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| President Muhammadu Buhari |
The
government presented its 2016 budget before year end and it was premised
largely on expected revenue from crude oil sales. Although oil contributes
about 14 per cent to the GDP, without doubt, it drives the entire economic
process and for the 2016 budget, the government based its calculation on $38
per barrel. By the time of its presentation to the joint session of the
National Assembly, the price of oil had nose-dived and has since descended to
below $30. Oil experts and other market indices are pessimistic in good measure
and now predict that the price could plummet to below $15 per barrel in the
course of the year. So, when the Senate Committee on Media and Public Affairs
gave a hint of the intention of the National Assembly to shift the oil price
benchmark for the budget, it was not totally unexpected.
However,
even the budget’s designed focus on non-oil revenue remains a mere desire as
the budget fundamentals do not indicate a substantial fiscal commitment to its
realisation. Unless the government intends to tax Nigerians to death or resort
to borrowing to realise its revenue, there is certainly no money to finance
this plan. Indeed, there are no easy solutions and all Nigerians must brace up
for serious re-orientation if the nation would not be postponing the doomsday.
Of course, relying
on the shifting dynamics of the international political economy, is no hope at
this critical time. The Minister of State for Petroleum is looking to an
emergency OPEC meeting to explore the possibility of production cut to shore up
price. This did not succeed even in the last December meeting of the cartel in
Vienna. The prospects of such are even doomed following the expected easing of
the economic sanctions on Iran after its nuclear deal with the Western powers
and the insistence of the big producers, namely, Russia, U.S. and Saudi Arabia,
to glut the market with increased production. This gloomy picture is then made
complete for an oil-dependent country like Nigeria with the speculated slowdown
in Chinese growth, and the boost in alternative sources of energy.
So,
Nigerians and the ruling class should know that hard times are here. It is
certainly high time thoughts were directed to alternatives to driving this
oil-dependent economy. These times are auspicious for Nigeria to rediscover a
new sense of urgency or direction and restructure the economy for good. Oil
wealth nudged the country into a certain laziness, characterised by extravagant
spending, unbridled consumerism and looting of the public purse by rent seekers
and locusts in power. Now that the wealth has been frittered away and money is
hard to come by, Nigerians have to suffer the consequences of their wasteful
and indolent past. So, urgent steps to restructure the polity and the economy
are inevitable especially so that regions or states can begin to create their
sanity zones or pockets of efficiency and become centres of development.
The lesson
of human history is that adversity concentrates the mind. Let this be the case
with Nigeria. A glimpse of this comes from the histories of Japan, Singapore
and Norway for example. Before World War I, the Meiji rulers in Japan embarked
on massive economic reconstruction through copying of technology from the West
and creating the institutional base for its consolidation such as the Ministry
of International Trade and Industry.
Singapore
created a first world economy through focused and disciplined national
reconstruction project championed by Lee Kuan Yew. And Norway overcame its
reliance on crude oil following the oil shock of the 1970s and pioneered energy
generation from waste recycling. Necessity remains the mother of invention. The
governing elite in Nigeria should wake up, redeem itself from irredentism and
allow a government structure that the people need to unleash their productive
capacity.
This should
be complemented in the short term with a clear fiscal policy side to boost the
other aspects of the economy. This has not been calibrated in the 2016 budget
and the National Assembly should take note as there is still room for
remediation. The government should know that this is an emergency period.
Nigeria can only achieve transformation through the renewal of the citizens’
minds and a renewed work ethos. Leaders must communicate the reality that the
economy is bad in words and action.
To diversify
the economy especially using agriculture as launching pad should not be
difficult. There is land. There is the good climate and there is a huge
population of able hands and brain. Also, there is a huge number of research
institutes in Nigeria with research outputs that can be harnessed to achieve
the goal of that transformation. Let that work begin now. (Guardian)
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