There are events in the life of nations that transform them forever. While not suggesting that anything happening to Nigerians now approximates what Jews experienced during the Holocaust, after that harrowing experience they vowed ‘never again.’
South African blacks suffered through the apartheid years and were scarred by their experiences. When Nelson Mandela got his chance to rule he rejected a new form of discrimination by the majority, choosing instead to build a ‘rainbow nation’ out of the ashes of racism.
Nigeria had her civil war, a sufficiently traumatic event that would have changed another nation. Despite the fact that a generation that were witnesses to its grim fallout are still active in governance, they don’t appear to have learnt any lessons from it.
Ethnic suspicion, hate, profligacy, lack of vision and extreme corruption – some factors that led to that dark chapter in our history are still alive and well today, as we try to make sense of troublous times more than half a century after the guns fell silent on the Eastern front.
Perhaps, the excruciating nature of this season is to brand it on our psyche that as a nation we can’t continue business as usual. We have lived a lie for too long. We’ve been pampered and screened from truth about our true condition.
Sometime in the last ten years people were horrified when the dollar-to-naira rate breached the N200 barrier; they are shell-shocked now that the greenback is going for over N1,400. Inflation which in the last 20 years never crossed the 20% mark is almost hitting 30%. Although, that’s still a far cry from what prevailed between 1992 when the rate was 44.59% and 1995 when it reached an all-time high of 72.8% under General Sani Abacha.
Nigeria is smack in the middle of an economic crisis and it’s a hurricane that has been brewing. It is trouble that many with insight had been predicting for years. But administrations that have come and gone chose to play ostrich, ignoring the obvious systemic distortions. This crisis wasn’t caused by the removal of fuel subsidy; that move simply blew away all pretences and exposed the tattered condition of our undergarments.
Today, it is politically correct to lament about how people are suffering as a consequence of the double whammy of spiralling inflation and naira collapse. Everyone going on about general hardship is simply stating the obvious. Even if they say so a thousand times, it changes nothing. What is needed is the silver bullet that would bring inflation down to lower double figures and forex rates to affordable levels.
Unfortunately, there are no quick fixes. That is the reason why the twisting and the turning by the Central Bank and all those managing the economy has not resulted in any dramatic improvement. The apex bank can do all the tweaking it wants, if there are no significant increases in dollar inflows, not much would change.
Part of the problem with our country is living in denial, just kicking the ball down the road, hoping that magically we will emerge from the hole we’ve dug for ourselves.
I believe that one of the first steps towards recovery is full disclosure. We need to know how bad things are so we can begin to make the necessary adjustments. For instance, Nigerians need to be reminded that up till last year, 95% of all our revenues were being spent on servicing debts!
The World Bank’s Macro Poverty Outlook for Nigeria: April 2023 put the actual figure at 96.3%. That left less than four percent for funding government’s objectives. The report observed that while oil price booms previously supported the economy, all that changed in 2021.
The cause for this, according to the World Bank, was macroeconomic stability weakening amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetisation of the fiscal deficit.
Our economic reality has largely sustained by things that were not sustainable. Fuel subsidy was not sustainable and virtually everyone – from labour unions, to economists, to all the presidential candidates at the 2023 election agree it had to go.
The exchange rate was make-believe – sustained by the CBN shelling out billions to defend it against major global currencies. While this allowed the populace to access forex at relatively affordable rates, it opened a thriving window for arbitrage that made overnight billionaires out of people with the right connections.
The battering of the naira was collective work and we must all own it. Typically, most of those moaning delude themselves they had no hand in it. Those who were making hay round-tripping, government officials who spend billions to buy dollars for hoarding, politicians who have to be bribed to do their constitutional duties and would only receive their gratification in dollars, contributed.
Most bureaux de change (BDCs) are owned by those who have the power to approve them and allocate forex. For years it was in their interest to sustain the system of multiple exchange rates – virtually placing their feet firmly on the neck of a prostrate naira.
We didn’t learn much in times of prosperity. Rather than investing proceeds of the 70s oil boom on building a future, the lack of leadership vision saw us squandering petrodollars on fiestas and jamborees.
Between 2003 and 2019, crude oil rates were at record highs, yet not much was done to wean us from our appetite for imports, or to diversify the economy. While the world was preparing for change in the use of energy with a tilt away from fossil fuels, we carried on like the windfall would last forever.
That’s the explanation for how we went from former President Olusegun Obasanjo paying off most of Nigeria’s debts at the time of Obasanjo’s exit to where we were at Muhammadu Buhari’s departure where over 96% of national revenue was being spent on debt serving.
That we’ve not learnt any lessons or are not inclined to was evident in the recent controversy over the relocation of the Federal Airports Authority of Nigeria (FAAN) headquarters from Abuja to Lagos. Rather than being scandalised that over N500 million was being wasted on needless travel between cities by the agency’s officials, the argument was over regional political advantage.
For most countries dealing with rampant inflation and forex scarcity it’s like going through hell. While are our challenges may not be as grave, there are certain aspects that are reminiscent of the Greek economic crisis between 2010 and 2018.
At the height of its troubles Greece could not borrow. The populace was confronted with several reforms and austerity measures that led to impoverishment, loss of income and property, and a humanitarian crisis of sorts.
There was massive political upheaval leading to the fall of government after government and the flight of hundreds of thousands of well-educated Greeks out of the country – their own version of japa.
The government introduced round after round of tax increases, spending cuts, and reforms between 2010 and 2016, which caused riots and protests nationwide. In addition to these measures, the country still needed several bailouts from the International Monetary Fund (IMF) and others.
One lesson from the Greek experience is that getting this economy back to health might be a matter of years, not months. It is a bitter truth that we need to start getting used to. Another is that some of the remedies might be bitter medicine no one wants to take. It would be akin to economic chemotherapy which would be brutal to the one being treated.
The government will need to do more to block leakages, break up age old practices where a privileged few have fed fat on government. These steps won’t be popular with vested interests and would be opposed. What is required is the iron will to press through.
As citizens we have a responsibility to take pride in that which is produced locally. We must change our consumption habits, produce most of what we eat or drink or wear. Those in production must up their game such that the gap in quality between imports and local products is eliminated.
One major source of dollar demand pressure is the importation of petroleum product. With the Dangote, NNPC’s Port Harcourt and Kaduna refineries as well as BUA’s facility, set to begin production in the near future, Nigeria could soon be in a position where it no longer needs to bring products.
Things may look dire right now, but it is not hopeless for this country. What would really be sad is after making a massive effort to get out of the woods, we don’t learn our lessons. There may be hardship in the land, but we must keep reminding ourselves of the immediate and remote causes so that they are not repeated.
