The naira, Nigeria’s national currency sunk to an unprecedented low this week crashing to N710 to the dollar in the most frightening expression of the country’s dire economic prospects under the present government.
The attendant difficulties were explained away by presidential aide, Lauretta Onochie who used an address by President Joe Biden of the United States to the American people to explain the rising cost of living, to underpin her claim that the economic crisis in Nigeria is a worldwide phenomenon.
For America, the rise in cost of living has been especially pushed by the rising cost of petrol and other global issues which President Biden traced to the war between Ukraine and Russia.
Indeed, the global economic malaise has seen Central Banks around the world raise interest rates, mainly to stem inflation.
In Nigeria, Governor Godwin Emefiele who many of us had gotten used to announcing the stability of rates at the end of Monetary Policy Committee, MPC meetings, has taken the unusual step of raising the benchmark Monetary Policy Rate in the last two meetings of the MPC.
Now, whereas in most of the world inflation is being fuelled by in-built factors and demand factors, in Nigeria, inflation is surging on the basis of rising costs, or what economists describe as cost-push factors.
It is easy to understand. Farmers at the onset of Ms Onochie’s government in 2015 were buying a bag of feed at about N2,000, now each bag sells for more than N6,000 and sometimes up to N9,000.
Easily, a litre of fuel was N85 and now it is more than N180 where available. Diesel was selling for about N180 and now sells more than N700 a litre.
Farmers and manufacturers unable to bear and transfer the cost to consumers have had to close shop.
Now, even if we were to excuse President Muhammadu Buhari for poor management of the economy, his derelict management of the war against corruption is perhaps inexcusable.
That incapacity to fight corruption is undoubtedly at the root of the crisis now bedevilling the nation’s economy and the unfolding war against insurgency.
This is the root.
When Senator Bukola Saraki first unveiled the scam in the oil-subsidy regime of the Jonathan administration, the fear was that Nigeria could be losing as much as N1.3 trillion per year on the scam. That was sometime in 2012.
Indeed, a horrified Major-General Buhari as a candidate just before the 2015 election, had even disclaimed the existence of subsidy in petrol.
Before then, Asiwaju Bola Tinubu and other leaders of the APC had converged with other activists at the beginning of the year, 2012 to protest the planned removal of the subsidy as planned by the Jonathan administration.
The bid for political capital at the expense of economic vitality by the APC leaders forced the Jonathan administration to abandon the planned removal.
Now, at that time and up to the beginning of the Buhari administration, the fuel consumption in the country ranged from 28 to about 35 million litres daily.
It is now understood that government claims that the daily consumption is 100 million litres per day, despite decreasing economic productivity.
However, officials of the former the Department of Petroleum Resources, DPR explain that the daily utilisation in Nigeria fluctuate around 38 million litres per day. The rest of the fuel according to the officials is smuggled out of the country.
Now, because the government has in the last seven years been unable to fix the refineries all the petrol used in the country are imported. That means that 62 million litres are smuggled out daily.
If truly 62 million litres of petrol are smuggled out of Nigeria, it would require 1,878 tankers of 33,000 litres capacity or 1,377 tankers of 45,000 litres capacity to ferry across the country daily! Is that possible? Except the petrol is being smuggled out in underground pipes.
Your correspondent finds it unimaginable to that nearly 2,000 tankers would be leaving the country everyday without the customs and other security agencies seeing them!
So, you can see with the government now devoting about N500 billion monthly to pay subsidy for oil that is used and smuggled into pockets, you could well understand the pressure on the naira.
It is understood according to reports that money supply in Nigeria is currently at an unprecedented N48 trillion, a development that has been facilitated by the administration’s resort to ways and means (Printing money) to cover the government’s debt including the payment of the dubious subsidy claims.
That is another point of pressure, with easy money now being roundtripped to buy dollars and worsening the pressure on the naira.
The oil subsidy scheme is undoubtedly at the root of the pressure on the naira and at both ends, the bulk stops at Buhari’s desk. He is minister of petroleum resources and has failed to manage the building or rehabilitation of a refinery in his seven years holding that portfolio.
It is sad that petroleum, which ordinarily should be to the country’s economic competitive advantage, has now turned to a point of sorrow.
Just as Nigeria’s naira reached a record low, Russia’s currency this week attained a historic high with the Russian Rubble notching to 62 to the dollar, firming up from above 100 just few months ago.
That is despite the sanctions slapped on the country. Russia has been able to ride upon the global crisis to manage itself and indeed profit from the war with Ukraine to the disadvantage of the rest of the world.
Nigeria on the other hand with the same product to offer as Russia, has suffered mainly because of the failure of the government to put the refineries to use. The dependence on imported oil with the attendant inexplicable rise in subsidy payments is at the heart of the corruption that has fuelled the economic malaise.