Fear, anger as Nigerians prepare forharsher 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 infla­
tion 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 devel­
opment.
“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 eco­
nomic 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.