NIGERIAN ECONOMY, ROCKED BY THE ‘UNCERTAINTY’ IN THE VUCA – By Kenneth Adejumoh
Towards the end of the last decade, hardly would any business or corporate executive meeting/summit/roundtable session end without a reference or mention of the acronym VUCA (Volatile, Uncertainty, Complex and Ambiguous) to describe the economy and business landscape. Any business executive who has not used it in his or her presentation might not just be communicating what the audience expects to hear. In the media, at the time, it was a reoccurring word for business editors and economic analysts.
The current reality has truly brought to us the popularly chorused ‘uncertainty’ in the VUCA. The speculated uncertainty, I am sure was in no way connected to a medical crisis as we have in a novel Coronavirus Disease 2019 (COVID-19) pandemic. Top on the much talked about uncertainty had every connection to the unending oil price war among the OPEC+ nations as well as the tussle for global economic power (trade war) between China and the United State of America (USA). This were the directions of focus by economic analysts and business analysists.
I am not an expert in economic reviews and figure but from the ordinary man’s perspective, the new world order occasioned by COVID-19 has exposed our nudity as an oil export dependent economy. Before mid Q1 2020, the global economy was already looking shaky with the ravaging coronavirus pandemic. No economy needed a professional analyst to opine that all economies were headed for a crash. By the end of Q1, we all wondered the extent of the crash and ways to revive the situation immediately.
Reports indicated that oil price crashed for the first time in years to below zero during this period resulting in the shutdown of oil wells. This affected Bonny Light which fell for the first time to $15 per barrel, way below the cost of production. The resultant effect is the collapse in revenue accruable to the Nigerian government. The states and local governments will subsequently feel the impact.
COVID-19 fast tracked the unknown uncertainty. It came like a 200kg weight of blow of a heavyweight champion to dent the face of an amateur boxer. This sort of occurrence is better imagined than experienced. But here we are, nursing the pains from that blow into our faces that has caused us to spine as a whirlwind or tornado.
Our exposure today reflects the deficiency in thinking in the heyday of oil boom when little or nothing was done to diversify the economy or invest in infrastructure like other oil dependent economies. Reports have it that Nigeria has the lowest rate of investment in infrastructure among OPEC nations.
In the days of oil boom, former President Goodluck Ebele Jonathan and his team led by Dr. Ngozi Okonjo Iweala as the Director of the Economy and Finance Minister, the government made attempts to save for the future and even established the Sovereign Wealth Fund. Sadly, majority of the state actors (governors) kicked against the plans and made endless demand for the funds. Now, the chicken has come home to roost.
The hapless citizens were largely ignored, even when they relentlessly cried out against the mismanagement of funds. Indeed, while other oil nations grew their savings and their Sovereign Wealth Funds, here in Nigeria we were on a roller coaster-like ride as a few amass the funds as personal wealth. The public or political office became an oil well, money-making venture for a few in a country globally referred to as the most populous black nation.
The reality is that the VUCA economy is self-induced by the selfish actions of a few. Now, the whole country is paying the price. The COVID-19 pandemic that we war against knows neither rich or poor, bond or free, south or north, east or west, Muslim or Christian, and it also does not recognise any tribe. The pandemic has leveled the playing ground. The luxury Mercedes Benz Sprinter worth of $176,000, the Rolls Royce Cullinan worth about $250,000 among other luxurious wheels are all idling away just as the second-hand used Toyota Corolla 2006 model worth N2.5 million of the average Nigerian.
The economy is bleeding and needs help. The leaders and drivers of the economy must no doubt be having sleepless nights. Those who have robbed the fortunes of the oil boom, I hope that they can sleep well as they watch the shambles resulting from personal greed. Recently in a local TV, the Minister for Finance, Budget and National Planning, Mrs. Zainab Ahmed estimated that our economy could shrink by as much as 3.4 percent in the course of the year without massive stimulus. The mystery of where the stimulus funds would appear from cannot be easily solved.
Inflation is gradually climbing to 13 percent. This is a hard price for a nation to pay. The lack of forward thinking in government and failure to be deliberate about diversifying and investing in non-oil economy has led us to this point. The oil sector which accounts for over 80 percent of our export revenue is today trading below cost. The number cannot add up.
A recession is inevitable. But we can pull through with our ‘never say die spirit’. Let us boldly say, this too shall pass.
What is done is done. What matters at this stage is how we choose to respond. There is no time to dilly dally. The government must be decisive. It must, as a matter of urgency, introduce new policies to redirect the ship of the economy. The private sector needs to throw its massive weight behind the government. It must offer counsel, be willing to drive the strategic direction and join hands to move the state forward.
For the rest of us, welcome to the new normal, to a new world order where remote working, learning and collaboration are the order of the day. It is only by working together that we shall overcome.
Kenneth Adejumoh, Public Relation Expert, writes in from Lagos