Why Nigerians Should Prepare for More Hardship — Obadiah Tohomdet
Obadiah Tohomdet, former Senior Communications Specialist at the World Bank and Managing Director of SIMANS Strategic Communications Ltd, Abuja, spoke with JOSEPH INOKOTONG on a wide range of economic issues and what Nigerians should expect in 2022 Excerpts:
There are fears that this year 2022 is likely to be a more turbulent economic year for Nigeria. First, the fundamentals of the budget seem unrealistic; debts will increase further because the federal government cannot meet half of its revenue projections, which means it will have to borrow more. Additionally, the FG has reportedly pledged to the International Monetary Fund (IMF) to remove fuel and electricity subsidies and it will work to remove them in 2022. With all of this, do you think these fears are real ?
I would like to focus on the issue of oil subsidies. Let’s take a look at the oil subsidy aspect and unpack it. Recently I heard that the Central Bank of Nigeria (CBN) is actually mentioning that the subsidy is increasing and then the World Bank report actually shows that Nigeria has spent around N864 billion on oil subsidies over the past first nine months of 2021. And then recently the Nigeria National Petroleum Company (NNPC) Limited mentioned 3 trillion naira.
If you look at it properly, you will see discrepancies in what we even call the grants themselves. So where is the truth in all of this? Why are there discrepancies? If you calculate correctly with the exchange rate, maybe the CBN subsidy figure will get closer to the World Bank one.
I want to question the aspect of the subsidy from the outset. Why is there no harmonized figure for the subsidy we are talking about? If the FG must indeed remove the subsidy, when can the government say that the subsidy has actually been removed? Has the government ever mentioned that this is the final number we reached by removing the oil subsidies? We are not there yet, which means that there is still a question mark on this question of subsidy itself. Of course, whatever the situation, if you look at the parameters of the country right now, other than the subsidy which will generate inflation if removed, will increase the cost of living for people which is already increasing, the cost of living for Nigerians are on the rise, Nigerians are actually going through hard times, actually paying more for food prices. The prices of consumer goods are rising. The problem I mean is that looking at even the banditry that’s going on, the Boko Haram problem, the fact that farmers can’t go back to the farm anymore and when you collect all the variables, and the question from the removal of oil subsidies, of course, Nigerians must be prepared for hard times.
During the campaign period, of course, resources should be released into the system, you could say it’s private funds coming into the system. But private companies, individuals do not exist in isolation from government patronage. Whatever the private sector brings to politics will also come from government in a different dimension. The trend is that things can be tough, we have to be ready for the tough times and I think individuals have to prepare for them as well.
Why the disparities, FG says economy will grow by 4.2%, IMF/World Bank said growth for 2022 will be 2.7% while CBN forecasts Nigeria’s GDP to grow by 2 .8%.
That’s what I raised about subsidies. Of the grant, there are a lot of disparities there. Then there is the question of the disparity of the postulates of international organizations. If you know the psychology of government, there is no government that would want to degrade itself. The tendency is that some of the numbers that come from the government would be for political reasons. You can also have what we call political figures. CBN’s projection is closer to that of international organizations. So now we can say where the professionalism in the approach comes from. But on the other side you can see that it is tinged with political coloring. Now it’s up to you, analyst, to decipher how to put it all together because the disparities are just too great.
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