Oil at $40/bar­rel? You wouldn’t re­ally say

Finweek English Edition - - IN BRIEF -

Iam out of Nige­ria t his week, trav­el­ling for busi­ness and for plea­sure. It seems it doesn’t mat­ter whether I am chat­ting to fam­ily, friends or fund man­agers, the ques­tion is the same: “Ooh, Nige­ria, things must be get­ting nasty with the oil price so low?”

Well, the an­swer is yes and no. When peo­ple talk about get­ting nasty, what do they mean? That crime is ris­ing? That unions are protest­ing on the streets? That the poor get poorer and the rich don’t get that much richer?

It’s cer­tainly true to say that the gov­ern­ment isn’t in a po­si­tion to splash cash; Pres­i­dent Buhari has been clear that he in­her­ited a Trea­sury all but empty, de­spite the pre­vi­ous ad­min­is­tra­tion hav ing en­joyed a pe­riod of his­tor­i­cally high oil prices. That scant in­her­i­tance will tie his hands when it comes to big spend­ing projects over the next few years, as­sum­ing oil fun­da­men­tals don’t dras­ti­cally im­prove or China growth doesn’t get a se­ri­ous kick up the back­side.

At state level it’s the same story: there was plenty cash com­ing in, but there was just as much go­ing out. Be­ing diplo­matic, let’s just say it wasn’t al­ways be­ing spent on in­fra­struc­ture or de­vel­op­ment.

But when I am walk­ing around, do I see less money, do I feel peo­ple who al­ways ben­e­fit­ted from high oil prices have fallen on hard times? Cer­tainly not. If we use the num­ber of su­per cars out­side my lo­cal night­club as a handy met­ric for the Nige­rian elite’s eco­nomic con­fi­dence (or at l east conf idence i n t heir Lon­don or Geneva f und man­agers), you’d still think $100 a bar­rel is the or­der of t he day, not $40. At my near­est Abuja su­per­mar­ket at the mo­ment, it’s eas­ier to buy a mag­num of Cristal than a loaf of bread, and in the chichi bars of La­gos the bot­tle pop­ping con­tin­ues at its usual fren­zied pace.

It would be un­fair to say t hat ev­ery­one sip­ping on cham­pagne has had their hand in the ti l l , but the in­su­la­tion from the oil price shock is partly a re­sult of the vast sums taken from the Nige­rian state over the last few decades, and the num­ber of peo­ple who saw f it to take a share. Again, look at the cars on Abuja’s streets: it’s not un­com­mon to see state des­ig­nated num­ber plates on ve­hi­cles wor­thy of a sheik or a movie star.

Per­haps t his goes some way to ex­plain­ing why Buhari is mak­ing his way through the Nige­rian Na­tional Petroleum Cor­po­ra­tion, c ut t i ng, chop­ping and chang­ing. He knows that $40-some­thing oil doesn’t al­low room for las­si­tude or for the im­punity wit­nessed dur­ing the Jonathan years. If ever the ma­jor­ity of Nige­ri­ans (though they may well have missed the boat) are go­ing to ben­e­fit from their na­tion’s vast re­serves, it’s go­ing to de­mand far less cham­pagne and far more dis­ci­pline from the state.

So, ask me again in a year’s time how the oil price drop is af­fect­ing life. I never want any­thing to get nasty for Nige­ria (it’s had more than its share), but per­haps by then we’ll be see­ing some change. Not at the bot­tom of the pile, be­cause the oil wealth never made it that far, but per­haps at the top.


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