Nigerian 2016 Budget—promising yet disappointing
Authored By; Christopher Okoli (Nigerian-American based Investment Advisor)
In April of 2012 I published my research findings on the future of energy in a book titled “Crude World of Oil”. The findings were so terrifying that I decided to do something and warn the probable countries that would go through some traumatic economic pains because of the impending demand destruction on crude oil due to global warming concerns. I was deeply terrified on the impact such destruction would present to Nigerian economy as the country’s economy is primarily driven by over 75% revenue from crude oil. I made frantic efforts to make public the findings, but most of the media houses in Nigeria would not give me audience.
The 2016 budget that was presented to National Assembly for approval few days ago was mere document, quickly put together to calm the troubled minds of Nigerians that are sliding deeper into state of confusion. If I have to objectively analyze the budget, I would probably say that it could be like to a madman that fell into a deep hole, while his love ones were making efforts to bring him out of the hole, he opted for a shelve to dig deeper. It might have sounded so promising to Nigerians, but the content seems not to augur well with the fiscal and monetary reality on ground.
The writer did a wonderful job in promisingly inspiring Nigerians to remain committed to the country’s dream, but the figures are pointing to a disappointing end. I guess that the budget preparatory team failed to realize that Nigeria is now part of the global village and all global headwinds must be taken into consideration. On September 26th 2015, when I granted Onyedika Agbedo of Nigerian Guardian Newspaper an interview (http://www.ngrguardiannews.com/2015/09/nigerians-should-be-ready-to-absorb-looming-financial-pains-says-okoli/), I warned and pleaded with the policy makers to search for the country’s hidden assets and monetize such assets instead of chasing shadows. Unfortunately, the 2016 budget never accommodated such views.
- I still maintained that the global economy would be heading towards global recession by the fourth quarter of 2016, so how would Nigerian government attract foreign investment of close to one trillion (Naira), when foreign investors are being denied access to American dollars? This is due to a monetary policy that is scaring away foreign investors and Nigerians in Diaspora.
- Aggressive cost-cutting measures of about 30% -40% from recurrent expenditures would have helped to bring down the deficit financing. I hope that the policy makers know that the country has lost her borrowing power, meaning that Nigeria will be simply at the mercies of the lenders. Crude oil has lost over 150% (from a price of $112 per /barrel in June 2014 to $36 on December 2015) and the country cannot shrink overhead for at least 30%, this is definitely a big problem that must be urgently addressed.
- Increasing deficit spending in a ghastly shrinking revenue environment is a perfect storm for economic and financial disaster, which is what the 2016 budget has revealed to me. Nigerians must tighten their seat belts for the worst austerity measures.
- Why should Nigerian masses continue to bear all the pain because crude oil price has gone down from $112 to $36 per barrel? The poor masses will continue to pay the same N87 per liter in 2016.
- Only 9% reduction in non-debt recurrent expenditures resulting in N2.35 trillions, which is still over 35% of the 2016 budget, when the price of crude oil (primary source of revenue) has shaded over 150%.
- Crude oil might likely remain in the $20 handle most of 2016 because of the global warming concerns, please take a look at the link below for more details; https://wordpress.com/post/cokoliblog.wordpress.com/91
I was really hoping to see an aggressive cost-cutting budget that would have drastically reduce the bloated costs of running Nigerian economy and channel such resources towards education (funding research, technology growth and giving teachers quality training and pay).
Here are some of the possible reasons the 2016 budget was not able to address the yearning needs of Nigerians;
- President Buhari was not able to decouple himself from the corrupt-infested politicians, and he is being subjugated to accommodate all their desires.
- The masses must overwhelmingly support Mr. President to carry out his painful reform agendas if the country really wants to move forward. Sacrificial collective adjustments from all Nigerians are the requirements for building a great nation. The pains of 2016 will definitely be child’s play when compared to the pains of 2015 because Nigerians will be paying for over five decades of unabated pillaging of the economy. Do not be dismayed if Naira hits N500 to $1 because this is what I extrapolated from the budget.
- President Buhari can definitely not win this war on chronic corruption unless the masses are willing to endure the 2016 traumatic economic tsunamis created by China, Crude Oil, and global currency devaluations.
- Pray for the President because he is the only person that is capable of salvaging Nigeria at this point. The policy makers must speed up efforts to find the hidden and non-performing assets in the country, monetize such assets because that will be the best way to diversify Nigeria’s economy, and everything else will just be the normal rhetoric the masses are used to hearing.
My fellow brothers and sisters, the road to success has never been easy and seamless, because many unimaginable pains will be encountered and many sacrifices must also be made. For Nigerians to have a truly United States of Nigeria, painful sacrifices must be made in 2016 and the impending economic disasters must be tenaciously and resiliently endured for the country to move forward. I am still waiting to see when President Buhari will reward and recognize those Nigerians that sacrificed their lives for democracy.
Christopher Okoli (Nigerian-American based Investment Advisor) 12/23/2015
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Reviews of 2015 and Projections for 2016