The COVID-19 pandemic may not be fun for everyone. It has exposed the imperfections in our modern life in which wisdom of important philosophies is either inaccurate or accurate. As the pandemic moves fiercely across the world, there is demand, supply, market and information shocks being experienced globally, according to policy experts. Most petrodollar states are hit hard by what the International Monetary Fund (IMF) and other financial institutions warn will be “the worst downturn since the great depression of the 1930s”. For most petrodollar states, the future is bleak.
The world is in recession, according to the IMF. The ricocheting effect of the pandemic presents an ominous sign for most countries that rely only on oil to provide a significant percentage of their export revenues. The devastation caused by the pandemic has sparked concern for how the most vulnerable will be impacted in Nigeria. If there was a moment to see the negative impact of the pandemic on the poor, it is now. The latest National Bureau of Statistics (NBS) report on Poverty and Inequality shows that more than 82.9 million Nigerians are poor by national standards.
According to the NBS report, 40.1 percent of the total population was classified as poor. In other words, an average of 4 out of 10 Nigerians live on N137,430 per year. By implication, the monthly income of an individual in this category is about N11,500 with an income per day of N38, the report reveals. The NBS report further disclosed that Sokoto, Taraba, Jigawa, Ebonyi, Zamfara, Yobe and Adamawa top the poorest states in the country while Lagos, Delta, Osun, Ogun, Oyo, Edo and Anambra states had the least in terms of poverty level. With the pandemic, challenges faced by poor families can deepen social inequality in our society.
Although, President Buhari made a promise in 2019 that his cabinet will take 10 million Nigerians out of poverty in the next 10 years. But the pandemic has taken the wind out of his sails. Early in the year 2020, the price of oil has been volatile in the international market. This has been a source of concern to those in authority in Nigeria and other oil-producing nations that rely solely on the commodity to fund their economies. Nigeria started the year with a projection to sell crude oil for $57/barrel. This was revised downward to $30/barrel and it is currently $20/barrel. These adjustments in oil price has compelled the FG to revise its 2020 budget twice within three months. The latest revision of the 2020 budget has a benchmark of $20/barrel.
The crash in oil price has brought more troubles to Nigeria. As receipts from oil decline, earnings are projected by the federal government to decline by a staggering 90 percent in 2020. About 80 million barrels of Nigeria’s oil are floating on board ships in international waters without buyers, according to reports. It has been predicted that Africa’s largest economy would also shrink by at least 8 percent in the year 2020 as a result of a contraction inflicted by the pandemic. The FG has therefore, abolished the cash-consuming petrol subsidy to save the nation from bankruptcy.
Part of the trouble is the devaluation of the Naira. Since 1980, the Naira has been devalued more than ten times. This makes one wonder what Nigeria is producing and exporting to the international market that necessitates devaluation of her currency. But the CBN says it has only adjusted the value of the Naira. If Nigeria was an export-oriented economy, devaluation of the Naira would have been appropriate to make the country’s goods cheaper in the international market. But when an import-dependent economy devalues its currency, it gives cause for concern.
The concern is borne out of the fact that we are considering the most populous country in Africa- Nigeria. For the past 64 years Nigeria has been exploring crude oil and selling same in the international environment. Regrettably, what is available in our sovereign wealth fund is less than $1 billion, according to reports. I think that Nigeria can do better. But Nigeria is never prepared for any shock arising from volatility of crude oil price. If the country was prepared for all manner of shocks, we would not be borrowing funds and at the same time begging for debt forgiveness.
Nigeria with a population of almost 200 million is one of the countries in Africa with abundant mineral resources. Going by the abundance of resources, Nigeria could be regarded as a “land of opportunities” harbouring millions of unemployed citizens. With the pandemic, there was a report credited to the Minister of Labour and Employment, Chris Ngige that Nigeria’s unemployment rate is to reach 33.5 percent by 2020. (Premium Times of April 13, 2020).
It is very unfortunate that millions of our youths with abundance of entrepreneurial attributes are wasting away as crude oil collides with pandemic. These are young individuals who, giving the right environment are prepared to work hard for economic gains
It is very unfortunate that millions of our youths with abundance of entrepreneurial attributes are wasting away as crude oil collides with pandemic. These are young individuals who, giving the right environment are prepared to work hard for economic gains. They are ready and willing to take risks provided there is work for them to do. Some of them have displayed the capacity to endure while they are committed to taking up new challenges coupled with acquiring new methods of doing things. But they are disappointed and stressed up daily because there is no job. All the positive attributes of most of our jobless youths have not yielded gains at the macro- economic level in the country, according to an economist.
Some economists have predicted that there is possibility that at least for three to four years, there is going to be no revenue flowing to the government from oil. If this prediction was true, what will be the fate of Nigerians? What will be the value of the Naira? Your guess is as good as mine.
The question many analysts have asked over the years is: “Why can’t we develop our agriculture, manufacturing and service sectors of the economy such that accruable revenue from these sectors can account for about 95 percent of the country’s foreign exchange earnings”? It takes time to develop these sectors of the economy. Both the government and private sector need to come together to make diversification of the economy work. It is the responsibility of the government at state and federal levels to create a favourable business environment to enable the private sector invest.
Truth be told, we need to cut cost of governance through waste reduction in the public sector without compromising productivity. While available funds are to be spent prudently and efficiently. Will the implementation of the Oronsaye Report reduce the cost of governance? Probably not! Accountability and transparency must be encouraged in governance. We should remember that it takes a generation of committed leaders to build a nation.
Our leaders must convert hope into action as soon as possible. Thank you!
