After failing to save during an oil boom in the last five years, Nigeria is now in a fix as falling oil prices takes a heavy toll on the economy, OYETUNJI ABIOYE writes
Nigeria is on the verge of a major economic crisis and may be thrown into a perplexing hardship worse than the Shehu Shagari regime in 1982 when the prices of crude oil crashed in the international market, economists have warned.
The economists argued that the current economic managers led by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, should be blamed for failing to save for the rainy day, after a five year period of oil boom that left the price of crude oil above $100 per barrel.
Some of the experts also supported a number of the views by a former Governor of the Central Bank of Nigeria, Prof. Chukuwuma Soludo, who claimed in his two recent articles that the economy was heading for an imminent crash except the prices of oil rebounded soon.
According to the experts, the country may find it difficult to survive considering a number of leakages in the economy.
“You need to look at the fact that if there are leakages in the economy and the price of oil crashes, you cannot survive it,” a senior lecturer at the Department of Economics, Ahmadu Bello University, Zaria, Kaduna, Dr. Usman Mutaka, told our correspondent on Sunday.
He further said, “Our economic managers are not transparent; they cannot sincerely tell us how much we earn, how much we have, how much we have spent and how much is remaining.
“Last year, we said we were the biggest economy in Africa and the 26th in the world; and now, the prices of oil crashed and we started crying like a baby.”
According to Mutaka, if all the money being stolen or unaccounted for including the $1.48bn by the Nigerian National Petroleum Corporation is remitted to the coffers of the economy, the oil price crash should not have been a problem for the country now.
He alleged that some of the economic managers had dual interests; a situation he noted had prevented them from performing their duties transparently and dedicatedly.
“Some of our economic managers have dual interests. Some have allegiance to some international bodies and countries. These affect their policies and that is why you see some of their policies showing allegiance to such international organisations or countries.”
Mutaka, who also wondered why the economic managers had failed to save for the rainy day, said, “For any commodity-driven economy like Nigeria, there must be shocks and these shocks are driven by the market forces. Our economic managers should know that there willl always be shocks and be prepared for it. You cannot continue to build the economy around few people who are super rich and care less about the masses.
“Every serious economist should know that where there is a bubble, there will be a burst; they should have prepared for this crash.”
A professor of Economics at the Olabisi Onabanjo University, Ogun State, Sherrifdeen Tella, said there was no reason for the country not to have saved enough, noting that the oil boom experienced during the Shagari regime was smaller compared to what the nation had experienced in recent times.
He said, “Before the oil crash in 1982, although the boom was not as long as this, we were consuming all manners of things. The same thing has happened again. The crude oil price was high during Obasanjo era. It came down for a short period during the global financial crisis and went up again. Where is the money today? Instead of investing the money, we wasted it and some went into private pockets because of the incompetence of our leaders. This is what has snowballed into the challenge we are facing now.”
Asked if the country could go bankrupt soon, Tella said, “Countries live on debt and pay later. However, the volume of our current external and domestic debts plus other obligations will determine if we are bankrupt or on the verge of bankruptcy.”
But the professor said, “Nigeria is likely going to face greater problems if the prices of oil continue to fall.”
An Associate Professor of Economics at Babcock University, Ogun State, Dr. Segun Ajibola, believes the nation’s economy is resilient with several sources of reverence.
Ajibola, who noted that the global crash in oil prices had affected the economy drastically, said the country needed to look for short and long-term solutions.
For the short-term, he said the government needed to discourage import and explore other means of diversifying the economy.
“We need to adjust our consumption pattern by sourcing for the local substitute of things we used to import, while we explore structural adjustment of the economy in the long run,” he said.
A renowned economics professor, Pat Utomi, had backed Soludo on the state of the economy.
Utomi said, “On the general state of the economy, I agree completely with Soludo. The economy is inchoate as it is. Even more importantly, I agree with him that we have showed no learning (desire), because what is happening now is a complete replica, as he suggested, of 1982.
On the management of the economy, Utomi said, “I don’t think the management of this economy by this administration is worthy of praise”
Okonjo-Iweala, however, described Soludo’s criticism of the management of the economy under President Goodluck Jonathan as “intellectual hara-kiri.”
She also said the state governors were responsible for the country’s failure to save in the time of the oil boom.
Soludo’s questions for Okonjo-Iweala
Can you tell Nigerians how much the amnesty programme costs, and also the annual cost for ‘protecting’ the pipelines and security of oil wells? And the ‘thieves’ are spirits?
As coordinator of the economy, can you tell Nigerians why the price of Automotive Gas Oil, popularly called diesel, has still not come down despite the crash in global crude oil prices, and how much is being appropriated by friends in the process?
Do you really know (as coordinator and minister of finance) how many trillions of naira, self- financing government agencies earn and spend?
How many trillions (in actual fact) have been ‘lost’ through customs duty waivers over the last four years?
There is no programme on how to make the naira the de facto currency of ECOWAS or the international financial centre that can attract more than $100bn per annum. Where is the strategy for orchestrating the revolutionary finance to power the economy during this downturn?
Posers for PDP, APC
So far, neither the APC nor the PDP has a credible programme for employment and poverty reduction. The APC promises to create 20,000 jobs per state in the first year, totalling a mere 720,000 jobs. This sounds like a quota system and for a country where the new entrants into the labour market per annum exceed two million.
What Jonathan must do, if he wins
President Goodluck Jonathan greatest challenge is how to save himself from the stranglehold of his largely provincial palace jesters who tell him he has done better than God, and seek out ‘enemies’ and friends who can help him write his name in history. Propaganda won’t do it.
Second, he must claw back his powers as President of Nigeria. He largely outsourced them, and must now roll his sleeves for a new beginning.
So far, your report card is not looking great. You need a team of big and bold thinkers, as well as with excellent execution capacity.
What Buhari must do if he wins
The APC manifesto contains some good principles and wish-lists, but as a blueprint for Nigeria’s security and prosperity, it is largely hollow. The numbers do not add up. Thus, his first job is to present a credible development agenda to Nigerians.
The second key challenge for Buhari and his team will be to transit and transform from a group of what I largely refer to as Aggrieved People’s Congregation to build a true political party with a soul from the patchwork of political associations. It is surely easier to oppose than to govern.
Nigeria is on the verge of a major economic crisis and may be thrown into a perplexing hardship worse than the Shehu Shagari regime in 1982 when the prices of crude oil crashed in the international market, economists have warned.
The economists argued that the current economic managers led by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, should be blamed for failing to save for the rainy day, after a five year period of oil boom that left the price of crude oil above $100 per barrel.
Some of the experts also supported a number of the views by a former Governor of the Central Bank of Nigeria, Prof. Chukuwuma Soludo, who claimed in his two recent articles that the economy was heading for an imminent crash except the prices of oil rebounded soon.
According to the experts, the country may find it difficult to survive considering a number of leakages in the economy.
“You need to look at the fact that if there are leakages in the economy and the price of oil crashes, you cannot survive it,” a senior lecturer at the Department of Economics, Ahmadu Bello University, Zaria, Kaduna, Dr. Usman Mutaka, told our correspondent on Sunday.
He further said, “Our economic managers are not transparent; they cannot sincerely tell us how much we earn, how much we have, how much we have spent and how much is remaining.
“Last year, we said we were the biggest economy in Africa and the 26th in the world; and now, the prices of oil crashed and we started crying like a baby.”
According to Mutaka, if all the money being stolen or unaccounted for including the $1.48bn by the Nigerian National Petroleum Corporation is remitted to the coffers of the economy, the oil price crash should not have been a problem for the country now.
He alleged that some of the economic managers had dual interests; a situation he noted had prevented them from performing their duties transparently and dedicatedly.
“Some of our economic managers have dual interests. Some have allegiance to some international bodies and countries. These affect their policies and that is why you see some of their policies showing allegiance to such international organisations or countries.”
Mutaka, who also wondered why the economic managers had failed to save for the rainy day, said, “For any commodity-driven economy like Nigeria, there must be shocks and these shocks are driven by the market forces. Our economic managers should know that there willl always be shocks and be prepared for it. You cannot continue to build the economy around few people who are super rich and care less about the masses.
“Every serious economist should know that where there is a bubble, there will be a burst; they should have prepared for this crash.”
A professor of Economics at the Olabisi Onabanjo University, Ogun State, Sherrifdeen Tella, said there was no reason for the country not to have saved enough, noting that the oil boom experienced during the Shagari regime was smaller compared to what the nation had experienced in recent times.
He said, “Before the oil crash in 1982, although the boom was not as long as this, we were consuming all manners of things. The same thing has happened again. The crude oil price was high during Obasanjo era. It came down for a short period during the global financial crisis and went up again. Where is the money today? Instead of investing the money, we wasted it and some went into private pockets because of the incompetence of our leaders. This is what has snowballed into the challenge we are facing now.”
Asked if the country could go bankrupt soon, Tella said, “Countries live on debt and pay later. However, the volume of our current external and domestic debts plus other obligations will determine if we are bankrupt or on the verge of bankruptcy.”
But the professor said, “Nigeria is likely going to face greater problems if the prices of oil continue to fall.”
An Associate Professor of Economics at Babcock University, Ogun State, Dr. Segun Ajibola, believes the nation’s economy is resilient with several sources of reverence.
Ajibola, who noted that the global crash in oil prices had affected the economy drastically, said the country needed to look for short and long-term solutions.
For the short-term, he said the government needed to discourage import and explore other means of diversifying the economy.
“We need to adjust our consumption pattern by sourcing for the local substitute of things we used to import, while we explore structural adjustment of the economy in the long run,” he said.
A renowned economics professor, Pat Utomi, had backed Soludo on the state of the economy.
Utomi said, “On the general state of the economy, I agree completely with Soludo. The economy is inchoate as it is. Even more importantly, I agree with him that we have showed no learning (desire), because what is happening now is a complete replica, as he suggested, of 1982.
On the management of the economy, Utomi said, “I don’t think the management of this economy by this administration is worthy of praise”
Okonjo-Iweala, however, described Soludo’s criticism of the management of the economy under President Goodluck Jonathan as “intellectual hara-kiri.”
She also said the state governors were responsible for the country’s failure to save in the time of the oil boom.
Soludo’s questions for Okonjo-Iweala
Can you tell Nigerians how much the amnesty programme costs, and also the annual cost for ‘protecting’ the pipelines and security of oil wells? And the ‘thieves’ are spirits?
As coordinator of the economy, can you tell Nigerians why the price of Automotive Gas Oil, popularly called diesel, has still not come down despite the crash in global crude oil prices, and how much is being appropriated by friends in the process?
Do you really know (as coordinator and minister of finance) how many trillions of naira, self- financing government agencies earn and spend?
How many trillions (in actual fact) have been ‘lost’ through customs duty waivers over the last four years?
There is no programme on how to make the naira the de facto currency of ECOWAS or the international financial centre that can attract more than $100bn per annum. Where is the strategy for orchestrating the revolutionary finance to power the economy during this downturn?
Posers for PDP, APC
So far, neither the APC nor the PDP has a credible programme for employment and poverty reduction. The APC promises to create 20,000 jobs per state in the first year, totalling a mere 720,000 jobs. This sounds like a quota system and for a country where the new entrants into the labour market per annum exceed two million.
What Jonathan must do, if he wins
President Goodluck Jonathan greatest challenge is how to save himself from the stranglehold of his largely provincial palace jesters who tell him he has done better than God, and seek out ‘enemies’ and friends who can help him write his name in history. Propaganda won’t do it.
Second, he must claw back his powers as President of Nigeria. He largely outsourced them, and must now roll his sleeves for a new beginning.
So far, your report card is not looking great. You need a team of big and bold thinkers, as well as with excellent execution capacity.
What Buhari must do if he wins
The APC manifesto contains some good principles and wish-lists, but as a blueprint for Nigeria’s security and prosperity, it is largely hollow. The numbers do not add up. Thus, his first job is to present a credible development agenda to Nigerians.
The second key challenge for Buhari and his team will be to transit and transform from a group of what I largely refer to as Aggrieved People’s Congregation to build a true political party with a soul from the patchwork of political associations. It is surely easier to oppose than to govern.
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