Nigeria facing a very big economic problem, economists cautions

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.
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.
Firstclassnewsline.net
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.
Firstclassnewsline.net