As we continue to battle the pandemic, questions on what we should or should not be doing continue to be discussed. Should we continue the lock-downs? Should we stop interstate travel? Are we testing enough people? Is there hope for a vaccine soon? So many questions with very few answers. There is so much uncertainty over many things that anyone claiming to have precise answers should be given a babalawo certificate. This is not to say that every decision on the pandemic should be accepted without question. It must be tough being a decision maker right now. Still, one thing we know for sure is that we will be here after the pandemic is gone. By “we” I mean the country. But the post pandemic country is going to have a lot of questions to answer because it looks like the post-pandemic world will not look the same as the pre-pandemic one.
The first evidence of this is with oil prices. At this point I should remind you that oil prices are one of those things that are largely unpredictable. Still it will take a very optimistic person to expect oil prices to return to anywhere near their pre-pandemic highs. Ignoring the anomaly that saw us witness negative oil prices, a near future with $50 oil looks very unlikely. The Nigerian story does not need re-hashing but just in case you forgot: we still, despite all the talk of diversification, have crude oil as our only major export accounting for over 90 percent of all exports. The government is also still dependent on crude oil exports for its revenue. Somewhere around 65 percent last year by my calculations. The collapse of oil therefore has the government and the CBN running around looking for revenue and foreign exchange. But if oil is not going back to what it used to be then what next?
The answer is actually very straightforward. We are going to have to find something else besides oil to do for the world. Preferably more than one something else. Something else that is less volatile than oil and that can be scaled up a lot more easily than oil. I know some people at one banking regulator have been shouting about how we need to “produce what we consume” and other protectionist mumbo jumbo. The truth however is that we are always going to want some things from the rest of the world. Someone in Ghana or New Zealand or Cuba is always going to produce something that we would like to have. The only way to survive with a lifestyle that is different from those in Pyongyang will be to reciprocate, and do some things that the rest of the world wants.
What kinds of things? For example, one of the side-effects of the pandemic is that many businesses are figuring out that many jobs can actually be done remotely, or can be done from home. But if they can be done from home then does home have to be where the business is located? Can people in maybe Ekiti be employed by a company in Toronto and still get the job done? As people are finding out now, many jobs can be done anywhere. And given that the costs of employing people in Ekiti is likely to be way cheaper than employing people in Toronto to do the same work, then the opportunity for win-wins are there.
While thinking about this I did some small calculations using Ekiti as an example. For Ekiti to get a billion US dollars’ worth of foreign exchange inflows each year, the state would need to have just 40,000 people working remotely from Ekiti and earning a relatively modest 25,000 USD a year. Modest by global standards. Those inflows would also generate twice the tax revenue from PAYE than Ekiti got from the oil drenched FAAC last year. Is it unimaginable for Ekiti, a state with over 3.5 million residents to have 40,000 people working remotely for international companies? It is not. But it is hard work. For that kind of thing we can’t do via a meeting in Abuja to allocate 40,000 jobs to Ekiti. We can’t schmooze our richest man in Africa to give us those 40,000 jobs. We can’t carry gun and force company X to give us the jobs. We are just going to have to be competitive enough to earn those jobs. This is just an example but in fact, most of the options for engaging with the world either through exports or through services will require us to be competitive. Are we ready for that? Are we ready for a post-oil Nigeria?
NONSO OBIKILI
Dr. Obikili is chief economist at BusinessDay
