Going forward, if Nigeria survives the ravages of the coronavirus pandemic, its continuous survival in a post-COVID-19 world depends on its ability to restructure or re-configure the structure of its state from a politically wired-to-fail country into an economically programmed-to-succeed nation…
A combination of lower demands as a result of acute global economic paralysis arising from the outbreak of the deadly coronavirus pandemic and an oversupply arising from a Russo-Saudi energy war, have forced crude oil prices in the international markets crashing down to a record low of below $25 per barrel. The ravages of the coronavirus disease (COVID-19) pandemic, which has left nearly two million people infected and resulted in about 200,000 deaths is an existential threat to mankind. To contain a disease that is highly contagious through to human to human contact, the countries of the world have shutdown their spaces, both domestically and internationally, through the enforcement of lockdowns and the activation of social or physical distancing protocols in a bid to contain the spread of the coronavirus pandemic – a viral disease that has no known cure or preventive vaccine for now. In addition to the harvests of death, the pandemic has set off a chain of reactions that may see the world slide into a global economic meltdown.
Nigeria, a mono-economy, which derives over 80 per cent of its national income from crude oil sales, and which has so far recorded over 400 cases of the coronavirus infections and 12 deaths, is set for another tumultuous episode of economic recession that may inevitably result in a depression. With the current reality, Nigeria’s 2020 national budget of N10.59 trillion, which was benchmarked against a crude oil price of $57 per barrel at an output of 2.18 million barrels per day, and which was signed into effect in December 2019 by President Muhammadu Buhari, has become a piece of fiscal fiction in its now unrealistic assumptions and projections. To this end, the Buhari administration is proposing a wide range of fiscal adjustments to contain the emerging global economic reality.
As a result of the steep decline in demand and a corresponding fall in the price of crude oil in the international markets, the federal government of Nigeria is suggesting a downward review of the 2020 benchmark price of crude from $57 per barrel to $30 per barrel, while reflecting an exigent cut in output from 2.18 million barrels per day to 1.7 million bpd. These adjustments will translate into a scaling down of revenue projections by N3.3 trillion, from the earlier N8.41 trillion to about N5.08 trillion in the 2020 fiscal year, in addition to the initial cut in the budget by N320 billion, from N10.59 trillion to N10.27 trillion. Despite a truce recently reached between Russia and Saudi Arabia, which may see multinational oil cartel, the Organisation of Petroleum Exporting Countries (OPEC), making an unprecedented crude oil production cut of nearly 10 million barrels in the coming months, the prospect of a price rebound is substantially diminished by the coronavirus pandemic induced global economic meltdown.
For Nigeria, a heavily indebted country of nearly 200 million people, with more than half of its population being miserably poor and hungry, the initially proposed budget estimate of N10.59 trillion ($33.8 billion) was barely enough to fund its enormous infrastructural and human development needs. Burdened by a combined domestic and foreign debt of over $80 billion, Nigeria’s incredibly high debt service ratio to revenue of 60 per cent makes a substantial cut of 40 per cent in its grossly inadequate budget of $33.8 billion economically disastrous for the Nigerian people. Now, Nigeria seems poised to be one of the worst affected countries in the world in the impending COVID-19 induced global economic meltdown.
Like a ray of light in a dark tunnel, the COVID-19 pandemic and the consequent global economic crisis needs to ignite a new conversation on the condition of the Nigerian state. Successful countries in the modern world are those whose bases of structural formation and corporate existence are economically configured to compete in the race for global resources.
Nigeria’s overt reliance on a single commodity for the bulk of its national income has made it susceptible to shocks in the international oil market, leaving its economy vulnerable to perennial dislocations. The lack of a diversified source of earnings is an indication that Nigeria’s complex web of complicated economic problems predated the impending global economic meltdown.
Like a ray of light in a dark tunnel, the COVID-19 pandemic and the consequent global economic crisis needs to ignite a new conversation on the condition of the Nigerian state. Successful countries in the modern world are those whose bases of structural formation and corporate existence are economically configured to compete in the race for global resources. Whether as liberal democracies, civilian dictatorships, monarchies or military regimes, successful countries, whose state structures are well configured economically are usually also well managed and competitive corporate entities with a distinguishing feature of national cohesion. These nations are made up of citizens whose hands are mobilised on the deck by a purposeful political leadership, towards converting their internal economic potentials into an export driven competitive national economy. These countries will pull through the ravages of the COVID-19 pandemic and make economic recovery thereafter, with mutually beneficial collaborations with similar nations, without necessarily asking for help from multilateral institutions.
On the contrary, Nigeria is a country with a collection of ethno-geographic nationalities that is yet to achieve nationhood. The structure of the federating units of the Nigerian state is delineated along primitive ethno-geographic fault lines, which effectively makes national cohesion impracticable in a fiercely competitive world. This faulty structure of state has rendered Nigeria a country of indigenes of the innumerable ethno-geographic nationalities and not a cohesive nation of citizens. Unfortunately, this primitive structure of state has entrenched a culture of ethnic identity politics in the selection of Nigeria’s political leadership, whose major role is to aggregate the sectional interests of the disparate sections of country over their share of Nigeria’s oil revenue.
With a polity, leadership and indigenes that are fixated on the sharing of oil revenues, also known as the national cake, in furtherance of their sectional interests, there is a little consideration for increasing the size of the cake in the national interest of the Nigerian state. Rather than compete with other nation states for global resources, Nigeria’s ethno-geographic nationalities are competing among themselves for revenues accruable from the exploitation of Nigeria’s deposits of oil. With Nigeria’s steadily growing population in the last decades and a daily crude oil production not exceeding a little over two million bpd, the national cake has now become grossly inadequate for its 200 million people.
The political leadership of Nigeria, a politically configured wasteland of economic opportunities, has been going cap in hand seeking external help in the form of billions of dollars of loans, aid or grants, in order to keep the ship of state afloat in this perilous period.
To shore up monthly allocations to Nigeria’s unproductive federating units in the face of dwindling crude oil revenues, the federal government, having largely exhausted its savings from the excess crude account, has plucked out $150 million from the Sovereign Wealth Investment Authority. And when Nigeria exhausts its meagre fiscal lifelines, what happens next?
It has become manifestly clear that only well managed, cohesive nations that are economically competitive in the global race for resources through exports and overseas investments are capable of drawing from their enormous wealth to cater for the welfare and security of their people at this difficult time. The political leadership of Nigeria, a politically configured wasteland of economic opportunities, has been going cap in hand seeking external help in the form of billions of dollars of loans, aid or grants, in order to keep the ship of state afloat in this perilous period. A heavily indebted and revenue strapped country like Nigeria can scarcely provide adequate palliatives for its 200 million people to cushion the effect of its enforced lockdown to contain the spread of coronavirus.
Going forward, if Nigeria survives the ravages of the coronavirus pandemic, its continuous survival in a post-COVID-19 world depends on its ability to restructure or re-configure the structure of its state from a politically wired-to-fail country into an economically programmed-to-succeed nation by first replacing the state of origin anomaly in its subnational social arrangements to the provisions for state of residence. The replacement of state of origin with state of residence is the first step towards the transformation of Nigeria from an unproductive country of national cake-sharing indigenes into a productive nation of national cake baking citizens.