Welcome to the reality: Nigeria is broke

Minister of Information, Lai Mohammed last week said that Nigeria is broke. He spoke to State House correspondents at the end of the Federal Executive Council (FEC) meeting in Abuja. He said the Federal Government took a painful decision by increasing the pump price of petrol from N86.50 to N145 per litre. According to him, the current problem is not about subsidy removal but a result of dwindling income of the government. He said: “The current problem is not really about subsidy removal. It is that Nigeria is broke. Pure and simple!


“It is like somebody who has been earning N100,000 a month and he is faced with a situation where his employer says henceforth, you will be earning N10,000 a month. He would need to make some very painful decisions and some very painful adjustments. That is the situation with Nigeria today.

 “A few months ago, we were earning as much as $100 for every barrel of crude. In the months of February and March, we were short of…so, we no longer have the resources, the foreign exchange to bring in refined fuel products. And our economy is shrinking. We appreciate the fact that the decision is going to affect everybody.

“We appreciate what we are going through, but Nigerians should also know that the government has the responsibility at times to take very difficult decisions. So, it is not always about popularity.” Lai Mohammed was only stating the obvious. This fundamental truth was not told to Nigerians from the very beginning.

This is what Lai Mohammed and his principals should have told Nigerians before the hike in the pump price of petrol. Nigeria is indeed on financial life support machine if you like. This government should have told the nation the whole truth. Nigeria is broke, please understand and bear with the government. The average Nigerian would have listened. Nigerians can see for themselves how the slide in the oil price has brutally exposed Nigeria’s Achilles heels. Foreign exchange inflows at the CBN in January amounted to just $1.30 billion, which represented a year-on-year decline of 46.7 per cent.

Skeptics of this administration could point out that the oil price has recovered above the $38 budget bench mark to about $48/b but Nigerians must understand that sabotage and disruption in the Niger-Delta have picked up to a level not seen since the period preceding the Yar’Adua amnesty. Oil industry sources have said that Nigeria’s output is at the moment as low as 1.40 mbpd. Whichever data is used, it has become obvious why access to foreign exchange has become problematic and why the CBN is selling no more than $200m per week at the official rate. While foreign exchange supply has crashed with the oil price since mid-2014, demand has not eased.

 The gap between supply and demand is therefore substantial. The CBN is not the principal source of foreign exchange. Autonomous sources provided $4.08 billion in January, compared with CBN’s $1.30bn, and would have included remittances of about $1.80bn as well as oil exports generated by the private sector. Comments last week by Vice-President Yemi Osinbajo, and the announcement by the NNPC of a new authorised price band for sales of petrol/gasoline, have fuelled speculation that a devaluation of the naira exchange rate may be coming. Most Nigerians do not realise the nation has been living in The Matrix. This subsidy removal is perhaps the red pill that may wake Nigerians up to reality. Nigeria is poor. It is broke.

Nigeria has been raped, pillaged, looted and left for dead. All these years, the nation’s economy has been sustained on the junk food of corruption and Nigeria had kwashiorkor but because it looked chubby, Nigerians thought the nation was healthy. Nigerians were busy throwing money around. Those who had political godfathers and had access were renting two bedrooms in Abuja for N700 million. Houses were springing up around the country from the proceeds of corruption. It was unbelievable that make-up artistes were charging N500, 000 and pre-wedding photo shoots were going for N700, 000. Aso ebi for wedding, naming or burial ceremonies were sold for N90, 000. These Nigerians were busy buying Rolex watches and Ferraris.

Range Rover Sport was everywhere you turn to in Lagos, Abuja and Port Harcourt. To these sudden wealthy people, the items were like Keke Napep. Little did they know that it is all fake life. The perception of a wealthy nation was all a mirage. Nigerians have all been living off the spoils of corruption. That’s why the country seems so hard and difficult now that nobody has access to free money anymore. There is at the moment no money circulating because there is none to steal and rent flats and shops for girlfriends.

There is no more money for civil servants to steal to pay bogus tithes of N500, 000 to unsuspecting churches and take an equally bogus title from traditional rulers. There is no money for Nigerian lawmakers to spray in dollars at their daughters’ weddings; for Lagos big boys to spend N2 million every Friday night at nightclubs. It’s time for Nigerians to face reality. The party is over. Buhari must deregulate completely the oil sector whether labour likes it or not. CBN must not back down on its foreign exchange policy. It must not reverse itself on the 41 items denied access to foreign exchange. It is time for Nigerians to learn the hard way.

It is time to see the real Nigeria and Nigerians. Now that money budgeted will go into our roads and bridges and hospitals, there will be economic progress. Such budgetary allocations will now benefit those who do not have a rich corrupt uncle with connections in oil and gas. Those who cannot travel to Dubai to celebrate birthdays will do so here in Nigeria. Those who do not know what Coldstone ice cream tastes like will benefit from government programmes. Now is the time for those who have stolen Nigeria’s money to invest in real estate and reap the benefit of corruption. Hopefully, the real estate markets will crash. The thieves with 15 houses in Abuja will be forced to sell them fast for cash. It would, however, be better if EFCC seized and auctioned them. All those in the service industry will have to reevaluate their pricing. You cannot charge 500,000 to paint faces anymore; free money is gone for ever. Nigerians welcome to the real world.