TOPE FASORANTI argues for prudent use of the recent gains to prop up the economy
On the surface, the past few months have flattered Nigeria’s oil economy. Production reached roughly 1.53 million barrels a day in May, a fifteen-month high and the first sustained move above the country’s OPEC quota in years. Brent has spent most of the spring comfortably above the price on which the federal budget was built. And the Dangote refinery, after years of dependence on imported crude, is at last drawing more of its feedstock from home. Taken together, the figures invite a certain complacency.
They should not. Almost none of this improvement is of Nigeria’s own making. The gains are exogenous: they originate outside the domestic economy, and what arrives from outside can depart as abruptly as it came. A favourable accident is worth having. It is not the same as wealth deliberately set aside, and the distinction matters most precisely when conditions are benign.
Three supports, all temporary.
Consider how each gain actually arose. Production recovered chiefly because the Niger Delta grew calmer. Pipeline attacks eased, crude theft declined, and the producing region enjoyed a spell of relative security. The additional barrels came not from new wells or renewed investment in onshore fields, but from the simple absence of disruption. The capacity ceiling that has constrained Nigeria for a decade, a structural limit rather than a passing one, has not shifted. So when prices surged this spring, and the incentive to produce was overwhelming, the country could not respond. It could only recover ground already lost, restarting shut-in wells rather than commissioning new ones. A return to full capacity is a genuine achievement. It is not, however, the same as the capacity to expand, and that distinction is the crux of Nigeria’s predicament.
