What A Country!

“Oil below $60 as FG presents 2015 budget to N’Assembly” was the headline in one of the national dailies on Wednesday, December 17. The question I asked myself was: How come we squandered our petrodollars in times of plenty and now that crude oil price has slumped, we are biting our fingers and imposing short-sighted austerity measures? The same crude oil selling for less than $60 per barrel sold for well over $100 dollars consistently in the past four years. What did we do with its proceeds? Those who think we will continue to accrue bumper oil money should think again, as things have changed on the international market.  Things are changing fast, but like the bad planner that we are, we haven’t changed our economic dance steps to the rhythm of global realities.

Characteristic of our leaders, what we get is contradicting reports. Today, the President says “no shaking, oil prices will not affect us”, tomorrow the Minister of Finance would say “brace up for austerity measures”! Talk is cheap; all we do is talk about diversifying our economy to depend less on oil. But it ends there; nobody is thinking about the devastating disaster a sharp and continued drop in global demand for our crude oil would portend. The value of the naira drops daily, we all know the effect that has on our economy. Here we are!  Our appetite for immediate gratification has ensured that our country’s resources are plundered. As a result, we its people have become blind to sustainable routes to economic growth and development.

Now the queues have returned to filling stations, just in time when people are making plans to travel for Christmas and New Year festivities. Nigerians are still being charged the expensive old petroleum price when it has crashed. The truth is, at 97 naira per litre, even with total removal of subsidy, we are still paying too much for petrol going by the present reality. But our immediate gratification assumes topmost priority when we sell our God-given petroleum as crude oil and import it as finished products through some unwholesome middlemen. That is what we are paying for. So whilst I agree with PENGASSAN, we groan at the pain it causes us. But we must bear it and support them.

There are no measures attesting to our ability to ask: “what-if?” We do not even follow global trends to understand that today’s global economy does not support and cannot sustain our leaders’ avarice.  While we spend our petrodollars on concurrent luxuries such as exorbitant salaries and allowances for political office holders, those we sell to are getting closer and closer to energy self-sufficiency. In practical terms, our crude oil may be worth a lot less in an ever-changing world. Developed nations are dealing with this situation as they have lost so much of their manufacturing base to the Far East. We cannot afford to get caught with our pants down.       

Nigeria’s earnings from oil continue to plummet this year. It has been estimated that this might result in a $12billion shortfall of budgetary estimates, or more. And despite dipping our hands into the Excess Crude Account (ECA) to augment the deficit, we are still playing catch up. State governments have experienced as much as a 50 percent reduction in their allocations. The account that is supposed to be our Sovereign Wealth Fund, which should insulate our economy from external shocks, has also been plundered and drained. 

If oil price continues its free fall, production is disrupted and the 80,000-barrels-a-day oil theft goes on unabated, we will keep dipping into the ECA until it runs dry, as there is no magic to progress.

    

According to the Gross Summary of Statutory Revenue Allocation and VAT released by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) in March 2013, apart from Akwa Ibom (N22, 205,383,781); Bayelsa (N13, 350,351,654); Delta (N17, 057,045,907); Rivers (N20, 934,686,737); Kano (N12, 333,095,855) and Lagos (N14, 219,026,551), no other state got up to 10billion naira from the Federation Account. In many of these states, internally generated revenue is near zero. For instance, Plateau State got N6, 099,168,412 during the month in review, and has only succeeded in generating just over 6billion in IGR between January and October. The state makes roughly 600million in IGR per month; a paltry 10 percent of its monthly allocation. This is why any reduction in the Federation Account allocation creates panic among states. This simply is not good enough.

The way to go is to look inwards. The Minister of Agriculture has promised that agric would be Nigeria’s petrol. Enugu should be saying the same about coal and Zamfara about gold. I could go on and on. But where will we find the investment today to make this a reality?

We need sound leadership, so apart from our security challenges, the economy should be another crucial reason why we must “shine our eyes” before casting our votes come February and thereafter protect those votes.