Nigeria’s mono-cultural economy may be in for harsher moments if recent reports that the price of crude oil, the main foreign exchange earner for the country, dipped from the $100 official fiscal benchmark for 2014 budget to $90, per barrel, the lowest in two years, are true. Oil accounts for over 85 per cent of the funds for the country’s annual budget execution. Nigeria is now a dispenser of revenue that can barely settle the monthly salaries and allowances of workers at the three tiers of government.
The Rivers State government, for example, has been lamenting that the allocation of funds from the Federation Account to states was scarcely enough to meet the burden of workers’ salaries and emoluments, pay contractors and debtors’ bills, etc. The state governor, Rotimi Amaechi, said recently that monthly allocation to states by the Federal Government had dropped by more than half, with the result that most states now ‘struggle’ to pay salaries. Rivers State’s monthly allocation, according to him, has plummeted from N25 billion to N12 billion. “The President is talking about oil theft; what quantity of oil can they steal that will bring down revenue from N25 billion to N12 billion? So, the stealing is more in (the) NNPC (Nigeria National Petroleum Corporation). Oil theft is a different thing and the stealing going on in NNPC is a different thing. Corruption in NNPC is undermining the revenue the states are getting. Our corruption index has gone down by nine points. So, all the gains we made under Obasanjo have disappeared. We are now known as one of the worst corrupt countries in the world…” Amaechi reportedly cried out on a radio phone-in programme in Port Harcourt, the state capital.
Such claims are also coming from other states. Well documented works, however, ranked Nigeria as number 26 in the world in terms of Gross Domestic Product, nominally and 30th in 2013 before rebasing, 40th in 2005, 52nd in 2000; and the country as the largest economy in Africa, based on rebased figures announced in April 2014. The country was also said to be on the track of emerging as one of the 20 largest economies in the world by 2020. But the prospect of Nigeria moving forward now that oil prices are crashing is quite unpredictable. For decades, the nation’s leadership had failed to diversify the economy, a situation that makes the country a parasite that survives largely on imported products from the industrialized world. The organised private sector (OPS) has also been repeatedly drawing attention to the inhospitable business climate that hampers the growth of manufacturing and industry, as well as shrinks employment opportunities.
Indeed, the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo- Iweala, at the African Forum of the World Bank/IMF in Washington DC, United States, said some days ago that poor electricity supply in Nigeria had raised the cost of doing business in the country by 16 per cent, and that achieving macroeconomic stability and sustainable growth of the economy would depend on the extent infrastructure constraints were addressed.
“Like in most of Africa, Nigeria faces a large infrastructure deficit. The inadequate infrastructure is holding back economic growth by at least 2 per cent per annum; according to a recent World Bank study, and we need about US$ 14.2 billion per year to bridge the infrastructure gap, with about $10.5 billion needed for federal infrastructure alone, but current spending is only $5.9 billion. Absence of adequate infrastructure in Nigeria, particularly poor electricity supply, adds a massive 16 per cent to business costs in Nigeria, compared to 2 per cent in South Africa, 5 per cent in China and 10 per cent in India”, the minister said.
With such glaring facts as Okonjo-Iweala laid bare, it is obvious that the Federal Government is not ignorant of the nation’s shortcomings. The problem remains the fact that both the FG and state governments have their eyes fixed on petro-dollars, with scant determination to develop the nation. No value is added to Nigeria’s crude through refining, for example, while the trillions of naira earned from oil has not translated to better infrastructure, industrialization or a thriving manufacturing industry.
With the reported slump in oil price, the federal and state governments should be more prudent in managing available resources and make sure all expenditures truly reflect value-formoney. Indeed, this is no time to contemplate the creation of more states unviable states.
