Crude at $70: Time for new SAP

“Already, some states are having difficulty with the payment of salaries of their workers. Many have issues with payment to contractors” – Alhaji Remi Bello, President, Lagos Chamber of Commerce and Industry, LCCI. THE NATION, November 13, 2014, p 13.
The same day’s edition of the paper reported that workers at the National Assembly, NASS, had not been paid their salaries for October; and legislature’s third quarter allocation is still pending (p 5). And, on its back page, the RIPPLES cartoonist reminded us that Dr Okonjo-Iweala recently assured us that ‘Nigeria is not broke”. To which RIPPLES replied, “Yes. It’s Nigerians that are broke.”
But, jokes apart, it is quite clear to those not clinging to officially sanctioned illusions that Nigeria was already in deep trouble. That crude oil was heading for a drastic fall was predictable from last year. What nobody could forecast was the dramatic drop from $108 in August this year, just three months ago, to $76 on November 13. Now, this mind-boggling reality portending grave dangers for all segments of Nigerian society and the nation’s economy can only continue to be ignored at our collective peril. The first thing governments, at all levels, and the people of Nigeria must understand, is that the remedies which must be applied, invariably painful, cannot wait until after the 2015 elections – as those in governments would prefer. The old adage, “a stitch in time saves nine”, applies here. The longer government delays, the worse will be the damages to be repaired later. So, some of the measures, recommended under such circumstances, are urgent – like initial first aid to victims of car crashes.
There is no need to repeat all the known facts about the vital role of crude oil revenue to our economy. What we must get into our, usually thick, yet porous, skulls is the fact that for several years to come, the revenue will be less than what it was in 2013 – which was inadequate for our needs. Meanwhile, those financial needs have escalated; some on account of measures taken in the past (Minimum Wage increase, agreements with ASUU and NMA etc’ bloated governments, debt stock and repayment obligations etc); others will result from the need to, in the first instance, obtain more loans and pay more interest. One thing is inescapable, there will be more hardship for the masses and there is nothing governments can do to avert the decline in popularity and pervasive hostility which will arise from these calamities.