCTAD scribe said.
For African countries to make headway, she identified the African Continental Free Trade Area (AfCFTA) as a vital part of the continent’s “ability to scale up, integrate better into global value chains, and take advantage of its vast wealth in critical minerals.
“The goal is to avoid falling back into a path of commodity dependence. Value addition—adding value to critical mineral production rather than only focusing on extraction—is one of the main priorities for the future,” Grynspan noted.
She advised developing countries like Nigeria to embrace the digital boom, the green economy, and other emerging sectors.
“Industrial policy is back. Emerging economies must seize the opportunities in the fastest-growing sectors: services, the green economy, and digital/AI-related trade,” Grynspan stated.
“To enter this new world with a strong footing, countries must build the necessary infrastructure, skills, and governance.”
Crude was first discovered in Nigeria in 1956 in the southern Niger Delta region. The West African oil giant pumps an average of 1.5 million barrels per day, according to OPEC, but it is still short of its two million bpd target.
Oil accounts for around 62 percent of Nigeria’s export earnings and forms a huge chunk of government revenue.
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Cutting the Middleman Out
Meanwhile, President Bola Tinubu has issued an Executive Order (EO) to safeguard and enhance oil and gas revenues for the Federation, curb wasteful spending, eliminate duplicative structures in the sector, and redirect resources to benefit Nigerians.
Presidential spokesman, Bayo Onanuga, said Tinubu signed the EO in pursuance of Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
The Executive Order is based on Section 44(3) of the Constitution, which vests ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in, under, and upon any land in Nigeria—including its territorial waters and Exclusive Economic Zone—in the Government of the Federation.
According to him, the move seeks to restore the constitutional revenue entitlements of the federal, state, and local governments, which were removed in 2021 by the Petroleum Industry Act (PIA).
The PIA created structural and legal channels through which substantial Federation revenues are lost through deductions, sundry charges, and fees. Under the current PIA framework, NNPC Limited retains 30 per cent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts.
In addition, the company retains 20 per cent of its profits to cover working capital and future investments. Given the existing 20% retention, the additional 30% management fee is considered unjustified by the Federal Government, as the retained earnings are already sufficient to support the functions NNPCL performs under these contracts.
NNPC Limited also retains another 30% of its profit oil and profit gas under the production sharing, profit sharing, and risk service contracts, as the Frontier Exploration Fund under sections 9(4) and (5) of the PIA.
“A fund of this size, being devoted to speculative exploration, risks accumulating large idle cash balances, which would encourage inefficient exploration spending, at a time when government resources are urgently needed for core national priorities, including security, education, healthcare, and energy transition investments,” the statement read.
