Nigeria is a potentially great country because in Africa it has the largest human capital and a domestic market of 170m people. It has an abundance of natural resources. Although Libya has greater oil reserves, Nigeria produces 2.3 million barrels of oil a day, making it the biggest producer in Africa. There are 37.3 billion barrels of oil in Nigeria’s reserve, meaning that at 2.3 million barrels production rate, Nigeria can continue to pump oil for 45 years, even if new oils are not discovered. And today, more oils have been discovered in Lagos and Borno.
The large expanse of Chad basin holds a huge reservoir of oil. Nigeria is the ninth largest producer of oil and eighth largest exporter in the world. It earned $800bn since 1957 according to Bell Oil and Gas. Just imagine that the seeded money that built Dubai was mere $30bn. Although the petroleum sector is important, it remains a small contributor to the country’s vibrant and diversified economy.
Nigeria depends on oil for 95% of its foreign earnings. Yet, apart from oil, Nigeria exports a few manufactured goods, agricultural products, ICT and other services. Meaning that without oil export, Nigerian economy would be in a bad shape. Each time oil price drops, Nigeria’s economy slides into a recession.
A bad situation
Despite all its earnings, Nigeria is not at ease with itself. It is a desperate nation in need of rescue. It hardly generates enough electricity to power growth. At 3000-5000mw all year round, Nigeria’s electricity generation is barely enough to support an economy, the size of Tajikistan. Lagos alone needs 19000mw of electricity to sustain growth. Nigeria has no factories, no roads, no railways, no hospitals, no good schools and above all, no sea and airports. Why? Because Nigeria, despite its endowments lacked the leaders that would translate it’s potentials into success.
It has always been about leadership. Given the position the country finds itself, it means all its past leaders were colossal failures. They were unmitigated disasters to the country. If Nigeria had produced one good leader that stayed for four years, he should have been able to have something to show for all it earned.
Government of hope
When Nigeria witnessed an opposition party chasing an unpopular ruling party, it brought a glimmer of hope, more so, as the new president was a man of unquestionable integrity with personal quality that is rare to find in Africa. Muhammadu Buhari is not a corrupt man. He is a disciplined person that brought character and class to Aso Rock. But Buhari got it all wrong with his first appointments as president.
He had the wrong Chief of Staff, the wrong advisers, the wrong SGF and with that, has continued to make terrible mistakes in all his subsequent appointments. A good kitchen will produce quality and healthy meal. A bad kitchen will produce foul and bad meal. That is the situation Buhari created for himself and is not changing his ways, despite our rational and informed advice.
Watching the economy
If a doctor diagnoses a sickness and starts treatment and the patient is not responding, it means he has to change the treatment. It is the same with the Nigerian economy. Buhari as the doctor should know that the economy is not responding to his medicines. That the Naira is going on the loose and exchanging at above 400 to dollar is an indication that the monetary policy is not working. That airlines and factories are closing shop due to paucity of forex means the exchange regime is skewed to favour corruption.
Aero Contractors tragically closed down and sent 1000 of its work force to the labour market. People argued it was because of its chequered past riddled with mismanagement by the Ibrus. They may be right, that could be the remote cause of Aero’s death. But the immediate and final blow is the paucity of foreign exchange.
Aviation is an international business where service parts, fuels, airport levies are all paid in dollars. Without the dollar, no airline will survive. More domestic airlines without foreign operation will close shop. More foreign airlines with naira earnings but who cannot convert the money to dollars will also leave.
Doing business in Nigeria
Nigeria is not conducive for business and not attractive for foreign investment. It is also not ideal for tourism. Enter any plane bound to Nigeria and all you see are Nigerian passengers. All because of corruption, insecurity, lack of electricity and other critical infrastructure. For companies, there is chaotic tax administration to contend with. Nigeria has multiple tax regimes that ensure companies operate without profits. There are VAT, withholding, income, STDL, LG, signage, mobile advert, environmental, fire service, borehole and even transformer taxes. No company can survive under such harsh operating environment when it has to generate its electricity at a time diesel is above N200/ltr.
Hunger in the land
The National Bureau of Statistics (NBS) said inflation has increased to 17.1 per cent in July from 16.5 per cent in June. It also said Food Sub-index increased by 15.8 per cent (year-on-year) in July, 0.5 per cent points lower from rates recorded in June. This is the reason people don’t take the statistics bureau seriously with the kind of scandalous figures it is pushing down our throat.
The Bureau is trying to make us feel good when hunger is killing us. It is simply trying to be politically correct by trying to hide the failure of government to provide food to Nigerians at reasonable prices. How can inflation, with regards to food items be 17% when price of 50kg bag of rice that was N9000 last year is N20,000 today?
Which market is the NBS using to get its figures? Indomie, a new staple that sold for N1050 per carton last year is selling for N1900 while bag of 100kg maize that sold N4000 last year is today N12,000. To me inflation with regards to food items and energy is nothing below 100%. Check how much you bought a litre of petrol last year and now or a gallon of engine oil for same period. Check how much you paid for electricity last and what you are paying now. The difference is a staggering 89-100%. Haba!