Visions of a Post-Oil Nigerian Apocalypse: Stories From Down South

FG to raise $34bn from reducing JV oil assets stake to 40%

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In 1998, a group of veterans from Zimbabwe’s Chimurenga (Independence) war grew tired of the snail-paced land redistribution program and took matters into their own hands. When word got to Harare about farm seizures and sit-ins targeting the descendants of white settlers, President Robert Mugabe’s response became a defining moment for Zimbabwe. Rather than immediately do something to end the crisis, Mugabe instructed his security forces to stand down, and thus commenced the most chaotic and unplanned land reform process in modern history.

Twenty years later, as Zimbabwe still struggles with the disastrous economic effects of trade losses and economic sanctions that followed that episode, Nigeria is in the early stages of its own “1998” moment. Public finances are worse than they have ever been, with debt servicing now taking up 70 percent of all of Nigeria’s income. Of the remaining 30 percent, the majority goes to maintaining the country’s humongous political and civil service structure, and barely anything is left. The clear message is that crude oil is no longer enough to run the country, and that particular resource is a decade and a half away from becoming a worthless antique as alternative energy gains more prominence. At the moment though, nobody is listening. Maybe we need to look at Zimbabwe’s story to understand what is in the offing.

Government Fiat Fixes Nothing

Like present-day Venezuela, Zimbabwe was noted for its ridiculous hyperinflation that famously saw it print a fifty trillion Zim dollar note in 2008. As the country’s economy progressively broke down due to lack of liquidity, the government tried to artificially create liquidity through quantitative easing – printing money for the uninitiated. Of course, that only resulted in the Zim dollar becoming worthless as there was no corresponding income in hard currency to justify the official exchange rate. Previously one of Africa’s top agricultural exporters, the chaotic land seizures resulted in a catastrophic drop in exports and a huge hole in the country’s revenue that has still not been filled.

In Nigeria, rather than losing our oil exporting capacity, it is more likely that oil buyers will simply stop buying as much as they do, resulting in a major price dip sometime over the next 15 years. When that happens, we should not imagine that we will be able to keep on using the state-backed MMM strategy of obtaining loans to plug our deficit. As with Zimbabwe, lenders will very quickly realise that we have no capacity to pay back with hard currency, and they will instantly turn off the credit money tap that we are currently gorging ourselves on.

In that scenario, if the government then decides to start printing Naira to prop up the fake economy, then we might all need to take some tips from middle-aged ex-Yugoslavians, present day Venezuelans, Zimbabweans and anyone else who has lived through the horrors of hyperinflation. We should never imagine that Nigeria is “bigger” than that scenario because presently, we are living at the mercy of time and international energy markets. All it takes to stop the inflow of dollars to Nigerian government coffers is another breakthrough in electric vehicle technology or trade sanctions that prevent us from selling petroleum. If either of these things happens, we are effectively dead in the water like Zimbabwe in the noughties.

The Social Consequences will be Brutal

At the height of Zimbabwe’s economic crisis, an estimated three million citizens left the country, with many going to the usual Five-Eyes destinations, and the majority going across the border into South Africa. To put that figure in perspective, Zimbabwe’s population is currently about 16 million people. This means close to 20 percent of the country had to leave due to economic hardship. If Nigeria does not quickly find a solution to its dependence on crude oil for export income, we could face a smilar situation with far more dangerous outcomes.

For one thing, Zimbabwe’s neighboring countries are reasonably self-sufficient, ethnically similar countries by African standards, so absorbing one or two million Zimbabwean immigrants with similar languages and shared history did not create excessive social dislocation. Zimbabwe also had one of the best education systems in Africa, with a literacy rate topping 96 percent. This meant that Zimbabweans actually had in-demand skills that made it easy for them to emigrate and settle into the diaspora. During my time in the UK, I met several hundred Zimbabweans who almost without exception were gainfully employed in skilled occupations despite attending government schools back home before leaving. The concept of the “private school” as we know it, did not exist there at the time.

Nigeria by contrast, has the world’s highest number of out-of-school children and a famously underdeveloped education system that is unfit for purpose and largely boycotted by anyone who can afford a private education. We also have a unique set of geographical circumstances including Africa’s biggest population inside a land mass smaller than the Canadian province of Saskatchewan, incredible sub-ethnic diversity that makes us very different from most of our neighbours both culturally and linguistically, and perhaps most crucially, a very poor neighbourhood that is already dependent on our economy to stay afloat.

In other words, if 20 percent of Nigeria’s alleged 177 million people (about 35 million people) are dislocated by economic hardship, there is nowhere in West or Central Africa for them to settle into. Europe and the world beyond will only take the best of our skilled labour, and even at that they can only absorb so many. It also doesn’t help that as a people, we have a much more negative reputation than Zimbabweans did in the noughties, so nobody really likes us that much. If you put all these variables together, what picture do you see?

I will leave that to your imagination. Perhaps it is time for us to stop acting as if it is business as usual, as we steer dangerously close to an extinction-level event. Fellow Nigerians, it is time to panic.

 

 

David Hundeyin



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