Fear, anger as Nigerians prepare for harsher times in 2015

Amid the dwindling price of crude oil and the attendant austere measures proposed by the federal government, Nige­rians have continued to express fear over the possibility of more difficult times in the new year.

The price of crude oil, Nigeria’s primary source of income, has plummeted in the last few months by more than 40 per cent from an average of over $100 per barrel, a development that had forced the nation’s economic managers to embark on measures aimed at mit­igating the effect of the price slide on the nation’s economy.
One of the measures is the recent devaluation of Naira which has seen the nation’s currency weak­ened against the Dollar by more than eight per cent and the likeli­hood of total removal of subsidy on fuel in the country.
The measures, in the views of some experts, are capable of sub­jecting Nigerian masses to more hardship in the coming year.
In an interview with Sun­day Sun, the President, Lagos Chamber of Commerce and Industry (LCCI), Alhaji Remi Bello, explained that the situation was already affecting the cost of production across the country. He blamed the situation on what he called the import dependent nature of the nation’s economy. “Many firms are already feeling the heat across all sectors. In the last few weeks, naira exchange rate has depreciated by about 11 per cent in the interbank market and over 12 per cent in the parallel market. The impact of the depreciation on operating costs is very profound.”
In spite of the harsh implication, Bello noted that the current ex­change rate condition offered some advantages to industries with high local value addition. According to him, “It makes such industries more competitive than their foreign or import-dependent counterparts. The current situation is therefore a good opportunity to encourage industries and investors, to look inwards for products and services that are hitherto imported,” he said.
Speaking further, the LCCI boss identified high inflation rate as yet another factor Nigerians will have to deal with in the incoming year. “A natural outcome of depreciating exchange of rate is inflation for an import dependent. Cost push infla­tion will be pronounced in the next few months. This will be driven by high cost of production and high cost of imported finished goods.”
Bello is also of the opinion that there would be decline in govern­ment businesses and high risk of payment default by government. “Businesses driven by government patronage are likely to experience a decline in the short term given the current government revenue outlook. Capital projects of gov­ernments will reduce drastically and this would affect some seg­ments of the private sector. Other expenditure heads such as training and travels may also suffer major reductions. Generally, government contractors would experience a slowdown in tempo of activities.
“With declining revenue, the risk of default in payment for jobs executed for government agencies will be higher in the short term. This situation calls for cautious engagement with government con­tracts at all levels of government. As government revenue contracts, the capacity to meet financial contractual obligations may be difficult.
“With the current developments, many contracts, especially the medium to large ones will come with variations. Clearly the ex­change rate depreciation will alter many cost parameters. This is a new challenge that many contrac­tors and suppliers as well as their clients will have to confront. This will happen in public and private sectors,” Bello explained.
Also speaking on the develop­ment, the immediate past President of Trade Union Congress, TUC, Peter Esele said the quagmire is the price Nigeria has to pay for being a mono-economy adding that Nige­rians are yet to get the benefits of being citizens of an oil-producing nation in the over 50 years that the nation joined the league of oil-pro­ducing countries in the world.
“It is a shame that for over 50 years since we found crude oil in Nigeria, one cannot really get the benefit. Now that the price of crude oil is falling we are fretting. When the price becomes too high we will fret. So, what really do we want? Our biggest problem is that we are a mono-economy. If you practice mono-economy this is what will happen to you,” he noted.
Expressing his reservation over the likelihood of total removal of subsidy by the government, the former TUC boss said the chal­lenge before the government is not whether or not to remove subsidy. The challenge, according to him is government’s justification for the decision.
“The challenge before the government is not whether or not to remove subsidy. The challenge is why will ordinary Nigerians not enjoy the benefit of the falling price of crude oil? It is only when you are able to tell the people that that we can begin to talk about removing subsidy.
“With the falling price of crude how much should a litre of PMS cost Because if the price of PMS goes down and people in other parts of the world are enjoying it means that there is a fundamental question the government must answer. Ordinarily, you cannot remove subsidy when the price of crude oil is falling, that will be adding to the problem.
“The implication for the masses is that it will be difficult for everyone. Devaluation means more money with less purchasing power; With a general election too we need all the prayers and best wishes we can get,” Esele said
Also reacting to the issue, Dr. Adebisi Afolabi of Department of Economics, University of Lagos said although the current economic situation is not new to Nigeria. He however condemned the seeming panicky approach by the nation’s economic managers to the devel­opment.
“The issue to me is this: Our economic managers are bad managers. Otherwise why should they begin to raise people’s anxiety within a very short period that the prices of crude oil crashed? What has happened to the accruals from excess crude for a long time that the price was favourable? They were just sharing it. When the price of crude oil was favourable were the masses better off?” Adebis queried.
The development, he noted has grave implication for the Nigerian masses whom, according to him got little or no benefit when the price was favourable. “The im­plication is that the masses will be impoverished the more. It means more hardship and more suffer­ings for the already impoverished people of this country.
“The masses you are talking able about depend solely on the government, no job, no alternative means of eking out their living. So how do you expect them to wriggle their way out of the coming eco­nomic hardship when the system has failed to provide them with anything?” he queried.
In his own contribution, Ke­hinde Okunuga, a public analyst said an attempt by the government to increase pump price of fuel in the name of removing the subsidy totally will amount to a scam. According to Okunuga, the price of PMS going by the current price of crude oil at international market is N82.57k adding that the most honourable step to be taken by the government is to announce a further reduction in the pump price in the country.
“What are they subsidizing again? Already, the price of petro­leum is N82:57k, less than N97, so, which subsidy again? I think, the most honorable thing that the Presidency should do is to reduce the price of petrol with immediate effect, not even having to wait till next year. As for me, waiting for another week will amount to scam­ming all of us and any moment from now, if the government does not do so humbly, all of us will force it to be done,” he said.
THE SUN