Pls i urge us all to raise our voices to God to save us ASAP and not to fight ourselves... How Nigeria May Collapse
in 2015 By Rudolf Ogoo
Okonkwo. Forget the urban legend that there is a
United States CIA’s plot to fulfill their
purported prediction that Nigeria would
cease to exist in 2015. If Nigeria collapses
in 2015, the country to be held
responsible, besides Nigeria itself, is Saudi
Arabia. Before you raise your hands in protest, it
won’t be for the reason you think.
Nigeria has a very high ranking on all the
lists of the most-unstable countries in the
world. Last month, a UK-based risk
analysis firm, Maplecroft, grouped Nigeria
with the worst ten in Africa. Heading the
team of most-unstable nations are
Somalia and Sudan. Others are South
Sudan, Democratic Republic of Congo,
Central African Republic, Libya and Egypt.
The ranking looked at conflict, terrorism
and political pressure.
In another list compiled by Foreign Policy
Group and Fund for Peace in 2013,
Nigeria was ranked 16th in the world with
a 100.7 points on the failed state index.
The index indicators are factors like
demographic pressure, human rights,
uneven development, economic decline,
delegitimization of the state, public
service, security apparatus, factionalized
elite and others.
The good news is that Nigeria is also on
the list of the highest growing economies
in the world. Some of the richest people in
the world are Nigerians, too. So, all things
being equal, the economic factor will
balance out the instability factor and
allow Nigeria to soldier on beyond 2015.
In fact, that is how Nigeria has been
soldiering on, defying all predictions of
doom. When Nigeria last visited the
precipice, which was during the civil war,
it was able to pull back and survive,
thanks to the oil boom that followed.
In his speech during the declaration of his
interest for a second term, President
Goodluck Jonathan touted Nigeria’s
economic growth as one of his
accomplishments. At 7% growth per year,
Nigeria is one of the top performing
economies in the world. The president
gloated, “Nigerian economy is on the right
path.”
Nigerian economy is not on the right path.
In fact, it is in distress. Even the eternal
optimist, the Minister of Finance, Mrs.
Ngozi Okonjo-Iweala, is beginning to
sound the alarm bell. Now read carefully with an open mind not thinking about the coming election.... Here is how we got to where we are:
You must have heard of the declining
crude oil price. Unlike past fluctuations in
price of crude oil, this one is so bad that
everyone is going to feel the effect. If the
austerity measures announced by Mrs.
Ngozi Okonjo-Iweala have not affected
you directly, the recent devaluation of the
Naira would.
All these are happening because Saudi
Arabia is locked in a mortal fight to
destroy the US crude oil production.
Experts believe that the United States,
with its 11 million barrels production a
day this summer, became the world’s
largest oil producer, beating the former
number one, Saudi Arabia. Most of
America’s new oil is produced through
fracking, an exploration system that
extracts oil from shale rock using the
process known as hydraulic fracturing or
fracking. This process of splitting rocks
using high-pressure liquid is expensive
and is believed to be profitable as long as
crude oil price is high. The thinking in
Saudi Arabia is that allowing crude oil
price to fall below $60 a barrel will knock
off the US shale production.
At the last meeting of the Organisation of
Petroleum Exporting Countries, OPEC, in
Vienna, the cartel failed to do what is
needed to increase price – that is, cut the
production quota of each of the 12-
member countries. While Venezuela,
Nigeria, Iran, Iraq, and Ecuador pushed
for cut in production, Saudi Arabia, Qatar,
Kuwait, and the UAE opted for retention of
the current production quota. That failure
led to a further drop in price of crude oil
to a five-year low. At $72 per barrel of
Brent crude, Nigeria’s oil is now selling
below Nigeria’s 2014 budget benchmark
of $77.5 per barrel.
What this means is that Nigeria will find a
way to make up the short fall in revenue.
Technically, nothing will be going into the
Excess Crude Account until oil price
recovers. And whatever was there has
been all but depleted. Initially, Nigeria
raided its External Reserve to support its
expenditures but that move was not
sustainable. That led to the decision to
devalue the Naira and reduce pressure on
the Central Bank to keep burning dollars
in foreign reserve in support of the Naira.
On the American side, the fall in oil price
has been a foreign policy political
weapon. America’s lack of dependence
on foreign oil means that it doesn’t have
to worry about every little crisis that flares
up in the Middle East. In other ways, the
fall in oil price means that countries like
Russia, Venezuela, Iran and Syria are
under economic pressure. That helps
America’s foreign policy entanglements
with these countries. Iran is being forced
to stay on the table to discuss its unclear
ambition by a combination of sanctions
and falling oil price. Russia has lost over
$100 billion from falling crude oil price
and is under severe economic pressure
that it is moderating its ambitions in
Ukraine and other parts of Eastern
Europe. In Syria, ISIS that has been
financing its campaign of terror from illicit
oil sell is now having difficulty selling oil in
a world market that is glutted. For
Venezuela, America doesn’t have to worry
about the radical leftist government in the
country when declining revenue is forcing
the government to deal with a growing
number of disaffected citizens.
Given these economic and political
conditions, there is little interest in
America or Saudi Arabia to see an
increase in oil price soon. What this
means is that Nigeria must brace itself for
a crude oil price that could fall below $60
a barrel. In trying to calm the fear of
Nigerians, Mrs. Okonjo-Iweala assured
Nigerians that the country would
withstand crude oil price of $60 a barrel.
But what about a $20 dollar a barrel price
of crude? Will Nigeria still stand or will it
collapse? If by next year the price of
crude oil falls to $25.42 a barrel that it
was in May 1999 when President Olusegun
Obasanjo’s started his first term as
president, Nigeria may collapse. Here is
why.
Lets begin with Nigeria’s budget. Nigeria’s
budget can be divided into four parts:
statutory transfers, debts services,
recurrent expenditure and capital
expenditure. In 2014, Nigeria budgeted
N4.64 trillion. This is divided as follows:
N399.7 bn or 8.61% for statutory transfer,
N712 bn or 15.34& for debt service, N2.43
trillion or 52.35% for recurrent
expenditure and N1.1 trillion or 23.7% for
capital expenditure. The United Nations
Development Programme recommends
70% of the budget to Capital Expenditure
and 30% to Recurrent Expenditure.
In the last ten years, Nigeria’s budget
allocation has not come any close to the
UNDP’s recommendation. The best we
have performed in the last ten years was
in 2010 when Recurrent Expenditure got
56.77% while Capital Expenditure got
40.23%. Actionaid Country director,
Hussaine Abdu, lamented about Nigeria’s
inability to produce a progressive budget
in line with UNDP recommendation. “No
country develops under such provisions,”
he said, “because what grows a country or
builds the economy is the amount of
investments you are making on
infrastructure and other structural issues
that you require to strengthen your
economy.”
Looking at what the government could do
with the current economic austerity, the
budget would be a good place to start.
With debt service taking up 15.34% of the
budget, recurrent expenditure at 52.35%
and statutory transfer at 8.61%, the only
place that the government has room to
maneuver without having to fire workers
or upset bureaucrats, is in capital
expenditure. So instead of increasing it,
the government may be forced to
decrease it further, never mind the recent
non-budgeted ordering of N9.6 bn
cooking stoves.
In the last four years, crude oil price has
hovered around $100 a barrel. The
Nigerian government has been swimming
in petrol dollars. Looking at government
figures, economists determined that
Nigeria's total crude oil sell came to about
$470B in all 5 years of President
Jonathan's administration and $489B for
Yaradua, Obasanjo, Abdusalami, Abacha
administrations combined. Adjusted for
inflation, the numbers are $488.8B for
Jonathan and $594B Yaradua, Obasanjo,
Abdusalami, Abacha combined. The
boom is reflected in the budgets, too. In
2004, Nigeria’s budget was N1.79 trillion.
In the last year of Obasanjo’s
administration(2007), Nigeria budgeted
N2.26 trillion. But the lowest budget in the
last 5 years of Jonathan’s administration
was N4.2 trillion.
The additional money did not just come
from the revenue from crude oil. Nigeria’s
gas production within this same period
has tripled. In his declaration speech,
President Jonathan reported that, “in
terms of gas supply, we have grown from
less than 500 million cubic feet per day, 4
years ago, to about 1.5 billion cubic feet
per day currently. Our goal is to attain 4
billion cubic feet per day, over the next 4
years.”
These increases in revenue had not
translated into a stable economy that
could withstand a shock as normal as a
change in oil price. In fact, as more
money came, Nigeria became more
unstable.
If there is a worst time for Nigeria’s
economy to be in distress, it is now. With
the insurgency in the Northern Nigeria,
each day causing more havoc, creating
more victims, more destructions and
more distrust in the economy, Nigeria is
potentially coming face to face with that
perfect storm it has avoided for decades.
If Nigeria collapses in 2015, don’t look
anywhere else for the blame; put the
blame where it belongs- squarely at the
feet of Nigeria. In the last 15 years of
democracy and relative peace, Nigeria
had a chance to build a strong economic
and political base. But like all the other
opportunities the nation has had, we
squandered it. For so long, Nigeria has
been in denial about the unsustainability
of the corruption within its system. In time
of boom, the nation can endure the waste,
but in time of austerity, corruption will eat
up what remains of the nation.
In January of 2012, a presidential
committee on public service reform
discovered that top government officials
in Nigeria take home N1.126 trillion a year
in salaries and allowances – out of a
national budget of N4.6 trillion. These
public officers constitute just 0.013 per
cent of Nigeria’s population. They include
108 senators who each make over $1.7m
a year. That alone is $183.4 million (N28
billion). Then the 360 members of the
House of Representatives each takes
home over $1.2 million, which amounts to
$432 million (N65bn). Again, each state
governor collects an average of N200
million naira a month just as security
vote. In a year, they each get N2.4 billion
naira. So, our 36 governors take home
N87 billion naira on security votes alone
every year. Add our 38 ministers and
ministers of state, 100 plus heads of
federal and state agencies, over 432 state
commissioners, 774 local government
area chairmen or caretakers, almost
10,000 councilors and you will understand
where the N1.126 trillion goes.
Nigeria had a chance to trim down this
N1.126 trillion waste but the leadership of
the country, who are the beneficiaries, did
not have the will-power to do so. Like the
N260 billion naira spent from 2009 to
2013 on ex-Niger Delta militants, these
wastes are nothing but hush money paid
to postpone doing the right and difficult
things needed to birth a modern
sociopolitical structure that is fair and
balanced, a structure that is sustainable in
the long run.
Sadly, the day of reckoning is here. The
consequence of Nigeria’s self-denial is
staring us all in the face.
A ministry of finance committee led by Mr.
Aigboje Aig-Imoukhuede looked at the
subsidy claims of 2011 and discovered
that the Federal Government had
overpaid importers and marketers of
petrol by a whopping N430 billion naira. In
2012, Ngozi Okonjo-Iweala proudly
announced that Jonathan’s government
had recovered N29 billion naira from oil
marketers out of N234 billion certified as
stolen. Whatever happened to the rest of
the stolen money? Have we stopped
paying subsidies two years after? Of
course, not. Whatever happened to the
promise to retool and repair our
refineries? How much did we waste trying
to repair our refineries? How much are we
paying in subsidies today? Shouldn’t the
subsidies we are still paying be coming
down now that oil price is falling?
You will think that those handling our
economy will be answering these
questions publicly. But no, they are not.
We are beneath them.
The subsidy scam is part of the elaborate
corruption industry that feeds the
mammoth Nigerian unsustainable
structure. It has become so entangled in
the fabric of the nation that a half-hearted
attempt at disentanglement will result in
chaos. What could not be done in a time
of economic boom cannot be done in a
time of economic crisis. A lot of people in
Nigeria have been fed fat by corruption. In
crunch time, as the nation tightens its
belt, the corruption industry will morph
and move and when pushed hard will
marinate the nation and serve the country
for the forces of destruction to eat up.
Since 2009 crude oil thieves have been
increasing the amount of Nigeria’s oil that
they steal. According to the 2012 Ribadu
Report, crude oil thieves in 2011 stole
over 100,000 barrels a day. That is over
$3.6 billion dollars a year. Some foreign
sources put the figure of oil theft at
250,000 barrels a day. Mrs. Okonjo-Iweala
in 2012 told the Vanguard newspaper that
the loss to oil theft could be up to $12
billion that year. If Nigeria had closed
avenues for oil theft, that oil could be
shipped abroad and refined for Nigerian
use, allowing the citizens to enjoy low fuel
cost like other oil producing countries
when they pay for just the cost of shipping
and refining.
Meanwhile, as oil price falls, the oil
thieves are not going to go out of
business. Instead, they need to steal more
to make up for the losses due to falling
price. With their children in the most
expensive schools abroad, dozens of
girlfriends to show the good things in life
and with private jets to maintain, the oil
thieves and all the other looters of the
Nigerian economy, are going to do
whatever is necessary to maintain their
lifestyles.
In the political arena, the 2015 election is
shaping up to pitch two candidates, like
none that we have ever seen, against
each other. Oh, yeah, they probably have
met each other in a presidential election
before, but they have been transformed
in some unique ways. In past elections, we
used to have two distinct options that
fitted into our overall narrative, which was
that “the best is impossible and the worst
never happens.” A foreign newspaper
once described the two candidates
offered to Nigerian electorates thus: “one
is a fool surrounded by idiots while the
other is an idiot surrounded by fools.”
What is shaping up for 2015 is an
unpalatable option for a weary nation.
The option for 2015 is simple: If Nigeria
votes for candidate A, Nigeria is finished.
If we vote for candidate B, Nigeria is
finished. That’s a no-win situation for a
country of 170 million people.
The scenarios are clear enough to those
of us who care to disturb our so-called
beautiful dream.
The one thing that Jonathan
administration can do to reverse the
impending collapse is to acknowledge in
words and in deeds that what is not
sustainable is really not sustainable. And
that includes this government itself.

i'm watching in 5D

Well said


Nigeria on the brink

Great harms are done; when unqualified personnels are promoted to the positions of leadership.

NIGERIA IS DEAD

kingkoboko:
NIGERIA IS DEAD

And buried. Abeg make we all part ways jare.