“Once to every man and nation comes the moment to decide, in the strife of truth and falsehood, for the good or evil side.” - James Russell Lowell, 1819-1891.
INTRODUCTION
No two years are ever alike in the history of any country. But, 2024 in Nigeria will be characterized by three words: SCARCITY, FAILURE, and CHAOS.
Scarcity will be the most pervasive. The year is already starting with cash scarcity – a hangover from the disastrous currency change program early in the year. Other expected scarcities include foreign exchange, food, manufactured goods, drugs, jobs, university lecturers, doctors, nurses, and accommodation. Scarcity, meanwhile, induces recurrent inflation, meaning that inflation in 2024 might top 30% contrary to the budget assumptions. The situations in Nigeria make the shortages of supply inevitable.
Two quick questions illustrate the point and lead to forecasts for 2024 – which unbelievably promises to be worse than any year before it.
FUEL SUBSIDY REMOVED; TRUE OR FALSE?
“Subsidy is gone.” - President Bola Tinubu, May 29, 2023.
On vital national issues, a President should not speak flippantly. When Tinubu announced that “Subsidy is gone” in his inaugural address, my first comment on June 4, 2023, was “Talk is cheap.” Right now, a question which should have only one answer – Yes or No – has two answers; depending on who is talking. The Federal Government’s credibility and the fate of Nigerians in 2024 hang on the truth. Below are the answers given to the most important question for 2024.
Federal Government
“Subsidy is gone, and the President told Nigerians from his first day in office that there won’t be subsidy…..There are instances where the government needs to come in to see that things don’t go bad…Every rule will also have its self-adjusting mechanism…” - Mohammed Idris, Minister of Information and National Orientation on Channels TV.
World Bank
“It does seem like petrol prices are not fully adjusting to market conditions. So, that hints at the partial return of the subsidy….We think the price of petrol should be around N750/litre – more than the N650/litre currently paid by Nigerians.” - Alex Sienaert, Economist, World Bank.
Marketers
“How can you say subsidy is gone? No reasonable person who knows the dynamics of the market globally will say that…The government is subsidizing PMS [petrol] because, if it gets to N1000/litre, the country could be set on fire.” - Chief John Kekeocha, Secretary, Independent Petroleum Marketers Association of Nigeria.
“Since the dollar is now about N1,100, if you buy it at that price for the purpose of importing petrol, that means PMS should be selling around N950 or N1000/litre…there is no magic about this." - Chief Ukadike Chinedu, National Public Relations Officer, IPMAN.
President Tinubu will soon find out that talking first, thinking later can produce disastrous consequences.
Three major uncertainties hang over us like a sword – global price of crude, prevailing fuel price, and exchange rates.
Only God knows when Nigeria will ever have a realistic budget presented by the Federal Government to the National Assembly (NASS). As it is, the NASS is wasting time deliberating on a 2024 Budget that is already shredded by events beyond the FG’s control. The budget will never be implemented. Hope? Forget it.
Crude revenue estimates might not be achieved as export will average less than 1.6 million barrels per day on average. Stunted development is expected due to insufficient revenue to support development, according to the IMF. Dilapidated power plants and erratic power supply will remain obstacles to economic development.
Despite the Dangote Refinery coming on stream and wasted efforts to revive Nigeria’s four refineries, uncertainty of supplies and prices will make planning impossible for consumers. Expect either a return to subsidy or fuel price above N1000/litre in 2024.
Expect more devaluation as the budget was based on a N750/$1 exchange rate. The CBN on December 17, 2023, announced a new exchange rate of N951/$1, already tearing the 2024 Budget to shreds. Inflation is expected to be above 30% with crude revenue targets likely to be missed and total revenue in jeopardy, leading to increased deficit spending.
Scarcity of everything – cash, forex, food, imported inputs, housing, lecturers, proprietary drugs, jobs, etc., will propel inflation higher. Hoodlums have a stranglehold on Nigeria’s food baskets – Kaduna, Katsina, Sokoto, Zamfara, Benue, Borno, Niger, and Plateau. In 2024, Nigeria’s population will increase by at least 6 million mouths to feed while the 2023 harvest is estimated to be lower than in 2022. Massive food importation is certain, or else unprecedented famine will result.
Manufacturing decline is inevitable with the departure of multinationals and the closure of their local suppliers. Scarcity of cash, inputs, and dollars portend shutdown of many manufacturing companies. FDI is expected to decline further, with reports indicating that Chevron and ExxonMobil have snubbed Nigeria in their 2024 spending plans. Capital rarely rushes in where others are jumping out in droves. Despite the overblown successes of Tinubu’s foreign trips, the results are still in doubt. Foreigners determine whether to invest in an economy based on key indices, and Nigeria is losing on these fronts.
Higher-than-expected deficits will start from January 1, 2024, as Nigeria’s export of crude will not reach 1.7 million per day. Higher deficits invariably lead to more loans than budgeted, resulting in an increased debt burden and a higher debt-to-revenue ratio. Altogether, Nigerians can expect a dreadful performance in 2024.
Unemployment is expected to rise, with over 20,000 direct jobs lost to divestment according to a December 12, 2023, report. This is only a fraction of the jobs lost or about to be lost. Indirectly, about three times as many jobs would disappear by the time the ripple effects are felt. Meanwhile, Nigeria’s tertiary institutions will graduate close to 500,000 new job seekers, nearly 95% of whom will end up unemployed for years to come.
Power supply is expected to worsen, with reports indicating that power supply went as low as 4,212.86MW in December 2023. It was 4,360.12MW on average in December 2015, seven months after Buhari took office. No progress was made in eight years, and there is no provision for significant improvement in the 2024 Budget.
SUMMARY
Just about every index of a sound economy is discouraging. The 2024 Budget has already derailed; more foreign businesses and airlines are heading for the exit gate, scarcity of everything looms, and there will be 6 million more mouths to feed with dwindling domestic food harvest.
CONCLUSION
Nigerians should get ready for the toughest year in our history. The government propaganda machinery will be in top gear to convince us that things are getting better. Thank God, no government on earth today can cover up all the facts they consider unflattering to the President. The truth will be known sooner or later.
Those were most of the major forecasts for 2024 made in 2023. I challenge anybody to point to a single one that has not been correct. A close business associate of mine invited me for lunch and a chat in mid-January to register his disagreement with some of the predictions – particularly when the Central Bank of Nigeria, CBN, took aggressive measures aimed at bringing exchange rates below N1000/US$. It was about N1005/US$ then. He was sure it would crash to about N750/US$. He was contemplating getting rid of the funds in his domiciliary account before the crash. Like a real friend, I argued with him, begged him not to do it. He refused and sold everything. Today, as the exchange rate tentatively settles at N1550/US$, he has lost over N200 million.
I have an idea what the prevailing exchange rate might be in 2025. It is not N1000 or N1550. For many businesses, taking pre-emptive steps might mean the difference between survival and ruin. Scarcity of everything – except fuel at over N750 per litre — will persist for the rest of 2024 and most of 2025.
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