Fears for the Nigerian Economy In the Years Ahead, By ‘Tope Fasua
How did we get here? $76 billion in loans and still counting? We managed to escape a life of borrowing in 2006. We were down to $6 billion in total exposure, home and abroad. But no sooner had Okonjo-Iweala completed the deal which saw Nigeria coughing out $12 billion to her foreign friends, than we started digging the hole again.
A coin dropped the moment I saw that picture posted by Senator Ben Murray-Bruce, in which he posed with the old, retired chairman of the Federal Reserve, Alan Greenspan, and boasted about how the Atiku team was contacting the man to come and assist them in turning the Nigerian economy around. It was a major fiasco, and evidence of the delusions, as well as disconnection of the Atiku group from current realities, alongside deep misunderstanding of what is required to bring economic succor to our long-suffering people. Before that unfortunate picture, which plays into a brand of colonial mentality (believing that white men are the only ones who can save us), as well as a heartless adherence to liberal economics (in a country where almost 90 million people live in extreme poverty), alarm bells had been sounding about the Atiku campaign – what with the way all his dreams are built around privatisation, public-private partnerships (PPPs), individualism and entrepreneurship. For anyone who does not know, Greenspan was basically disgraced at the end of his otherwise illustrious tenure as the U.S Fed. chairman. His unshaking belief in self-regulation of the market was his albatross.
Buhari – Economy Has Failed, More Trouble Ahead
But perhaps the Atiku delusion may be better than the tragedy we have at hand already, and even though I believe I have offered the best ways out for our people, it seems that the minds of majority have been captured. On Friday December 14, President Buhari announced to state governors – most of who have stashed billions of naira away in different places – that Nigerians need to tighten their belts, as the economy is in bad shape and that there is the need to think of new ways out of the situation. True to himself, he laid the blame on the 16 years of Peoples Democratic Party (PDP) rulership and also the usual invocation of Nigeria producing 2.1 million barrels of crude oil per day and selling for an average of $100 in the PDP years (not true because at the tail end of the Obasanjo regime and until Yar’Adua reached a peace deal with militants, production dipped to almost 800,000 barrels per day, and certainly the average price of crude oil in that period was much lower than $100). The president, like most other people of ‘influence’, in and out of government, has ignored analyses that show that crude oil isn’t worth this almost eternal, total emphasis and reliance on. For a product which you cannot manufacture on your own, of which almost 50 per cent is the cost of production, for which the world has found alternatives, and for which there are other products that your people have been producing for ages which give much higher returns on investment, anyone who encourages crude oil as the pivot for this economy is simply a non-patriot. Even if we were bewitched, hypnotised and sedated, there comes a time when we must unshackle our minds from toxic habits. Now is the time.
Balance of Payment and Current Account Crisis
But the worst is yet to come. Buhari actually stated additionally on December 14 that from the look of things, the situation will get worse. We know for whom it usually gets worse. The Central Bank of Nigeria recently released highlights of the national balance sheet. In it we found out that Nigeria’s current account balance (CAB), for the third quarter ending September 30, 2018 had swung into a huge negative position of $3.3 billion, from a positive position of $4.45 billion as at June ending. The figure in the corresponding period last year was in positive territory to the tune of $1.97 billion. Similarly but without cheer, Nigeria’s balance of payment (BOP) went into a deficit of $4.5 billion, down from a positive $503 million, where it had been as at June 30, 2018. The previous year, that current account was in a positive territory of $2.8 billion. Nigeria is said to have incurred new financial liabilities to the tune of $10.9 billion, as against $2.6 billion, for the preceding period (June 30, 2018). Some of us had always warned that under Kemi Adeosun, what we had was almost criminal economic management, for we were just using loans to paper over serious economic cancers. The chicken has now come home to roost. But Buhari cannot feign ignorance. This is what he has foisted on the Nigerian people.
Meanwhile Nigerians do not seem to be bothered by these revelations, so whatever mass hypnotisation drug Buhari gives the people, that makes both the educated and illiterate flow in one direction and have no sense of personal or collective danger, is recommended to leaders elsewhere. Because never have a people been so docile, even in the face of clear and present economic and social annihilation. Even when the president told his mammoth supporters in Uyo that “there will be no more handouts in 2019 and Nigeria has to struggle in the years ahead”, he got an applause from ignorant masses. They collected the ‘handouts’ of N2,000 each or whatever depressing sum they were given, and went back home to their misery.
With these negative balances, the naira is under threat. Over $1.6 billion was yanked off the Excess Crude Account to meet up with the fraudulent ‘Paris Club Refunds’, which are no refunds but mere bribe transfers from the federal to state governors in order to get them to lock down their states for the pleasure of the ruling party.
Pressure on the Naira – Another Devaluation Coming?
With these negative balances, the naira is under threat. Over $1.6 billion was yanked off the Excess Crude Account to meet up with the fraudulent ‘Paris Club Refunds’, which are no refunds but mere bribe transfers from the federal to state governors in order to get them to lock down their states for the pleasure of the ruling party. Also we have seen a fast deceleration in our foreign reserves, which has hemorrhaged for almost six months now. The illusion is over. Payback time seems to have arrived early. Our economic managers may like to say it is some normalisation of interest rates in the U.S.A causing all these but our problem is more fundamental, and peculiar.
The director-general of the Budget Office raised an alarm on the same day, as Buhari admitted that the economy is in deep trouble. He stated that despite N40 trillion invested in some revenue-earning government agencies, most of them simply used the generated revenue to make themselves feel comfortable. He reeled out a few of these establishments that had collected N2.8 trillion in 2018 but simply refused to make remits to the federal government. In Nigeria, it is the choice of government agencies whether to remit revenues or not. They hold the knife, and the yam. They spend at will. Buhari’s government, after precisely three-and-a-half years, is now trying to put in mechanisms for controls and monitoring. According to Akabueze, the government is now toying with the idea of performance contracts for directors-general. Now we hear they want to enforce the publishing of quarterly reports from these agencies. As Akabueze reeled out the new measures, I’m sure top government functionaries present stifled loud guffaws. The Buhari government is closing the barn, when all the horses had already bolted.
Budget Reduction Unacceptable
Then the budget fiasco. In spite of a healthy population growth rate of 3.2 per cent per annum, an erosion in the value of the naira (inflation) by approximately 12 per cent per annum, plus the fact that his lethargic policies saw to a sharp devaluation of the currency and the dip into a deep and protracted economic recession from which the nation has not fully clambered out, this government believes it is an opportuned time to shrink the budget from N9.1 trillion to N8.8 trillion. I have written petitions to all who matter without as much as an acknowledgement, because they are all keen on sustaining the status quo. I have been on the streets thrice, demonstrating against the budget of hopelessness and the entire process of budgeting and appropriation in this country, as that is where poverty gets manufactured en masse. I have stated that the minimum acceptable budget level for Nigerians is N15 trillion – a doubling of our current plans. That is even concessionary. Smaller countries are doing a lot more and therefore growing faster than we have ever grown. All the empirical evidence I have provided to show we have the lowest budget-to-GDP ratio in the world, and the second lowest budget per capita in the world, have been ignored. Most Nigerians don’t even realise the budget is absolutely critical to the livelihoods of all citizens. Our leaders have us where they want.
Government Unable To Fulfil Obligations
The government is no longer able to fulfil its obligations. The federal government has become captive to the states, whose governors live like modern-day feudal slave owners. A mere marginal increase of minimum wage cannot be achieved, eight years after the last one. The governors state brashly that they cannot increase anything, yet they ride around in convoys worth billions of naira, and spend security votes – and their entire state budgets – without accountability to anyone. Workers are rearing to proceed on strikes. Academic Staff Union of Universities has currently downed tools, spilling the student population back to society, rather than keeping them on campuses. The president has said unions are distracting him from building infrastructure. Government is also under pressure with oil marketers. The cost of bringing in refined petrol is now above the cost of sale, the Nigerian National Petroleum Corporation (NNPC) has accrued over N1 trillion this year on fuel ‘subsidy’, and a provision of $1 billion of the $28 billion planned for 2019 is for fuel subsidy – an expense item which has made it back into our lexicon, despite the fuel price hike of 2015 – which was touted as the ‘final deregulation’ and accepted without a whimper because it was from ‘sai Buhari!’ We accepted that 50 per cent fuel price increase (far worse than what had French people rioting on the streets for days), alongside a currency devaluation (N177/N220 to N305/N360), a 45 per cent increase in electricity tariff among other lashes of ‘koboko’ from this government, with no complaints. After all it was ‘sai Baba!!’
…the question all Nigerians should be asking is: “How come the economy is still in so much trouble when we have borrowed to the hilt?”… The nation has never been more due for an old fashioned revolution but we are keeping it at the level of a revolution of great ideas, so as to avoid bloodshed. We hope our traducers and oppressors get the memo and begin to change course.
The DG of the Debt Management Office said the non-remittance of revenues by some departments of government is the reason we go a-borrowing (and eventually a-sorrowing). All of a sudden we are beginning to see sly admission that borrowing is not always good anyway, or that we may have borrowed ourselves into a cul-de-sac. But the question all Nigerians should be asking is: “How come the economy is still in so much trouble when we have borrowed to the hilt?” Mere civil servants (the top ones who are there by connections and by some sort of ‘class’ system being operated silently in Nigeria) still fly First Class with their many children, wives and concubines. Nigeria picks the bill. The nation has never been more due for an old fashioned revolution but we are keeping it at the level of a revolution of great ideas, so as to avoid bloodshed. We hope our traducers and oppressors get the memo and begin to change course. Nigeria is officially the most unequal country on earth, according to OXFAM. We are the country with the richest black man and woman on earth, as well as 90 million of the poorest.
How did we get here? $76 billion in loans and still counting? We managed to escape a life of borrowing in 2006. We were down to $6 billion in total exposure, home and abroad. But no sooner had Okonjo-Iweala completed the deal which saw Nigeria coughing out $12 billion to her foreign friends, than we started digging the hole again. By the end of the Jonathan regime, we owed $63 billion. Most of these loans were domestic – denominated in naira (roughly 80 per cent). And so Buhari, alongside his former finance minister, came and devalued the naira from N199 to the dollar, and to N305. Upon doing this, the domestic loan component of about $50 billion as at 2015, fell to about $33 billion. This is because N10 trillion divided by N199 (resulting in $50 billion), was suddenly being divided by N305 (resulting in $33 billion). If we add the $33 billion with the foreign loan component as at 2015 (about $13 billion), we will arrive at $46 billion. If we are at $76 billion today, it means that this government has added at least $30 billion to our loans and the figure is still climbing. We weren’t able to exit $35 billion in 2006 without a major write-off. There’s no way we would be able to exit these new, larger debts today when Nigerians have become far more corrupt. Perhaps the plan is to sell Nigeria wholesale and we are almost there.
There you have it. Our jobs are cut out for us. We must urgently rescue this nation and stop thinking selfishly. Therein lies the secret of a great nation. Yes, some people will keep making money, even as a country drifts to the abyss. Some people made it before Iraq, Libya, Somalia, DR Congo, and the rest, got shot to pieces. Let us please rescue our nation. All hands on deck. No nation has been more mismanaged than this one. None! We cannot keep ignoring all these red lights flashing on the dashboard.