Petroleum-Industry

…the political class will be increasingly under pressure as scrutiny on them increases via all channels. The social media bill will not be passed, even though Mr. Melaye and Dr. Saraki will push hard for it as it becomes a channel for exposing the misdeeds of corrupt, immoral and stupid politicians. National Assembly members will be regularly shocked by how quickly their scandals are exposed and splashed on the pages of newspapers. Dr. Olubukola Saraki’s trial will finally commence at the Code of Conduct Bureau as the Supreme Court will decide his appeal and rule against him.

The year of our Lord 2016 will be a make or break year for Nigeria. Especially with regards to issues ranging from the sustenance of our economic and political stability to the reduction of the current naira volatility, our corporate cohesiveness as a united nation with regards to the Biafran and other agitations and the potential for social unrest arising from the high rate of unemployment and underemployment across the country. Looking ahead, it’s possible to posit a few predictions for the country in 2016. Some things are certain, like the fact that global oil prices will stay low throughout 2016, unless Israel attacks Iran, Syria disintegrates and takes down the entire Middle East with it or a major producer like Saudi Arabia goes up in flames (the Iran/Saudi spat has already led to crude prices going up by a dollar). Other certainties include the fact that Mr. Donald Trump will not become president of America, but is only helping push Hillary Clinton into office. A few things are a bit more tricky like, will Nigeria win Olympic football gold at the Brazil Olympics next summer or will we huff and puff and come back home immediately after the group stages? Probably. Below are a few things that will certainly happen in Nigeria in 2016.

Global oil prices will remain depressed in 2016, finally falling below the psychological threshold of $30. The fall will continue below $20 once Iran’s crude production hits the market, probably midway through the year (there is a slight possibility that third columnists in Iran will manage to scuttle the nuclear deal between it and America and thus, Iranian oil will not come into the global market). This will translate to a continued reduction in government earnings in Nigeria which will accelerate through 2016. State governments will increasingly be unable to meet their obligations to both their employees and their residents. The prospects of mass retrenchment in the civil services will become real through the backdoor. For example, if you don’t pay your staff for six months to a year, can they really be said to be employed? Lagos State will be the only state to buck this trend with its internal generated revenue system becoming even more aggressive. Two obvious strategies to reduce the impact of diminished revenue are: blocking income leakages and maybe increasing income from gas which has not been as badly impacted as crude oil. Unfortunately, it takes significant time to launch new gas trains, so the impact from that might not be felt quickly. The impact from blocking revenue leakages also might not be as great as anticipated, for example, while it might have been expected that revenue from Customs would increase, the impact of the CBN forex policies on trade will significantly reduce monies made from ports and border posts.

Devaluation might be official or through the backdoor, with the CBN stopping its aggressive defence of the naira. Whichever way it happens, devaluation will lead to a call for the head of the incumbent Central Bank Governor who will be sacrificed on the altar of public opinion, so watch out for Mr. Emefiele’s ‘surprise’ resignation.

The pressure on the naira will increase and the gap between the official and black market rates will widen further; resulting finally in some sort of currency devaluation in the first or second quarter of 2016. Devaluation might be official or through the backdoor, with the CBN stopping its aggressive defence of the naira. Whichever way, it happens; devaluation will lead to a call for the head of the incumbent Central Bank Governor who will be sacrificed on the altar of public opinion, so watch out for Mr. Emefiele’s ‘surprise’ resignation.

Corruption will take centre stage as the British judiciary’s prosecution of Mrs. Dieziani Alison-Madueke commences around the same time as the Nigerian leg does. Nigerians will be dazed by the revelations from Dieziani’s trial. Mr. Dasuki’s transgressions would be small potatoes when compared to hers. How Nigeria’s commonwealth was shared by a group of devious thieves and what they used the money for will transfix the nation for months. Yachts, diamonds, mansions in Lucerne and private jets will be the subject of discuss for months. Former President Jonathan Goodluck and a coterie of close aides will be exposed as the most irresponsible and useless administrators in the annals of the Nigerian nation. Mama Patience’s ‘cash for access’ scandal might also be brought into the mix.

Inflation will gradually become a part of our daily conversation because for a certainty, ponmo will cost more in 2016 as increased inflation, partly driven by the expanded budget, currency fluctuation and the CBN’s decision to allow banks have more liquidity through reduction of CRR pushes inflation past the 10 percent mark. This might end up leading to the CBN mopping up excess liquidity and lending rates going back up.

The passage of the PIB bill in its new form will be driven through the National Assembly in 2016. The implication of passage of the PIB bills will be an increase in Foreign Direct Investments in the third and fourth quarter of 2016, as Oil and Gas companies dust off their investment plans and start searching for new acreage for gas and crude oil as well as downstream investments. This will help drive down unemployment a bit.

Inflation will gradually become a part of our daily conversation because for a certainty, ponmo will cost more in 2016 as increased inflation, partly driven by the expanded budget, currency fluctuation and the CBN’s decision to allow banks have more liquidity through reduction of CRR pushes inflation past the 10 percent mark. This might end up leading to the CBN mopping up excess liquidity and lending rates going back up. On the positive side, there will be GDP growth on the back of the expansionary budget, with infrastructure/education spending leading to sizeable reduction in unemployment.

The idea of merging states to reduce the economic impact of will gain currency but will not happen despite its making sense because the governors and the residents will harken to tribal sentiments.

President Buhari’s presidential style will become increasingly autocratic as he becomes more and more impatient with the levers of democracy. The impact will be felt on a few newspapers, whose editors will be invited to the DSS offices in Abuja for reporting unsubstantiated news. To shore up its revenue, the Federal government led by the Federal Inland Revenue Service will hand out more fines to companies (multinationals and large corporates, even small ones) for infractions committed in past years.

As a sop to the Igbos, construction work on the Second Niger bridge will finally start this year driven by the Fashola led Ministry of Works. Work will also restart on the East-West Road cutting through Delta, Bayelsa, Rivers, Akwa Ibom and Cross River states which started in 2006 but which has not been completed after nine years and billions of naira wasted. The people of Ekiti will slowly start to face up to the reality of their predicament as their governor’s unorthodox governance style continues with him simply refusing to bother to govern apart from executing his doctrine of stomach infrastructure.

…in all, 2016 will be an interesting year for Nigeria.

The idea of merging states to reduce the economic impact of will gain currency but will not happen despite its making sense because the governors and the residents will harken to tribal sentiments.

Finally, the political class will be increasingly under pressure as scrutiny on them increases via all channels. The social media bill will not be passed, even though Mr. Melaye and Dr. Saraki will push hard for it as it becomes a channel for exposing the misdeeds of corrupt, immoral and stupid politicians. National Assembly members will be regularly shocked by how quickly their scandals are exposed and splashed on the pages of newspapers. Dr. Olubukola Saraki’s trial will finally commence at the Code of Conduct Bureau as the Supreme Court will decide his appeal and rule against him.

All in all, 2016 will be an interesting year for Nigeria. Keep your seatbelts on.

Femi Akinfolarin, a lawyer, writes from Lagos.