The recent analysis by Bloomberg, an international business medium, that crude oil price could fall to as low as between $10 to $20 per barrel and that countries should prepare for this doom, calls to question the state of the Nigerian economy and the competence of those handling it because of their failure to avert this economic quagmire the nation has been plunged into. It further calls for the government to sit up and know why it exists on the mandate of the citizens of the country.
It is not just enough to be in government merely to satisfy one’s yearning and ambition. It is also not enough to cook up propaganda in the face of a gloomy reality that the Nigerian economy is heavily challenged and counter everyone who tries to point out a derailment. A solution, an urgent one, is what the people need now.
Even before the crash in the prices of oil, Saudi Arabia, one of the leading oil producing nations of the world, was already bracing up for any fall. While some countries, including Nigeria, need more than $90 per barrel to fund its budget, Saudi Arabia boasts of $726 billion in foreign currency reserves and says it can survive for two years with prices of less than $40 a barrel.
Between June 2014 when the price of crude oil started crashing and now, Nigeria has been existing on uncertainty with a heavily depleted foreign reserve and so much foreign and domestic debts to grapple with. In the face of this financial challenge, the devaluation of the Nigerian currency by the Central Bank of Nigeria, CBN, has resulted in inflation. Now, a dollar sells for up to N220 in the open market.
Financial analysts say the devaluation of the Nigerian currency has knocked more than $40 billion off the value of Nigeria’s economy. Though this is biting enough to the average Nigerian, it is worse for investors and major businessmen. Coupled with the uncertain political climate, Nigeria is steadily becoming less attractive to foreign investors as many of the investors have been withdrawing their investments.
A simple look at the Nigerian Stock Exchange shows this reality. For example, for the first time in the country, Aliko Dangote, Africa’s richest man, became the biggest loser among Nigeria’s richest people as a result of the devaluation and falling stock prices. He is so far believed to have lost $7.8 billion of his fortune in just February this year.
Tony Elumelu’s Heirs Holdings, an investment company, is believed to have lost an estimated $345 million in paper value on Transcorp, and its stake in the company with its worth now roughly $400 million, down from $700 million. This is just one area where Elumelu lost a lot. Jim Ovia, a co-founder of Zenith Bank, lost $110 million of the value of his stake in the financial services sector recently.
The high rate of corruption in the country as well as the unending cases of missing funds have not also helped Nigeria’s economy. It is shocking that those who should begin to work with their brains to rectify the situation are those now trying to play down the enormity of the crisis before all of us. The Nigerian government must know that this is no longer the time to play politics with the nation’s economy, but a time for serious work to revamp the economy.
