Nigeria: post-election crises inevitable

Their record leaves a lot to be desired even by their own admission. However, even if they were to win, by what someone called “scientific rigging”, a “constitutional coup d’état” or some other contrived contraption, it would not be long before they are out of power. Muhammadu Buhari and the All Progressives Congress (APC) look […]

Their record leaves a lot to be desired even by their own admission. However, even if they were to win, by what someone called “scientific rigging”, a “constitutional coup d’état” or some other contrived contraption, it would not be long before they are out of power. Muhammadu Buhari and the All Progressives Congress (APC) look increasingly set to win, provided there are elections, and they are free and fair. Whichever outcome we look at however, we seem set for a very serious economic and fiscal crisis. We have to prepare ourselves for this. The potential for a political crisis, though serious, is not my focus here.
The treasury is being emptied to finance Jonathan’s re-election, just as future income flows from oil are looking extremely gloomy. A recent report  (by the Centre for Social Justice, CSJ, in conjunction with the United States Agency for International Development, USAID and International Foundation for Electoral Systems, IFES) aggregated the summary of all presidential campaign expenses at N4.973 billion, broken down as PDP — N3.549 billion; APC — N1.424 billion. In these last four weeks however, the APC appears to have slowed down while the PDP has more than accelerated its spending. The big-shots are not willing to accept payments in naira, so the government is looking for hard currency blindly. With such heavy demand, and our dwindling foreign exchange reserves, the Central Bank has abandoned all serious efforts to prop up the naira, allowing it to slide from around N165 to over N220 to the US Dollar. Beside dubious maritime security and other contracts to the regime’s supporters the biggest scammers being funded to finance the re-election are fake fuel subsidy contractors, who are claiming over 420 billion, along with another 30 billion (so-called “forex” adjustments), for importing refined products. More often than not, the fuel was never imported, but this cabal receives “fuel subsidies” – and they often fail to pay back the loans they took from our banks. Much of the bill is from “round-tripping” and over-invoicing yet payments for these now take precedence over capital projects, and even salaries. And these are the same crooks the regime is falling back on for campaign funds. Thus, even if Jonathan gets to be “re-elected”, this massive haemorrhaging has to be addressed, and the books would have to be “balanced” somehow.
So where will the money for salaries, allowances, infrastructure and debt service come from, given the current decline in oil prices? Without any doubt all the governments will resort to massive borrowing. Kerosene and fuel prices will rise, and the naira may be allowed to slide further. Already the combined domestic and external debt of the Federal Government is in excess of $40 billion, not to mention the debts of the other tiers of government. Abandoned capital projects littered the country amounting to over $50 billion and counting.  The banks are not lending to the real sector as it is more secure and more profitable to continue lending to government and its agencies, along with telecoms and oil and gas sectors. As oil prices continue to fall, Nigeria will soon have an unbearably heavy debt burden because the relevant ratio to watch is not debt to GDP ratio, but debt to government recurrent revenue. We may not even have enough foreign reserves to adequately cover three month imports plus short term liabilities, having failed to save and, in actual fact, having squandered all that accrued from an unprecedented crude oil boom in the last five years. Some have pointed out that we are approaching the Shagari scenario which may explain the hasty introduction of ‘austerity measures’ and, as if by divine design, the emergence of Buhari as a political alternative. Does history repeat itself? Perhaps: but not in any linear fashion.
Another four years for this clueless cabal will spell doom. We will be faced with more fancy statistics, voodoo economics and false accounting. Worse still the government would have to pay-back those that it perceived as having helped it to come back, and punish sections of the country that may not have voted for them.
Actually the pay-back has started already. Let us take just one example. Remember the N17 billion maritime security contact awarded some years back to ex-militant leaders, to protect the country’s pipelines against vandalism and to check crude oil theft? Some of us kicked against it because it was the constitutional function of the Nigerian Navy and other security agencies to guard and protect our territorial waters. But given the seriousness of the situation we gave them the benefit of doubt. After all, the Extractive Industries Transparency Initiative (NEITI) had estimated Nigeria’s loss from such activities at  $10.9 billion  from 2009 to 2011. At that time, NEITI’s Chairman, Ledum Mitee, painted a pathetic picture of the situation while presenting the report on the extent of the loss. He said, “Over 136 million barrels estimated at $10.9 billion was lost to crude oil theft and sabotage.” The then Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Andrew Yakubu, further collaborated the huge loss arising from this oil theft,  putting the loss at about $12 billion annually.
But the criminal activities did not stop. At one time, experts estimated that about 400,000 barrels of crude oil were being stolen daily from the region, depriving Nigeria of billions more in revenue. We kept on paying about N5.6bn to former Niger-Delta war-lords (such as ‘General’ (Government) Tompolo; Asari Dokubo; ‘General’ Ateke Tom, ‘General’ Boyloaf; General ‘Shoot-at-sight’), for guarding the oil pipelines in the restive region, even though with little impact. Indeed, these contracts had only last week been re-awarded, with some OPC chaps added to the list of beneficiaries.
These chaps, and others who are seen to have helped secure votes, must all be rewarded in the event of an unexpected Jonathan victory. For the rest of us we may have to contend with more inflation, retrenchment, rising poverty and unemployment because since the government is convinced that its “transformative” policies are working, why should we expect it to change its ways? We are looking at four more years for Ngozi, Diezani and the rest of them.
We may have earned N12.8 trillion from crude oil exports in 2014 yet, only recently, the international rating agency, Standard & Poor’s, warned that Nigeria’s economy is in a “clear and present danger.” They rated us based on six main categories and found out that Nigeria was weak in three classifications, namely: institutional and governance effectiveness, economic structure and growth, fiscal flexibility and performance. Nigeria was classified as neutral (so-so or just average) in external liquidity and international investment position and monetary flexibility, while its only area of strength, our saving grace according to them, is our low debt burden. These problems would not go away soon so all those talking of “change” better get ready for stormy days ahead.
A Buhari victory would obviously change things, but only if the APC is fully aware it has a real battle ahead of it, with dwindling resources, fraudulent legacy-debts, corrupt institutions and little executive capacity from a public service used to the old ways of doing things.
By the way, someone should tell Mrs Jonathan that we the passengers need CHANGE of driver, because the current one has no idea where he is taking us. And if she must remain in Aso Rock she may consider moving to some of the buildings nearer to the Rock. She has a choice of a hospital or the zoological garden.