Early in the final week of March 2017, President Buhari marked his second year since winning the elections that finally made him Nigeria’s president after doggedly contesting for 13 years. From the point of view of anti-government cynics, it was described as the “second anniversary” of another addition to the string of regrettable actions taken yet again by Nigerians under the pretext of wanting the best for their country; to other Nigerians, it was a “victory for democracy” – or so they were told.
President Buhari was hailed as “a man of integrity”, “a messiah” and Nigeria’s best chance of ridding herself of the plague of corruption on which a great deal of the socioeconomic issues facing the country have been blamed. Buhari enjoyed a great deal of good will in the early periods of his administration and for some time, it really did seem like Nigerians had done something for the greater good. However, as global oil prices continued to sink even lower than the depths from which they were mined, the previously ignored glaring hole in Buhari’s armour of campaign promises became undeniable. It became obvious that the Buhari admin like a lot others before him had taken the helm of affairs and hinged the country’s financial future and the propensity of his success primarily on selling crude oil.
After the passage of the 2016 budget and the drama that came with it, for more than a year, no real economic direction could be made available; there was a plan A that seemed temporally impracticable and nothing else as a contingent. The country eventually went from employing austerity measures and putting up with greedy lawmakers complain about receiving allowances and benefits late, to having them shut up entirely as it seemed like their failures and inefficiencies had squared up against them, derisively staring them in the face. September 2016 then came and the National Bureau of Statistics officially put out the word confirming what a great many people had been living with for months: the Nigerian economy had slid into a heavily anticipated recession.
Even before this final act that all but confirmed everyone’s concern locally and internationally about the Buhari’s promise of all round change, things had already started to go sour. Nigerians had to put up with long periods of unproductivity stemming from crippling fuel scarcities; for the first time since the Nigerian Civil War, peacetime Nigeria had to deal with a humanitarian crisis of hunger and malnutrition while working class families had been recorded as not having enough to afford to eat even twice a day. Factually, after the first three months of his swearing in, the general theme everyone concerned about the country could agree on was that: it just was not working. While the prices of oil continued to hold strong at the lower price levels, inflation rates in oil dependent Nigeria shot up adding to the already existing hunger and agony the drenched the place. In August 2016, Bloomberg described the naira as being one of the worst performing currencies of 2016 and shortly after came news of recession. By December, the Nigerian Bureau of Statistics announced that in addition to the 45% youth unemployment rates, an additional 4 million people had lost jobs as seemingly everyone from mega-corporations like Guinness and Nigerian Breweries (N11bn combined) posted huge loses while SMEs went belly-up in record numbers as many other businesses scrapped their plates to break even on operations. To many Nigerians who had to endure this period, Buhari was a plague on the land and they wanted nothing more than for him to go away – just pack up and leave, in a way, he did.
As an oil dependent economy, the market situation of crude oil globally is extremely important to the life of the average Nigerian. When oil prices crash, inflation; business crippling credit crunches; etc., become rife like we saw between late 2014 and 2016. When the prices of oil soar, it is however relatively “all good”. Since Nigeria as a country has stuck to producing the same volume of oil since 1974 (or below), reason dictates that as the Nigerian population continues to expand, there will be irrefutable variations between the distribution of generated national income and the population statistics. This implies that while as at 1974, oil climbed to around $11/b and had to be used in catering to the welfare of around fifty million people – comfortably, in 2017 and with crude selling at around five times that price, the conditions might just be more than five times as different.
At 2.5 million barrels of oil being sold daily in 1974, the “per capita oil money per diem (PCOMPD [NB: this isn’t actually a thing, I’m just inventing and using it to mean how much income per person the govt. made from selling crude oil daily])” stood at around 55 cents. Adjusting for inflation 55 cents in 1974 would be around $3 today and concurrently, the $2 per day poverty line in 1974 was 38 cents also adjusted for inflation, hence in 1974 the government was making enough to keep every Nigerian then, living above poverty. In 2015 with the restive Niger Delta “protesting” and blowing up oil installations at full swing and with oil export volumes dropping to an annual average of around 1,700,000bpd, selling at $35pb and catering to 182m people put that PCOMPD figure at 33 cents. Just in case you were wondering, $0.33 is in today’s money, there is no correcting for inflation.
As a side note, the population expansion of Nigeria is “crazy” to use the term colloquially. For example, between 2006 and 2016, it took Nigeria just these 10 years to add 40 million new people into the population. For comparability, the population of Ghana is 29.5 million; 40 million in 10 years is about one and half times the population of Ghana while the Netherlands, Belgium and Switzerland combined have about 35 million people, just a bit more than Ogun, Osun and Lagos States. Nigeria has for a while, been the most populous country in Africa and in the early 2000s it became the nationality with the highest concentration of Africans (“black people”) on earth. The statistics indicated that one out of every ten black people found in the world is probably Nigerian. In 2009, that became a fact as Nigeria became the most populous black nation on earth. Currently Nigeria has an estimated population of 182 million and that figure is projected by the United Nations to reach almost 400 million by 2050.
YOU GUYS, GET A HOBBY! JESUS CHRIST!
Returning to our discussion, as an instance, if one intends to make a million naira by selling a product X, a million units of the product could be sold at a price of N1 or one unit of the same product could go for N1m. This situation is the conundrum surrounding Nigeria and being an exporter of oil: if the country intends to make more money from selling oil, since it cannot individually affect oil prices, substantially increasing crude output is the next reasonable step.
There is a threshold however; of just how much crude would at a certain price have to be traded to effectively sustain a population and that would be at the barest minimum, the internationally acknowledged poverty lines; $2 per day as at 2017.
Taking national income and factoring in the population of the country and the average periodic cost of living helps to give a good idea of just where social welfare packages stand, how much they are worth, just what exactly citizens might expect from their government and what their taxes are working at. The issues that would normally fall under this line of thinking would include universal basic healthcare, education, affordable housing, structural amenities and transportation while subsidies on sectors like energy, agriculture would follow when excesses remain from taking care of the basics.
To get 62% of 180m (112m) people living above “poverty lines” ($2/day), using government income and distributing equally, although this does not reflect the income per capita, it gives an idea of just how much income would need to be generated and with that data, one could work out just how much the private sector would have to contribute in taking some load off the government – or buying the government out entirely if we ran a purely capitalist economy like they do in the “home of the land and free of the brave”.
Enough income to ensure that at least 112m Nigerians live at least at $2/day at current crude oil rates: $53.53 would require the country to up its crude output to 4.2 mbpd or 6.8 mbpd if it would have to consider all 182 million people. Alternatively, it could also sell crude at $90/b and let the difference between being a rich country and being a poor one be determined by the average population deviation from the $2 poverty line. The primary focus on crude is in consideration of the fact that as at 2016, 95% of Nigeria’s exports and source of forex still revolved around the oil and gas sector.
Further complementing the earlier point about the involvement of the private sector, the knowledge of variables that the government would have to generate, would serve as a reference for how much private sector participation would be needed, between an optimal crude production volume at 6.8 mbpd and a “realistic” one at 2.6 mbpd there is a difference of 4.2 mbpd. At current rates, 4.2 mbpd is worth $225m. This figure would be shared between the 5% of exports that are not crude dependent, foreign direct investment, local value chains and other internally generated revenue.
$225m (N81b) daily is a large sum especially when compared with IGR figures at a combined N682bn for 2016. N81bn daily might be the cost of an effective poverty alleviation scheme but in reality, compared with combined states IGR, will not even last 10 days. This reflects just how much work has to be put into the developing economy and fairly the reason why Nigeria albeit being “rich” in natural resources it can only sell as raw materials and add very little value into, is actually a very poor country.
The Buhari administration might have had no other palpable plans on making the economy more productive and buffering the effects of the fall in prices of crude; it pretty much just sat tight until the prices went up again. Whether they realise it or not, Nigerians gave them all the time in the world to do this spectacular bit of nothing. While they continue on that rollercoaster ride that is the price of crude, perhaps now while it is on another period on an upward trajectory; the sun shines once more, it would be a good idea to start making hay – again.
For 182 million Nigerians without any form of population control and a determination to live almost entirely off 2.5 million barrels of crude oil daily, the threshold price of crude for living above poverty in today’s Nigeria is $145/b. For living above poverty at current prices, the country would have to put out about 7 million barrels daily and today we are aspiring to 2.6 mbpd and hoping for the best.
Today, using the data above as a point of reference, the country is a third of the way through. Although hunger and poverty persists, regarding the economy, the Buhari administration sleeps in the eye of a storm where it all seems to be peaceful and serene with pleasant wafts of gentle breeze while all forms of social, political and environmental hell like the murderous herdsmen, ethnic clashes and unwavering desertification respectively, continue to run loose.
Concluding in all fairness, Buhari was just a man in the right place at the wrong time. It could be argued that anyone else who was going to have to handle being president between 2015 and 2016 was going to see hell in all ways as close to literal as possible. Nigeria’s economic problems did not start in 2015, they had been existing for decades and so had the hardships that became characteristic of periods of shortages. The Buhari administration was not the cause of our illness, it merely is a symptom of it and until we begin to build our socioeconomic aspirations on the foundation of decent population statistics, the system will remain ill for a long time coming.