I pity President Muhammadu Buhari. Many dislike him, others hate him, but I pity him. One thing the People’s Democratic Party and Fayose would do is to help him lose all credibility, and they are doing just that. This is punishment for his comprehensive disdain for corruption, including the manners and grace with which he has fought the high and mighty in the polity.
But this is not the gist for today. Here is why I pity President Buhari: The economy!
Fluctuating oil prices, extensive corruption, vandalization of oil installations and insurgency are only parts of President Buhari’s problems. The economy is sinking, not as a result of Buhari’s leadership or non-leadership role. Our almost mono-economy hugely reliant on oil exports is the problem and lack of visionary leadership from past administrations crippled us to this state.
Our oil sector is currently losing a massive 400,000 barrels of crude every day to pirates in the Gulf of Guinea. That quantity of oil is equal to the entire daily export capacity an amount equal to the entire daily export capacity of its Forcados terminal in Burutu LGA of Delta State.
When that is added to theft and fraud, conservative estimates pegs a monthly loss of $1.5 billion. Recall that our 2016 budget is estimated at $30 billion. If the current trend continues, the economy would have shed $18 billion – which is more than half of our total annual budget for 2016!
There isn’t much President Buhari’s led government can do on its own. Without a total renovation of intelligence collaboration and local law implementation, the piracy scourge will continue to worsen. Meaning the economy will shed more than $18 billion. The Federal Government has upped its ante against pirates, but with insurgencies by Boko Haram in the North and Fulani Herdsmen in the South, it has too much on its plate already.
The Minister of National Planning and Budget, Mr. Udoma Udo Udoma, was once quoted as saying “In view of the current economic realities, the FEC predicated the budget on $38 oil benchmark for the Medium Term Expenditure Framework, (MTEF). We are working with 2.2 million barrels a day production.”
The yet to be signed budget expenditure for 2016 is N6trillion. This budget was predicated on an oil benchmark of $38 per barrel and 2.2 million oil production barrel per day.
Vandals are responsible for an estimated 250,000 barrels in daily losses. Pirates are stealing at a rate of 400,000 barrels per day. That’s a 650,000-barrel shortage on the budgeted daily output. If we do the arithmetic, we have about 1.55 million barrels of oil daily production. Assuming oil prices go up to $60 per barrel, this will not cover the losses from oil revenue.
So–barring all conscious effort on the part of the Nigerian government—prices will have to rise more substantially than they have so far this year for Nigeria to feel any positive effect; and that price has to be from $75 per barrel upwards.
All in all, Nigeria has sunk deeper and deeper, and even a continued oil price rally would not be sufficient to prop it up as production continues to decline. For June, the Federal Government plans to export 1.57 million barrels of crude. This is less than the estimated 1.6 million barrels scheduled for export in May. What’s more, our 2016 budget envisaged a daily output of 2.2 million barrels—an amount unlikely to be reached in the short-term.
I pity President Muhammadu Buhari.