Our foreign reserve may come under pressure due to lower oil prices. As at last week it fell to $56 per barrel, below the $60 benchmark for the 2019 budget. Experts predict that the US-China trade spat could expand into a currency war.
The trade war between the largest two economies in the world has fanned fears of a global economic slowdown, which could translate to lower oil demand and lower revenue for Nigeria since oil accounts for a large chunk of its budget.
It could get worse if China decides to buy crude oil from Iran in retaliation to the latest US tariffs. Oil prices could sink to as low as $30 a barrel.
If oil prices fall that low it could deal a big blow to the economy. It will force the Central Bank to intervene more in the foreign exchange market to prop the naira. Whatever false sense of security stable oil prices bought the federal government, it’s time to realise that the N3.73 trillion budgeted for 2019 is at risk.
When the price of a barrel of oil fell to $40 in 2016, the economy slid into a recession forcing the CBN to restrict scarce forex. The economy is still recovering. Economic hardship coupled with festering socio-political unrests don’t get along well together.
At some time, the decline in the number of deaths from wars, violence and genocide was said to explain the dramatic improvement of global standards of living. Yet Nigerians die daily, victims of bandits, militants and kidnappers. Add the figures of mothers and children who die daily from curable illnesses, a precipitating underdevelopment is evident. It’s hard to disagree with pessimists who say that Nigeria is under siege even though we’re not at war.
It is not difficult to be negative about the future of Nigeria when compared with Ghana’s growing socio-political stability and the growing economic strength of Ethiopia and Egypt. On the other hand, Nigeria is frequently portrayed as a house that has fallen, with a penchant for ethno-religious violence, a land of oil and blood, a den of advance fee fraudsters, a land burdened by debilitating infrastructure.
Pervasive socio-political troubles square with the notion that Nigeria is fragile. Failed economic promises and a growing and unconscionable disproportion of Nigerians living in extreme poverty are some of the combustible elements fuelling the pessimism.
The above image is often contradicted by Nigeria’s untapped potentials which include the usual suspects — a growing youthful population, a landmass gifted with many natural resources other than crude oil, a large number of accomplished professionals in diaspora etc.
Government – the executive and legislative arms at the federal and state level – allows such high octane elements to mix at its peril. Indifference to the country’s prospect is a depressing line of action but subconsciously this is the default attitude of President and the Governors. It explains the cynicism and despondency of citizens.
It thus falls on Nigerian statesmen and women to point out, repeatedly and forcefully, the need to prevent another economic downturn. Well-meaning Nigerians with a keen sense of history realise that they can’t remain passive this time around and hope for a miracle to spare the nation from anarchy and doom. Neither praying nor hoping exonerates those who have a voice from personal responsibility. Beer parlour or arm chair politics is insufficient because Nigeria is as much theirs as it is of those who think she is their personal heritage.
Besides, to do nothing is similar to conniving with marauders by leaving open a window into your house.
By Our Reporter
