What time is it, Nigeria?

By Seyi Olu Awofeso

Sensing he’s got no wrench to remove a spigot from the faucet, the world press takes turns to cast Muhamadu Buhari as an anti-hero in a sequel. He’s since been nervous and flailing but still seen as flattering to deceive. And without waiting for klaxon sound of alarm, the world press enters a verdict that the Nigerian president, Muhammadu Buhari, is a no-hoper.

“Copying Venezuela’s exchange rate policy and China’s failed equity market strategy might seem the height of foolishness. But, at least, in the opinion of John Ashbourne, Africa economist at Capital Economics, that is precisely what Nigeria, the continent’s largest economy, has just done,” the Financial Times of London wrote on 23rd January with a strong accent on the word ‘foolishness’.

Financial Times condemns Buhari’s two-tier foreign exchange for approved goods at 200 Naira to a dollar and for excluded goods at the street price of 300 Naira per dollar – matched by a policy of automatic brake on stock trading whenever share price falls by 5%. To be sure, the latter step has proved worse than useless so far with the Nigerian Stock Exchange falling nonetheless, and losing four [4] trillion Naira, according to recent estimates.

Though it’s a tad odd to adjudge a 6-month-old government and dismiss its alibi that it is the past government’s insane thefts that are hobbling, the world press just gaily dismiss those alibis and say all they see is a worsening country without buffers and without a set of clever ideas holding it from a shattering fall, as graduate un-employment figure in Nigeria clips in horror on the heel of 50% mark.

According to the Financial Times, “Nigeria has operated a de facto twin currency system for the Naira since February 2015, when the bank held the official interbank rate at N199 to the dollar to avoid a spike in inflation. The unofficial rate, available at bureaux de change, has plunged to 300/$.the latest move takes Nigeria a step along the road to a Venezuela-style scenario, where the dollar now buys 913 bolívars on the black market, according todolartoday.com, compared with an official rate of 6.28/$”.

To be sure, Buhari had it coming. He hardly ran his presidential campaign by himself except for his 3-minute cameo remarks on the hustings. Others spoke for him, for the most part, and seeing Buhari as tabula rasa, more or less, those others picked up black chalk and wrote nonsense on his white robe as Buhari’s solemn campaign pledge. Outright lies, exaggerations and hyperbole were then mixed up in eclectic blend like a witch’s brew.

After winning the 2015 election with 52% of the votes Buhari can’t drink the brew – being too toxic – or throw it away – without losing face like an apostate. On the horns of a dilemma, Buhari appeared on television on 23rd December 2015 but with a grin, six months after taking office. “Since my Vice President has made this commitment how can i come on air now to deny it?” he almost rhetorically answered a journalist who reminded him he was yet to take a step on his campaign promise to give out 5,000 Naira in cash to each of the poorest 25 million Nigerians as dole.

That written promise in a campaign pamphlet is stated for him as his ‘covenant with Nigerians’. Buhari himself once held it up as binding during the campaigns but he possibly did so without reading the contents. And now, bound by those heinous lies, Buhari finds it hard going.

Revenues from crude oil exports, for one, have dropped rapidly by 21% in one month, and still likely to worsen, as the national currency – the Naira – mirrors the fall by selling on the street at a price half as much again as the official exchange rate of 200 Naira to a dollar.

On the back of that currency fall and with dwindling revenues from oil exports, Shoreline Group Oil Company in Nigeria reacted last week with a massive 30% lay-off of its entire staff. Shell Oil as well as Chevron Oil multinational firms, also in jitters, say they too shall lay off 18,000 workers. Analysts and oil watchers expect that 5% of this retrenchment figure will occur in Nigeria where the national oil workers union (NUPENG) is already threatening brimstones to deter workers’ dismissals.

In a country where wages don’t go far in a month, losing one’s job is suicide, but it is also true from an oil company’s viewpoint that it costs between $25 to $30 to produce a barrel of oil. And so, at today’s price of $29 per barrel (and still falling) costs won’t be recoverable. Against that spectre of labour crisis President Buhari has no answer – despite that nearly 2,000 workers in Nigeria’s construction industry were retrenched last November when 24 of Nigeria’s 36 states crossed into insolvency – unable to pay civil servants’ salaries, after banks deducted past loans at source, sometimes as much as 29% of the gross monthly revenue in the case of Lagos state.

“When Muhammadu Buhari clinched victory in Nigeria’s presidential elections in March, stocks soared as investors looked to the former military ruler to reverse decades of economic mismanagement and policy inertia. Now hopes have fizzled in his (Buhari’s) ability to turn around Africa’s largest economy and oil producer,” said Bloomberg – a globally respected financial and communication company, on 19th January.

To assert as Bloomberg does that “hopes have fizzled out on Buhari’s ability” is a harsh comment likely to render Buhari’s confusion worse confounded.

For example, South African government last week said it will resume its oil imports from Iran. That means Nigeria will lose a large chunk of the South African market. Iran was all along supplying 35% of South Africa’s crude oil worth 3-4 billion dollars up until mid-2012 when President Obama imposed international trade embargo on December 30th the previous year to hinder Iran’s exports. Following that embargo, Nigeria and Saudi Arabia together gained the South African market. But now, Nigeria will lose its share especially because relations between South Africa and Nigeria are somewhat frosty.

India – which last year replaced United States of America as Nigeria’s biggest oil buyer – has scaled down its imports to 220,000 barrels per day. Until the U.S imposed sanctions, Iran was India’s second biggest oil supplier. When Iran resumes its oil exports this June – with an initial figure of 500,000 barrels of oil per day – the already shrunk petrol market in India will further narrow for Nigerian oil exports if Iran regains dominance in India’s market.

Meantime, Buhari still has huge problems at home in addition to the loss of those overseas markets for Nigeria’s crude oil exports over which Buhari’s Minister of State for petroleum, Ibe Kachikwu, has been petitioning OPEC to convene at plenary to help resolve – possibly with production cuts – but the Iranian government says no, there will be no meeting of OPEC. Iran says until there’s consensus that production cut can somehow shore up crude oil price, given that non-OPEC oil producers control 40% of the market, there’s no need for OPEC meeting on any price review.

With Iran thus slamming the door on Nigeria’s face, Buhari has few options left. He can hope but not bet against a worsening situation. A flash of that came last week in Nigeria when shadowy militias in the Niger Delta blew up two strategic gas and oil pipelines feeding the Kaduna and Port-Harcourt refineries. Both refineries were rendered non-operational same day. Electricity supply dropped a quarter in effect as Nigeria’s National Integrated Power Project lost 1,000 megawatts instantly and up till today, as repairs are yet to start. A repeat attack on similarly strategic oil installations or flow stations will paralyze Nigeria completely and shut off Nigeria’s oil exports.

Little wonder the influential Washington Post early on wrote condemningly on November 22nd 2015 that: “President Buhari’s reform agenda appears to be sauntering out of the gates, according to the civil society-run Buharimeter. Oil revenues are down, currency value has slipped and Boko Haram has killed more than 1,700 since June. Buhari’s reform agenda probably faces its greatest threat from corrupt, old-school politicians within his own All Progressives Congress (APC) party. Buhari should neutralize some of the APC’s shadiest figures, who could emerge as “veto players,” as described in Carl LeVan’s recent book. Examples of these kleptocrats are not hard to find. The U.S. Department of Justice has accused one sitting APC governor of helping former dictator Sani Abacha steal at least $458 million from state coffers.”

Truth to tell, Nigeria is closer to a crisis today than an exit from the doldrums. A good few of the country’s 36 states owe months of unpaid salaries. Some states get a mere 100 million Naira per month from federal allocation – after debt deduction; the equivalent of five hundred thousand dollars only ($500,000) a month to run a state of three million people.

Should oil price further drop to stoke Naira depreciation and hike interest rate, nearly a third of Nigeria’s 36 states will default on recurrent expenditure – including salary payments to civil servants. Nigeria’s Sovereign Wealth Fund savings itself has just a billion dollars left in it, compared to United Arab Emirates’ 600 billion dollars savings in its own sovereign wealth fund. Nigeria’s gripes of recession don’t persuade these other better-run and well-buffered OPEC countries to lend Nigeria a very present help over $30 per barrel crude oil price. But meanwhile, Nigeria’s twin demons of darkness and debts grow in girth and steal a march on the country as President Buhari now travels the world to look for harness for a country which looks like falling.

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