The Nigerian economy like every other economies, faces booms and slumps, a regular occurrence in the economy we call the business cycle. During booming or bursting periods, economic agents rationally would save and invest the excesses that come with such burst. This often times is to insure and guarantee oneself against uncertain periods. But the Nigerian government does not think and act marginally as a rational economic agents would. Their spending behavior could be akinned to the biblical story of the foolish virgins waiting for the bride groom to return. According to the parable, five of the virgins were wise while the other five were foolish and stupid. The wise five, decided to carry extra jells of oil so as to be able to get their lamps on even if the bride groom returns late. As expected, their lamps went dim and they (the wise five) quickly refueled it while the other dreary five who didn’t care to bring along with them , a spare contingent jell had their lamp turned off because of lack of oil. They had to go out late at night in search of oil but by the time they got back, the groom had already came back and the doors to wedding feast were shut behind them.

This laissez-faire attitude of the foolish virgins epitomizes the attitude of the government towards savings and investment in the economy. When the economy is doing well they embarked on a spending spree declaring to the world that Nigeria’s problem is not money or resources but how to spend it. Not too long after the mouth wagging boasts of the government, came the oil glut of the 1980’s, which in real terms was one of the plans marshaled out by the G8 economies in the 80’S to tackle oscillating rate at which oil price was increasing. The plot successfully crashed the oil price and through it, they protected their own economies from too much oil imports. Their plot led to the first drastic fall of world oil price by more than 50%. The result in the Nigerian economy was the hurried structural adjustment program (SAP) of 1986, which in itself, a
laissez-faire neo classical policy, died peacefully of no complication other than the structural and institutional imbalances; the policy makers failed to settle before its introduction. Regrettably, policy makers in Nigeria have not learnt their lessons from the events of the 80’s. The
rationale behind the defunct SAP was the move to diversify the economy so as to increase its productive base and also to insulate it from the global economic shocks by transforming it from a monotonous one solely dependent on oil revenue to one that would enhance productivity and growth from different competing sectors of the economy. Coming to the new millennium, between 2000 till the 1st quarter of 2014, Oil prices soared and remained stable between $109 dollars and $115 dollars/ barrel. But like the foolish virgins, the government didn’t make any serious effort to diversify the productive base of the economy -now, the winter fire is about to catch up with the economy.

Since the 2nd quarter of 2014 fiscal year, there has been a continued decline in the prices of crude oil in the international markets. The price of Bonny Light crude (Nigeria’s high quality benchmark crude) has dropped from $114.60 in June to $86.95 as at October 31, 2014 (CBN, 2014), representing a 24.13% decline in just four months. Among the key factors responsible for this trend is the increasing level of oil
production in the U.S – a major importer and player in the global oil and gas market. With current domestic production level of about 8.6 million barrels every day (that is a 50% increase or roughly 3 million barrels per day compared to 2011), the US crude oil production has never been at this height in three decades, and is even estimated to hit over 9.9million barrels per day by 2018. Moreover, weak demand from China whose economy is also experiencing a slowing growth rate lately is another factor affecting the falling crude oil prices. To worsen the matter, the geo-political unrests in the Middle East have also resulted in abundance of oil in the world market –Oil glut, which would further crash down the price. From the going oil glut, some nations would gain from the demand side while others would lose out from the supply angle. Importing nations like Australia, India and China will gain due to the falling prices while exporting nations like Venezuela, Russia, the Kingdom of Saudi Arabia, Nigeria and other oil producing economies will be forced to accept peanuts from the market due to excess supply fuelled by US strategic entrance in the oil market. While exporting nations expects a cut down in their revenue, some affected nations will get over the market fluctuations but the future seems gloomy for Oil economies of the southern Atlantic like Nigeria and other satellites oil economies. Economies like Russia and Saudi Arabia that have social collaterals that will insure them against market eventualities won’t be affected much though might affect the Russia /Ukraine conflict as Russia might have to raise taxes to be able to annex Crimea. Saudi government on the other hand might fall back on their hospitality sector as the visional investment by the government under Sheikh Mohammed might come in handy.

Here in Nigeria, it is sad to see that our government has no plan B or a fall back plan which has warranted my personification of the Biblical foolish virgins on her. Often times, I ask myself if suddenly there are other exogenous happenstances that might further disequilibriate the economy as the oil price is doing, what would the Nigerian government do? What if there is a sudden discovery of alternative and more efficient energy source that is available in commercial quantities; a possibility which might be possible in the ten years considering the level of resources devoted to Oil energy substitute research by Chinese and American governments. This is a scenario that jitters and frightens me, causing anxiety down my spines and forces my kneel on the ground in prayer for the fate of our dear Oil economy. The falling oil price is hitting hard on economies round the globe, although the impacts on economies are asymmetrical. Its effect is pervasive on some countries while is calm on the others. Some of the less hit Oil economies like Qatar and Saudi are still talking tough and has recently indicated they have no plans to reduce its output and supply regardless of the alarm raised by OPEC.

Indubitably, other rational OPEC producers are likely to follow Saudi’s lead. Consequently, except for strong adjustments which may occur in the US due to the possible production cuts in its shale oil due to its very costly operational requirements – making it unprofitable in the face of falling prices – and except also OPEC play a strong leadership role in managing production and supply from its members. The troughy trend of falling prices may last in the short to medium terms. Therefore, with crude oil exports constituting over 70 percent of Nigeria’s total government revenue and over 90 percent of the nation’s foreign exchange earnings, there is no doubt that the falling crude oil prices in the global oilmarket portrays a clear and present danger to the Nigerian economy – both on the monetary and fiscal policy fronts . To allay the fears of the public and investors in the economy, policy makers like the Minister of Finance and the CBN governor have given some placating and assuring comments on behalf of the government. Well, we know the role the government plays in stabilizing the economy especially during periods of market imperfections such as the one we are facing, but if facts be laid bare as it is, the question is whether the government can accomplish its fiscal responsibilities taking cognizance of the depreciating assets and variables at her disposal with which she can manipulate and stir the economy with.

According to the Finance minister, “Nigeria has alternative ways or assets with which we can handle the problem”, but I have often wondered on what these other ways are except by going deeper into public debt undertakings which might go down the drain due to the systemic misappropriations inherent in the public sector Or do they also intend strip down the external reserve? The nation’s external reserves had fallen from $44.61billion as at October 20, 2013 to $32.75billion as at October 14, 2014 – showing a $11.91billion or 18.4% fall in just 12 months.
This obviously, could have been as a result of the hard tethering scuffle to defend the value of the nation’s currency against global currencies, especially the US Dollar, the Euro, and the British Pound Sterling. While inflation had maintained a single digit position, domestic demand had remained suppressed – seeming like the cause and consequence of the single digit achievement. Fiscal challenges had persisted making the national government take foreign loans to support important expenditure items.

Unemployment rate has remained above 33.3% in 2014 (with youth unemployment hovering around 70-80%). Extreme poverty has persisted in Nigeria with over 45% of its citizens reported to live below $1.25 a day (World Bank, 2014). Though economic growth rate has remained impressive at above 6.0%-6.5% making Nigeria one of the 10 fastest growing economies in the world, the growth has been less than inclusive, and has not yielded much prosperity in the lives of the individual citizens; hence, termed jobless growth due to its inability to generate jobs for the teeming labor force. This is largely due to the mono-cultural and unbalanced structure of the economy.There is every reason, therefore, for all literate citizens to be nervous about the realities faced by the Nigerian economy in the face of the current dwindling oil prices. Just in three weeks between October 7 2014 and October 29, 2014, the nation’s external reserves lost about 2% of its value from $40.17billion to $38.76billion with the trend expected to continue. This will in due course affect the nation’s ability to continue to defend the value of its currency, and also tighten our balance of payment position. One would expect an ultimate return to a net- importer or negative balance of payment position.
On the fiscal front, the nation’s struggle with fiscal deficit positions would clearly worsen. Prior to the fall in prices, Nigeria used to sell a barrel of its crude oil at above $110 against the budget benchmark of $77.5 per barrel; but volume of export which has averaged about 1.8million barrels per day had remained well below the budget estimate of 2.4million barrels per day. This can be attributed to the oil bunkering activities and other illegal activities going on around the creeks of the Deltas thereby offsetting the gains made in higher prices. But with the fall in prices, the low level export quantity (below benchmark) and low prices (nearing budget benchmark) would definitely result in inadequate
revenue to finance government activities.

Still troubled with the falling Oil price, one would expect a belt tightening policy measures or probably, expects the government to cut the cost of governance and all useless and unproductive administrative endeavors, but the reverse is the case. Like the foolish virgins, they are averse to belt tightening policies or policies that would put their God given brains to work. The recent request made by Mr. Godwin Emefiele, the CBN governor to be given the green light to print the centenary N100 naira note that would serve as part of the CBN’s support for the centenary celebration which has just been concluded last month, raises doubt on the sensitivity of the government to the economic plight of the nation. When asked why we should embark on such ceremonious and conscupious endeavor, he replied that is good for the country and that nations do it when they attain certain age, citing instance with Scotland. Well, this might be referred to as economic patriotism in manifest terms but my grief is on the insensitivity of the CBN boss to the precarious situations the economy is undergoing currently. Such endeavor can be further likened to a son who demands that his parents buy him a car when he knows they have just lost their jobs. If I were one of the parents, only God will save the ‘son’ from the spanking that I will unleash on the prodigal son. Apart from the insentivity and ‘witchcrafting’ of the CBN boss, why don’t we look at the cost of the design, minting and printing of the notes . It is evident that the quality of the note the CBN wants to embark on will drive the cost up thereby, making the cost of the notes to be higher than the face value of the notes. I don’t know what else to call economic suicide if
not this.

Furthermore, it is obvious that Nigeria lack the technology to mint her currencies which means that the money would be printed outside our shores and the project might be bankrolled by our hard earned foreign reserves. This further implies creating Jobs for South-African or London firms printing the currency when our economy is in a state of comatose. If I am permitted to make inferences from this audacious plot of Mr. Governor, one will be forced to think he has some latent motives in pursuing for the minting of the so called centenary N100.00 bill. The president, therefore must be advised from the rent seeking and ‘economics sorcering’ behavior of his employees.While we await the government to develop a contingent marshal plan that will navigate us away and unscathed from this injurious oil glut, the citizens must do their part by fulfilling their civic responsibilities – which is exercising their electoral franchise. As we all know, 2015 General Election is upon us and the election time is the only time the citizens play the Leviathan by rewarding every politician in the country according to his or her actions and in -actions in the past four years. Though confronted with limited alternatives, we must choose the lesser of the evils before us so as to be to maximize our economic potentials. Till 2015, we must continue praying the oil price don’t depreciate further and for God to save us from political jobbers who with the mask on their face pose as the Messiah just to garner our votes only and disappear till 2019. We must therefore exercise some rationality come 2015.

Ebuka writes from Ibadan. @senatorEbk.