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Nigeria’s economic crisis and glimmers of hope

After one year of economic nightmare, Nigeria seems about to take a turn for the better. A couple of positive policy shifts and some development in the global oil market give indication of hope.
The first indication was the guided deregulation of the downstream Petroleum sector. Almost instantly, the fuel queues disappeared. For years, especially in the last one-year, Nigerians lost many valuable man-hours at filling stations. Those who do not understand how free market promotes efficiency, should learn lessons from what just happened. How come the fuel queues disappeared over night, even when new suppliers are yet to enter the market? Answer: Rent seeking ended. Now what we have is approximately the true demand. Let us then watch what will happen when new suppliers enter the market. Certainty is that prices will begin to moderate even if government maintains the N145 selling price. Different filling stations will begin to sell below the 145 Naira benchmark to attract more customers.
The second indication is the decision of the CBN to allow flexible exchange rate. This move will have similar effect as the deregulation of the downstream petroleum sector or the removal of subsidy. First, supply of dollar will quickly increase because all those who have been resistant to bring in their dollars as Foreign Direct Investment (FDI) or as Portfolio investment or as home remittance will now do so. Second, the exaggerated demand for dollar will decline, as the rent will cease. Nobody will buy from CBN at N199 and then sell to the parallel market at N300. Most people will buy at nearly the same rate or the difference will decline significantly that the incentive to ’round trip’ will  cease. Can any one  help calculate the amount of incremental Naira, the country would have earned if it sold its dollars at N285 Naira at the official market in the last one year? We should have one window and one rate.
The third glimmer of hope is the gradual recovery of the price of crude oil at the international market. Last week, the price hit $50 dollars per barrel. Though there is irony to this, because the supply disruption in Nigeria is said to have contributed to this price recovery, With a budgeted price of $38, it means that Nigeria can begin to accumulate excess crude income and perhaps have an accretion in foreign reserves. If this situation is sustained for a reasonable period, the battered Naira may begin to appreciate.
Fourthly, after all the drama and avoidable delays, the reflationary N6.06 trn budget has been passed and I believe the Federal Government is about to inject huge sums of money into the economy. I can see contractors being paid and the road  and rail projects resuming. Both the capital projects and the taunted special social projects should complement these new policy shifts and get the economic wheels spinning at faster speed.
For me these developments give something to cheer. I want to congratulate all those who have worked hard to convince President Buhari that the “command and control “economic management regime was outdated.
It is certain that we still have a very long road to travel before the economy is revived, but we must remain steadfast. The President’s gaze must shift squarely to the economy in the second year of his tenure. As for the political and security eruptions, that threaten our sustained recovery,particularly the return of the militants in the Niger Delta, the government needs to engage Nigerians. This must be sincere engagement, devoid of propaganda and sophistry. I have repeatedly drawn attention to the fact that we need a department of HOME LAND SECURITY AND NATIONAL UNITY to undertake a painstaking and holistic effort to unite this Nation. From Boko Haram to MASSOB to IPOD to Fulani Herdsmen to Ekiti Hunters and now to the NDA( Niger Delta Avengers) and the Red Egbesu Sea Lions, something is fundamentally wrong with our polity. It no longer matters who caused it. President Buhari and the APC must pay attention to this suggestion. The government must do its utmost to give every Nigerian a sense of  belonging and ensure equity, Justice and fairplay. I strongly believe that the government must pay attention to the report of the 2014 National Conference. Many of the leaders of APC were once ardent proponents of restructuring of the country through a National Sovereign Conference.They were Leaders in PRONACO. I am surprised that they have gone cold on these matters.  Let us learn to be proactive. If we were proactive in 1967, and implemented the ABURI Accord, perhaps we would  have averted the civil war. My prayer is that no action or omission should extinguish these glimmers of hope for an incipient economic revival.

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