The Nigeria Economy after Covid 19 How to Save Yourself from the Huge Fall

The economy is going to have a free fall with serious inflation and naira will be devalued. Meanwhile, Covid19 is not helping matters globally either.
This situation has created a great dilemma for the Nigerian government, but refusing to own up to the fact because you lack an instant solution does not solve the problem.
According to report published March 11, 2020, 50 Nigerian crude oil cargoes stranded in market, says NNPC. From the report as a result of the coronavirus pandemic, Nigeria has about 50 cargoes of crude oil that have not found a landing and this implies that there are no off-takers for them for now due to the drop-in demand, the Nigerian National Petroleum Corporation declared on Wednesday.
It also stated that over 12 liquefied natural gas cargoes were stranded in the global market, a development that had never happened before. That is our source of revenue and what keep our naira up and running is dwindling fast.
According to the Group Managing Director, NNPC, Mele Kyari, who disclosed this at a round table discussion in Abuja, for Nigeria to become competitive in the global crude oil market it must strive to reduce its cost of producing crude oil. Kyari said, “Today, I can share with you that there are over 12 stranded LNG cargoes in the market globally. It has never happened before. LNG cargoes that are stranded with no hope of being purchased because there is an abrupt collapse in demand associated with the outbreak of coronavirus.”
He said that in the face of the Coronavirus global pandemic, countries like Saudi Arabia had given a discount of $8 and Iraq gave $5 to their off-takers in some locations.
This, he said, meant that when crude oil sold at $30 per barrel, countries like Saudi Arabia were selling at $22 per barrel and Iraq sold their crude at $25 per barrel.
He said NNPC was strategically putting in place measures that would alleviate the cost of crude oil production in Nigeria.
The corporation’s boss said a reduced cost of production would create a market for Nigeria’s crude and make Nigeria a choice destination for foreign direct investment.
Kyari stated that at the moment the cost of crude oil production in the country was within the range of $15 to $17 per barrel.
He noted that for leaders in the industry, such as Saudi Arabia, the cost of production was between $4 and $5 per barrel.
Kyari explained that due to the uncertainties of the global crude oil market, countries that produced at the cheapest price would remain in the market, while jurisdictions with a high cost of crude oil production would not be able to cope with the competing prices.
The conclusion from all these English language is as follow:
We benchmarked our budget @$57pb and 2.18mbpd and now we are already taking a net loss of $25pb and our supply is also going to be slashed. That is a triple warning;
1) drop in oil price (Brent is trading at $32.11c)
2) drop in supply volume
3) 87% dependency on oil as our source of the country’s revenue.
Yet our leaders just approved that we borrow $22.7B when our debt service ratio is already over 57% We are borrowing more money to sustain payment of politicians’ salary.
Fuel pump price is supposed to come down but ironically it will never in Nigeria due to bottle neck bureaucracy, and unrealistic Economic policies
This summary alone should tell you where our economy is heading and what will happen to our naira. It is always best to take precautionary measure to safeguard your money or investment. There are a few people who will be able take advantage of the situation and make a lot of money from the dicey situation. The following steps may be necessary
You must find a save heaven for your naira cash
We should all start converting our small cash to dollars because naira is already taking a dig and may likely dive soon as we are just overleveraged severely.
As a result, in draught in consumption, trade, import and export, and the panicking coronavirus situation, international stock is on the slide, giving room for cheap investment in stocks like amazon, google, apple, Alibaba and many more. This is likely to protect your naira from any form of devaluation. You can take advantage of this right now.
If you are a producer, you must source your raw material now at a cheap rate, but do not over stock
A lot more to talk about….
Hope Eno,
Investment/Business Consultant 08023982600

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