Nigeria, A Precarious Economy
I watched Sanusi Lamido Sanusi, our Central Bank Governor, on Saharareporters TV last week, wading through the many questions on Islamic Banking and my respect for the man soared even further.
I had watched his defence of the same issue in the House of Reps chambers, and at that particular moment when he mentioned that the second highest shareholder in the proposed non-interest (Islamic) bank was Igbo, the whole House was aghast. The jaws of most Representatives dropped! That is what comes from preparing well for a defence, knowing ones onions and being articulate.
Sanusi was one of my inspirations in putting my book, CRUSHED! together. I had approached him at one of those open forums, to write a foreword for the book, but I just let the idea slide because the poor man has too much on his plate already. The book is also a monster of sorts; controversial and bold in many ways. The few people who have read it have been shocked to speechlessness. Some were afraid for me, but therein lies my strategy. I chose to heed Soyinka's advise back in the day, that 'the man (has) died in him, who keeps quiet in the face of tyranny and injustice'. So, I am still physically living (as I type this at least), in spite of the many revelations in the book. I will have to seek him out and present a copy to him though. Some sections in the book are dedicated to his work. Imagine, I read part of the book again last week - and I burst into tears at some point! I was overwhelmed with emotions. Really, I've done Nigeria and the black race a great favour in that book. More than my fair share...
But my concern today is about the precariousness of the Nigerian economy, and by extension, the entire country, in spite of Sanusi's best efforts. I am concerned that the sheer banality of this economy may yet rubbish the legacy of a truly great and hard-working man. Sanusi did hint in the saharareporters interview that he didn't need five whole years to make his impact on the economy. My heart sank, for I knew the man must be really tired of the Nigerian madness. Why drill a CBN governor over every other issue, every other day? Why allege ethnic and religious bias over bank licensing? In the sharareporters interview, the CBN Governor was clear about his focus on inflation and productivity. Still, this economy hangs on a very thin thread.
As we all know, this is a mono-product economy. What we economists know as 'Dutch Disease', whereby a country neglects its other assets because of the presence of extractive resources - like crude oil - is holding Nigeria in a vice-grip. It is amazing that the best analysis of the Nigerian economy today, still centres around the proceeds of crude oil. If we are wise, we should stop analyzing and reporting GDP growth, inflation targets and what have you, that are totally skewed by the sales of crude oil. Today, Nigeria's Bonny Light Sweet Crude sells at around $118 per barrel, and we are lucky to be producing at an all-time-high of 2.6million barrels per day. We should really sterilize the effects of crude oil from our reporting of GDP and Foreign Direct Investments. To make matters worse, bilateral and multilateral trade agreements also deceitfully report progress and achievements based on Crude Oil sales. USA's AGOA (Africa Growth Opportunities Act), lists Nigeria as one of the countries whose exports are being 'encouraged' by the USA. But 98% of the export to the USA from Nigeria is crude oil.
Now the bad news. If the study of statistics is anything to go by, the crude oil prices that Nigeria is enjoying today at $118, is going to crash someday soon. This is not about voodoo. And it has nothing to do with religion. Crude oil is a product of science; it is nothing spiritual. From the 1880's through to 1973, the price of crude oil never exceeded $30 per barrel. The first spike in 1973 as a result of the Yom Kippur war between Israel and the Arab world, sent prices soaring to around $90, followed by a gradual crash in prices, to about $30 in the mid-80s. This was what put Nigeria, as well as other commodity-based African countries in economic depression, thereby exposing us to the bad advice of IMF, World Bank and their cohorts. This crash, which we never provided for or expected, is what turned many African countries - chiefly Nigeria - into beggar nations, laden with huge debts which had to be cancelled circa 2006. Between 1987/8 to 2002, the price of crude oil hovered between $30 and $35.
The current high plateau of crude oil prices on which we are riding, which started with the US invasion of Iraq in 2003, compounded by its spending in Afghanistan, among others, is therefore not sustainable to the future. More importantly, a high crude oil price is not in the interest of the superpowers. China's rise added for the demand for more crude, hence the pressure on price. But China too is working to reduce the cost of purchasing crude oil from countries like Nigeria. It is instructive to note that General Sani Abacha, much vilified and demonized by the Western countries and their local collaborators, ran this Nigerian economy on crude oil prices of between $9 and $11 per barrel! I am not a prophet of doom, but crude oil prices will, someday in the near future, come back to the $10-$30 level. In statistics, this is called the Random Walk phenomenon, and it is a scientific reality, because of the many intervening forces in the market, who exert their interests in different directions. Producing countries are only one of such forces and cannot keep crude oil prices at the peak levels that they are now, for much longer. So, what has gone wrong with Nigeria since Abacha? Yes, you heard me right, since Abacha?
How come Nigeria sells crude oil at $118 today and our foreign reserves are dwindling almost unstoppably? Why is the federal government financing every state and local government with the proceeds of crude oil but there is nothing to show for it on ground. Why do some states collect as much as N20billion from the federal government every month and their people are still crassly poor? What happens if the price of crude oil crashes tomorrow? The debate for minimum wage is on. But even at the present wage structure, ALL governments in Nigeria will start to owe salaries FROM THE FIRST MONTH, WHEN the price of crude oil crashes.
So in spite of Malam Sanusi's best efforts, I daresay this is a bad time in history for one to work for government in Nigeria. Reputations are at stake. Yet the needed unity and strategy, that could save this country from disintegration and even the black man from extinction, are nowhere near in sight. Since Abacha, we have totally lost our innocence in this country. We have become greedier. Our big men have totally confiscated the commonwealth, building mansions and stashing even more money abroad than Abacha could ever dream of. They have elevated deceit to the level of virtue and take pleasure in inflaming deadly rivalry amongst the people they lead, in order to keep the confusion going. It cannot go on for much longer. Certainly.