The state of the nation

This is a difficult time for Nigeria. Crude oil, on which the country depends for over 80 percent of its revenues and 90 percent of its foreign exchange, has been on a free fall in the international market since 2014.  As at the last check, the price was $32 per barrel. Meanwhile, the official cost of producing a barrel of oil hovers around $30 per barrel. With the current over-supply of oil, global growth slum, Shale gas revolution, US resumption of oil exports and the re-entry of Iran into the global oil market, speculations continue that the price may continue to slide further to below $20 per barrel.

Curiously, Nigeria’s 2016 budget proposal, still before the National Assembly for consideration, has a budget oil bench mark of $38 dollars per barrel. Expectedly, Nigeria’s currency – the naira – has been badly hit by the declining oil revenues and the attendant scarcity of foreign exchange to sustain our import-dependent economy.  Hopes that the new government would quickly put together a formidable economic team to work with the Central Bank of Nigeria (CBN) to fashion out appropriate remedy measures and policies to tackle the slide is fast vanishing.

The CBN in turn, it appears acting from political pressure, has been churning out various controversial, panicky, and fire-fighting policies and measures to protect a beleaguered naira while deepening the misery of Nigerians both home and abroad and impeding on their rights to do their legitimate businesses. Under its harsh forex demand management system, the CBN had placed some items on its import restriction list, but far worse, has made it even difficult for legitimate businesses and manufacturers – majority of whom depend on the importation of one or more foreign input and spare parts – to access forex. The result has been a shrinking businesses and manufacturing environment as many businesses and manufacturers are forced to lay off staff and close shop in the face the harsh operating environment they are meant to go through. This is happening at a time oil prices are shrinking and the government is talking about diversification of the economy and actually planned to raise a substantial part of the budget from non-oil taxes and revenues. We are at a loss where these revenues will come from when the companies and businesses that should help generate them are being systematically put out of business.   

A particularly tough blow to Nigerians is the stoppage of payments for goods and services abroad with naira denominated payment cards that had long being taken for granted as one of the features and benefits of globalisation. Currently, individuals and small businesses who make payments, do businesses with foreign entities have been disconnected and rendered helpless. Hundreds of thousands of Nigerians studying abroad and depend on their parents or guardians here in Nigeria for sustenance have suddenly found themselves unable to access their funds with no viable alternative put in place by the CBN.

Similarly, in a case of slaughtering the gooses that lay the golden eggs, Nigeria’s hitherto unimpressive regulatory agencies have gone into over-drive, slamming controversial, ridiculous, and sometimes unrealistic fines on flourishing foreign businesses in Nigeria sending signals to the international business community that it is unsafe to do business in Nigeria as the government could turn on foreign owned businesses in times of economic malaise as Nigeria is currently experiencing.

However, we must note that the government has been quite impressive in its wars against corruption and the insurgency in the North East of the country. We are at pains however to point out that from the way the government is carrying on, it appears those two – war against corruption and the Boko Haram insurgency – are its two sole programmes and nothing more.  Sadly, as it is becoming obvious by the day, ending corruption in Nigeria will not result to an end in poverty, hunger, infrastructure deficit and lead to economic growth and development.  These are even more important goals that the government needs to prioritise and for which it appears it has no plans.

We call on the government to prioritise the economy, empower competent Nigerians to fashion out comprehensive policy options and strategies for the country to surmount its present challenges and launch itself on the part of sustainable growth and development.