Thank you Federal University of Technology Owerri (FUTO) – Africa’s finest university – for honouring me as one of the four notable alumni of the university. There is never a greater honour than the one that comes from home. It remains like yesterday when I landed from the village of Ovim to Owerri, to begin a journey, in one of the finest technical universities in the world.

The first core homework I did in Johns Hopkins University was on a course – Computer Aided Surgery – and the assignment was to develop a mathematical model to guide a robotic needle going through a laryngoscope during minimal invasive surgery of the throat.

My series and calculus courses in FUTO went into action. Within days, I received a Fellowship from the professor. Later that work became a patent. And later, the United States Government acquired some rights.

I want to thank my FUTO seniors, our university and all FUTOites for the honour.

The near-term future of Nigeria is tethered on crude oil because oil still generates more than 80% of our foreign earnings. So, to improve Nigeria, you need to look at the business of crude oil production, distribution and marketing. Because Nigeria as a nation is more connected at the production level, a big component becomes how much does it take to produce a barrel of crude in the nation. We have no control on how much it sells!

Nigeria’s junior petroleum minister, Timipre Marlin Sylva, noted thus: “Currently, the average total cost per barrel is below $30/barrel for Joint Venture (JV) agreements & below $20/barrel for the Production Sharing Contract (PSC). We need to optimise our unit cost of production in order to sustain our way of doing business”.

In the startup world, we talk of unit economics; it describes a business model’s revenues and costs in relation to an individual unit. If the unit economics does not look great, the business model could be imperiled irrespective of the execution capabilities.

Looking at Nigeria, our business model runs through crude oil. So, the question becomes what is our unit economics since the unit economics of crude oil could be extrapolated to the national unit economics. Pure and simple, Nigeria must not relax at $30 per barrel when it costs Saudi Arabia less than $9 to produce a barrel.

Nigeria needs to modernize and improve security, transportation, logistics and technologies to ensure that Nigeria’s crude production drops below $12 per barrel. If that happens, we will extract more $billions from waste to fund the future. That is the biggest opportunity to bring efficiency in Nigeria but the nation must be ready to invest to make that happen.

People, Nigeria needs to improve its unit economics with the fierce urgency of now.

HMSPR at #NUCOPLaunch:

"Currently,the average total cost per barrel is below $30/barrel for Joint Venture (JV) agreements & below $20/barrel for the Production Sharing Contract (PSC). We need to optimise our unit cost of production in order to sustain our way of doing business" pic.twitter.com/5QwU45CXYG

— NNPC Limited (@nnpclimited) February 9, 2021

Who wants to study petroleum engineering? Like I have noted here, if the world decides that “crude oil” is evidently evil, it would be banned like “tobacco” and anyone or school associated with it would be tarnished. Last month, I had a chat with a college dean;  he told me that a new donor specifically requested that his money cannot be used in any project, research or training associated with fossil fuel production.

Imperial College London has drawn the first main blood: suspending its petroleum engineering program. Yes, if you do not train people on how to mine the oil, the sector will fade over time, they reason. This is a new age. It is like that Superbowl advert in America where that guy was playing piano singing “no cow no cow” to make a point that his company produces milk from trees, not cows! 

Get ready for a redesigned future.

As that redesign happens, Nigeria is expanding capacity to drill oil to the northeast of the nation: “The Minister of State for Petroleum Resources, Timipre Sylva, has revealed plans by the Federal Government to begin oil production in the northeast. Sylva stated this during a recent interview on Channels Television’s Newsnight in Abuja, which aired on Monday.”

We need to fix this emerging paralysis: calling names when people debate Nigerian policies. Samuel Nwite wrote an article summarizing IMF’s position which is that Nigeria should devalue the Naira. Many people started abusing the writer. I shared the piece, and I was not left out. The accusation: we are agents and apostles of the West who want to control Nigeria. Good People, sharing a report should not attract such venoms. 

I am not a full fan of the IMF. But on this one, the IMF is right on the money. There is nothing in that report that Nigerian thought-leaders have not postulated. For years, everyone has been saying: close the gap between BUY and SELL of US dollars. The IMF just said it more elegantly with the word it has always used: devalue.

Yes before the report, Nigerians have already devalued the Naira since we are buying USD at N460 in the black market when the official rate is N380. The percentage devaluation the IMF suggested would have normalized this N380 to N462, bringing both to equilibrium. That does not mean that the IMF hates us since Nigerians have devalued the Naira already. The IMF is saying: normalize that number for all transactions: black, official and white!

The International Monetary Fund on Nigeria: “A weak pre-crisis economy characterized by falling per capita income, double-digit inflation, significant governance vulnerabilities and limited buffers, is grappling with multiple shocks from the COVID-19 pandemic,”. Then, it went to ask for the government to further devalue the naira.

“IMF’s latest estimates suggest an overvaluation of the real effective exchange rate (applied on the current level of the official exchange rate) of 18½ percent, with the external position assessed as substantially weaker than what is consistent with fundamentals and desirable policy settings.” IMF.

Did you notice something? The IMF is not actually smarter: they just have thicker inks to print reports. Yes, Nigerians have since decided that USD is equal to N462 in the black market irrespective of whatever CBN is doing. The IMF wants the government to come to that number. Of course, it is a moving target, once CBN comes there, black market moves to N520.

Now you see why Bitcoin was rocking Nigeria!

Yet, as I noted in my commentary: there is no need of devaluing the Naira since it is a moving target. By the time you hit official rate of N460, the black market moves to N520. This is like same-pole magnets: Nigeria’s official and black forex rates cannot attract each other until we can produce and export things.

Yes, fighting for Naira will not come  via financial engineering at Nigeria’s central bank headquarters but rather at factories and warehouses in Aba, Kano, Lagos, Jos, and more. That is the message we need to push across to CBN and IMF: do not just focus on helping Naira, rather, focus more on helping manufacturers. If you help them, the Naira will be fine. Naira’s problem is not lack of financial engineering, but productive technical engineering in markets across Nigeria.

This is my defense before those guys abusing an innocent village boy like me who simply shared what IMF published. I am not an apostle for the IMF to take over Nigeria. There is nothing in that report we do not say daily: why should Dangote buy at N380 when Tekedia pays N460? Haba!

IMF Urges Nigeria to Further Devalue Naira, Asks CBN to Stop Playing the Role of Main FX Intermediator

Good People, we will have two Technology Setup sessions as follows tomorrow:

Topic: Setting Up Your Tekedia Mini-MBA Account in School Portal

Date: Wed, Feb 10

First session: 12 noon WAT

Second session: 7pm WAT

Zoom Link: Go here https://www.tekedia.com/live/

Both sessions are the same; attend only one if you have not fully set up your account. We will simply go through this video. 

Hopefully, by the end of tomorrow, everyone will be settled for learning.

Let me apologize for the complexity. We used to have a boring one-page board which worked but many said we needed a proper learning management system. Now, we did, but some members need help to get familiar with it. On the link above, we have provided a video for the 2-minute setup.