Though I was barely in primary 4, my young mind comprehended that government had put a ban on importation of goods except “essential commodities” and I was actually wondering what essential commodities were. But it wasn’t very long before the meaning became clear. I remember that before that time, most mid-income families like ours in Ibadan, and I could almost guess, in Nigeria, usually drank tea or cocoa beverages (Ovaltine was the popular brand then) with tinned milk or condensed milk (Coast or Peak milk). Most cooked Uncle Ben’s rice and ate corned beef and sliced bread (as if sliced bread was a brand at that time). Most people who could afford it also bought brand new cars, then Peugeot 505, 504, Santana, Mercedes Benz and Volvo. I recall also that we went to see “Father Christmas” at the Kingsway mall and we loved their elevators (the elevator somehow felt like a train to me at that time). Particularly, Water Corporation supplied water to the metropolis, so most houses did not need a well or borehole; people also didn’t particularly have electricity generators, because there power supply was quite stable.
Once the Ban on importation kicked in, everything changed. The first was that Kingsway Mall closed down their stores all over Nigeria, Uncle Ben’s rice disappeared from the market, then corned beef followed suite, lower quality slice bread flooded the market along with “Agege” bread having sway. People gradually stopped buying brand new car and then began to buy second hand one which later mutated into the importation of “Tokunbo Cars” by about 1986 or so. Liquid Milk and other milk products became a luxury while Powdered milk emerged as a dare alternative (I fell in love with powdered milk though). This condition remained until the milk revolution started with the introduction of Cowbell N10pack (Cowbell actually changed the milk business in Nigeria). Gradually, Water Works and NEPA services began to reduce their supplies until Water Works faded out completely in the early 90s and NEPA completely handed over power in the 2000s. They called this Austerity, but little did most Nigerians know it would mutate into full-fledged SAP by 1986 or so, under Babangida. As a result of these austerity, Nigeria metamorphosed (metamorphosis is the word that better describes what became of Nigeria from then). With the power of hindsight, the change did create a resilient Nigeria where the populace came to terms with the fact that everyone had to take responsibility for their lives, to do what they could for themselves, their families or their neighbours, whether or not government did anything.
1994, under Abacha’s regime, in the heat of agitations for the realization of Moshood Abiola’s mandate, after the botched elections (again) of June 12, 1993 by the government of Babangida, and the subsequent take-over by Abacha, the International community imposed serious sanctions on Nigeria to pressure the government to release Abiola, and other political prisoners like Ken Saro-Wiwa who had been arrested that year on a various spurious charges. The forced austerity kicked in immediately. But unlike the first one, the impact was not really as severe, apart from incessant strikes and all, nothing much changed, except that what was left of our social amenities crumbled. Fuel prices were hiked; water stopped running from water works, pretty much everything else that ceased by the mid-80s had started to be forgotten, and had become non concerns for Nigerians. On the average Nigerians were not as bothered about the sanctions from International communities as they were concerned for the impunity of the government of the day. Fortunately the sanctions passed abruptly in 1998 when Abacha died.
By 2004, the country was going through a respite, peaceful elections had held and Obasanjo had returned to power, Nigeria was on the rise again, but not in the same direction prior to 1984. Indigenous companies were established, Nigerian taste has changed significantly and after so many years of austerity, Nigeria had come to fully realize that they could not put their hope and future on any government. The actions or inaction of the government began to matter less and less as everyone found way to solve their own problems. However intense shakings were happening within the country, one of which was the Banking Consolidation. Several Banks closed shop and the number of Banks in Nigeria reduced from over 80 to 26 or so. It was the year of business reforms, and it brought increased awareness to the possibilities and potentials of living in an organized country and holding ones destiny in one’s hand.
Fast forward to 2014, and the government after much speculation of being “broke” found the reducing “Crude Oil” price as the best opportunity to announce Austerity. It was the Governments opportunity to act, figuratively, like those people who took the advantage of heavy rains and flood to discharge their garbage into the drainage. The Government hid behind the falling price to finally call a news conference and announce austerity.
But why threaten us with Austerity? What should the announcement of austerity do? This is not 1984 Nigeria, when there were some amenities the government provided, now, they provide nothing – no road, no healthcare, no light, no jobs, excessive taxing of business they don’t even support, no security, poor legal system, no government owned schools for children to attend, no salary to government workers, no subsidy for fuel. The government has been in austerity for a very long time, they just did not know it, and Nigerians have long left them to sort out their austerity. People now only feel sorry for the government that they can’t get their acts together, no one is waiting for the “broke” government to feed them or clothe them or provide good roads or education, even security, hunters have decided to help themselves and recover territories that the Nigeria army could not secure from Boko Haram invasion. So if the government is just announcing austerity, everyone already knew they had problems, except them.
On second thought, I thought there was an excess crude account, which was to be used to warehouse excess income made from the crude oil sales (as against the budget price). Technically, an excess crude oil account indicate that somewhere, somehow, someone knew that the current price of oil was bloated, and would one day return to normal, why would anyone panic and call for Austerity because the crude oil price has finally returned to its state? It does not make sense, except if it was their opportunity to open up on how mis-managed the economy was.
The government is talking of pressure on our foreign exchange, but looking deeply the biggest pressure on Foreign exchange is not from Telecoms companies importing equipment or from people paying school fees, medical expenses, or the population importing spare parts and all. The biggest pressure on our FX is from the same industry that provides the largest volume of the FX – The oil industry. Nigeria exports 2.3million barrels of Crude Oil per day (that is 365.7million liters/ day), but has no single functional refinery to process its domestic usage. Meanwhile, virtually all Nigerians (over 120million households) depend on petrol or Kerosene or diesel purchased every day to light their homes and offices, this is apart from fuelling their cars. No other country in the world consumes as much fuel per day as we consume per day on domestic needs. Since Nigeria has no refinery, then the same Oil industry must import all the Petrol, all the Diesel, all the Kerosene, and all the Jet fuel the country requires on a daily basis. This implies that Nigeria has to import virtually all the petroleum products it uses – Nigerians use 36.6million liters of petrol per day, 70m liters of Kerosene, 21m liters of Diesel just to mention a few. A huge percentage of the payment they receive in FX they pay back in FX to those same countries for the importation of oil products, and then pay subsidy claim at home for the balance.
My submission is that if the change in oil price is the reason for the austerity announced, then something had been wrong abinitio. Nigeria has been budgeting on a lower oil price than the prevailing rate and has maintained an excess crude account for the difference since 2004. As at 2013, the Excess Crude Account has a balance of USD11.6Billion, as at today, the balance is USD 4.1Billion. So within one year, the excess crude account has started depleting long before the oil revenue dropped. Note that the oil drop is still higher than the benchmark figure used to project the income in the 2014 budget
More so, while the government has made short-run plans to keep their stability, there are no long term plans announced. No plan to remove the import pressure created by importing oil products through the construction of new refineries. The government has been working on signing the PIB since 2011 and the end is still not in sight. The solution our economy craves is not just in placing high tax on champagne or private jets (all the owners have to do is open a company and make the private jets the property of the company for charter purpose, and only the owner will be able to charter it, hence, the private jets become commercial airliners and avoid the taxes). What our economy craves is real lasting steps that demonstrates that we are intelligently engaged with our nation, and truly want to make it a better place to live in. Arabians are doing it, Europeans are doing it, Asians are doing it and I dare say they are not more intelligent or more educated than us in Nigeria. We can do it; we must work to create a better nation for ourselves to live in and for our children. The Government must realize that this is their window to think deeply and correct our course as a nation. It is in our hands, to be or not to be, it’s all in our hands.