Coping with looming post-oil age (ll)

Also published in Daily Trust

Obviously, the increasingly unbearable economic hardship resulting from the foregoing, and the gloomy economic outlook it paints makes President Buhari’s mission particularly challenging, especially in view of Nigerians’ understandably high expectations of his administration to turn things around and put the country on a path to sustainable economic recovery.

This explains why though he maintains his readiness and ability to deliver, he nonetheless sometimes betrays worries knowing that the country is currently too broke, or rather, it has been rendered too broke to afford the ambitious economic infrastructure projects he needs to provide simultaneously with radical anti-corruption measures and sustainable economic transformation policies. The enormity of the challenges cannot be overestimated considering the fact that, and as I indicated last week, the proceeds from crude oil sales on which Nigerian economy relies are simply too inadequate to finance infrastructure projects of such magnitude.

In fact, with the current crude oil prices in international markets, and even if President Buhari managed to completely eliminate the corrupt practices that characterize crude oil export process, the proceeds from the sales of the mere two million barrels of crude oil that Nigeria produces and exports daily can’t provide enough funds to afford such massive projects. This becomes even clearer when viewed in the context of the fact that, even if the crude oil export transaction process is eventually sanitized from any form of corruption, the net revenue that will actually end up in Nigeria’s Federation Account will not be that much after all, due to the country’s huge financial obligations towards its foreign joint venture partners among the multinational oil companies and other local and international stakeholders working in its oil sector, as well as other expenses.

The picture also becomes gloomier when viewed against the backdrop of the country’s hugely disproportionate budget for government operating costs that are ironically greater than the amount budgeted for the provision of public services and infrastructure projects in the country.

Besides, even though government operating costs are indeed disproportionate, the amount of funds likely to be saved from the ongoing cost-cutting and other economic austerity measures, which President Buhari has embarked upon and apparently intends to pursue necessary statutory approval from the National Assembly in order to escalate the exercise, would not be adequate enough to considerably fund economic recovery and stimulation projects, and may instead turn out to be economically counterproductive, for that matter.

Moreover, though government’s steadily escalating campaign to recover stolen public funds from some former civil servants and political office holders is greatly commendable, and even though some of them have begun to return some of the stolen funds they had stolen, as President Buhari recently revealed, the legal and judicial processes it takes to actually recover the funds would probably drag on to outlive his presidency even if he manages to get reelected at the end of his current tenure. This is because people accused of stealing public funds in the country often connive with many unscrupulous lawyers, judges and other government officials to undermine the investigations and the trials in order to pervert the course of justice and eventually get away with it.

Under these circumstances, therefore, it’s simply unrealistic to expect the recovery of any significant amount of the stolen funds that is substantial enough to finance considerable sustainable economic recovery projects in the country.

Also, though with Buhari as President, Nigeria’s chances of attracting foreign direct investments (FDI) are presumably higher thanks to his reputation of integrity and intolerance for corruption, the country isn’t likely to attract the amount of foreign investments, particularly in real economy, that is considerable enough to stimulate accelerated economic recovery and sustainable growth.

Lack of adequate and modern infrastructure and standard public services, lack of transparency and, of course, endemic corruption have kept Nigeria among the most difficult countries to do business in the world. This explains why the few foreign direct investments in the country are largely in oil & gas sector, communications, banking and finance where foreign firms, and in collaboration with some corrupt top government Nigerian officials, exploit Nigerians, shortchange the country and make extremely disproportionate profits compared to their real contributions to the country’s economic development.

It’s very unfortunate that after being economically exploited and shortchanged for centuries by European and American firms and other multinational corporations, Nigeria, like other sub-Saharan African countries, is now being also shortchanged by Chinese, Indian, South African and other developing countries’ firms, which corruptly induce some corrupt Nigerian government officials and regulators.

Now that President Buhari is in Johannesburg, South Africa participating in the Forum on China/Africa Cooperation (FOCAC) where he is discussing massive power and railway infrastructure projects with Chinese delegates, the foregoing should serve as a wake-up call to him to be particularly wary of the seemingly irresistible offers of strategic economic partnership or assistance from such foreign firms. He should also order for the review of the terms of the existing partnerships with them and subject their operations to close and transparent monitoring by appropriate government regulatory agencies and other relevant government bodies.

Anyway, for Nigeria to cope with the serious economic implications of the looming post-oil age, survive the economic impacts when the economic value of crude oil eventually fades away, and in order to build a modern and sustainable economy, it should constructively engage reputable local investors in strategic economic joint ventures, give them all necessary concessions and incentives to invest in the provision of sustainable infrastructure projects in all real sectors of the economy. The recent announcement by Dangote Group of Companies that it intends to invest in electric power generation by constructing a gigantic power plant of 500 megawatt capacity to supply Kano, Katsina, Jigawa and some parts of Kaduna state is quite encouraging in this regard. 

Government should therefore encourage such investment initiatives so as to facilitate the creation of an enabling environment for profitable exploitation of the country’s vast economic potential in more sustainable and indeed more lucrative economic sectors e.g. agriculture and industrial production.