Armageddon here?

By Sanya Oni

Guess some Nigerians probably saw the appointment of Ngozi Okonjo-Iweala into South Africa’s Economic Advisory Council more newsworthy than the looming fire threatening to consume their homesteads.  Who cares that South Africa, the country of Cyril Ramaphosa has again slipped into recession – the second in two years? What mattered, as far as many Nigerians were concerned, was that our Okonjo-Iweala (which some say has been denied recognition by her home government) has been drafted by the South Africans to help the country pull its chestnut out of the raging fire!

But then, it would not be entirely in our character if we are not to be found chasing rodents when our house is literally on fire. Only a few weeks back, our ever boisterous tribe of “hailers’ actually gloated at the prospects of an economy on firm rebound; as against the International Monetary Fund had projection of 2.1% in 2019, the gross domestic product actually grew by 2.27% in 2019 – according to the National Bureau of Statistics. In that, the NBS would note that: “The strong fourth quarter 2019 growth rate also represented the highest quarterly growth performance since the 2016 recession.”

All of that now belongs in the past. That the same economy is headed for trouble today is an understatement. As if we do not already have enough trouble mapping the potential impact of the Corona Virus on the economy, OPEC, the oil producing cartel was confronted with a stunning discount by the Saudis of between $6 to $8 on every barrel of their crude headed for Asia, the United States and Europe – the consequence of which the Benchmark Brent crude oil futures has tumbled by 30 per cent to below $34 per barrel – the steepest drop since the Gulf War in 1991. And this is nowhere the trouble still looming with OPEC’s leading oil producer, Saudi Arabia locked in oil-price war with the non-OPEC Russia over production cuts with the latter scoffing at the calls.

We do have a fair idea of what the immediate future bodes. Never mind the rather optimistic picture painted by the finance, budget and national planning minister, Zainab Ahmed, about oil production mitigating the adverse developments; the single issue now is how much of the items contained in the N10.59 trillion naira ($35bn) budget instrument could still be salvaged in the face of the massive cutback in revenue.  And we are not even talking of such parameters such as the lavish assumption of $57 per barrel of our crude, or even the N2.18 trillion ($7.2bn) deficit hole – which the government hopes would be financed through foreign and domestic borrowing – all of which has, quite frankly, rendered the 2020 budget unrealistic.

Soon enough, Nigerians would be required to prepare for another round of structural reforms a la belt-tightening. Trust our officials, critical projects would be gutted; for sure, nothing will happen to the massive gravy embedded in the service wide votes for which the bureaucracy is renown; or their legislative equivalence put out as running costs. Trust the executive branch to somehow take care of its own in the elegantly woven scam that our public finance has since become; the poor hapless workers in the bureaucracy are welcomed to another season of the gnashing of teeth!

That was how it was in the past – and will – most unfortunately – remain in the foreseeable future!

Nigeria is, after all, a place where strange things happen. For instance, only in Nigeria can a whopping $253 million (N91 billion) disappear from the excess crude account in a space of one month without the parliament or the states raising hell!

Remember the alarm raised in February at the Federation Account Allocation Committee (FAAC) that the strategic reserve account – the Excess Crude Account – went down from $324.968 million recorded on January 15 to $71.814 million by February! And the so-called rainy days have not yet set upon us! Has anyone yet raised question about the authorisation let alone the question of whether or not the amount in question was duly appropriated?

So what have we learnt since 2016 – the year the economy hit the bottom? Never mind that claims of achievement are oftentimes outlandish; that the administration scored some hits is agriculture is merely stating the obvious. Sure, the country has done well in the area of boosting agricultural output; however that it has done pretty little to optimise the nation’s food processing potentials renders the claims of sufficiency exaggerated. We may have shut our borders to give junks and other unwanted stuff from coming in; only that we have done pretty little to address the roots of the problem: the poor operating environment which renders our manufacturing companies non-starters in competitiveness.

So much for our claims of resilience, our economy continues to bleed from massive imports. From fuel to consumables. As a consequence, our currency – the naira has remained fragile – so fragile that Godwin Emefiele’s Central Bank has had to pump billions of dollars to keep it from hitting the bottom. With oil price now sub $40 a barrel, he will certainly need to do more and so Nigerians had better mount a vigil so Emefiele can find magic of keeping their beloved currency from a free fall!

One good thing – we wouldn’t have to worry about fuel subsidy while the current cycle lasts! The government should be making profit instead.

Think Armageddon is far-fetched? Think about it this way: picture what it costs to keep the war in the Northeast going – an expensive business; what the country requires to contain the banditry, kidnapping and other variants of anarchy across the entire federation.

Add to it what it would cost the nation to put the 13 million out of school kids back into the school system; put the economy that is barely growing at 2.2 per cent side by side with population growing annually at rate of 2.5 per cent. Only then can one begin to picture the bleak future which lies ahead. And we have not gotten around to talking about what it would cost to modernise our infrastructure – a critical pillar in our quest to create a sustainable future.

Still in doubt as to where the latest cycle of plunge in oil prices will take us?