Over the last few years, Nigerians have lived in fear of fluctuating oil prices. Despite the efforts of successive governments to diversify the Nigerian economy and wean citizens and governments at the federal, state and local government levels off their dependency on revenue gained from the sale of Nigeria’s oil, (including drastic measures like the closing of Nigeria’s land borders to prevent the smuggling of imported rice and other products placed on the country’s ban list), the country’s 2020 budget was still pegged almost entirely on expected revenue from oil sales.
While Nigeria is one of the biggest exporters of unrefined crude, it has failed to capitalize on its natural resources to refine the crude it mines from the earth. The result is dependency on foreign suppliers to meet the country’s petroleum needs. Combined with corruption at the Nigerian National Petroleum Corporation (NNPC), the country seemed destined to fall to the mercy of other nations in the event of any crises that harmed its ability to export crude.
It seems that moment has finally come in the wake of the Coronavirus pandemic and the trade war happening between Russia and the Emirate of Saudi Arabia, the world’s largest producers of oil. Events have led to the crashing of globally pegged oil prices from 50 dollars a barrel to 30 dollars a barrel, a move that essentially dooms Nigeria to poverty, as its projected expenditure is no longer compensated by its revenue. Mr. Mele Kyari, the Group Managing Director of the NNPC and also a relative of alleged presidential puppeteer, has warned Nigerians to prepare for tough times as the government tries to ride out this period of uncertainty.
The reality is that Nigeria didn’t prepare for this eventuality. The foreign reserves have been depleted by the Central Bank of Nigeria in its fight to shore up the Naira against the dollar, a fight that only enriched government cronies at the expense of the every day citizen. Diversification was treated like a pet project rather than a matter of urgency, and few people did the due diligence that would have avoided this problem. The government has failed us yet again.