Nigeria is starting 2016, with a stack of challenges that will be hard to beat. In December last year, President Buhari presented his budget for 2016 to Nigeria and analysts continue to have high expectations regarding the breakdown of this plan. In the meantime, the budget, which will seemingly address all of Nigeria’s problems, is based on an oil benchmark price of $38, making it somewhat of a fool’s errand.
Oil prices dropped to $27 yesterday, sparking widespread confusion among member countries of the Organization of the Petroleum Exporting Countries (OPEC). However, oil prices and Boko Haram are just two of many big issues Nigeria will be facing this year. Here are some of the critical issues that need to be addressed in 2016:
1. Boko Haram insurgency and IDP relocation
President Buhari promised to end the Boko Haram insurgency by December 2015, a promise he communicated to the top brass of the army. However, it is now January, 2016 and bombings perpetrated by the terrorist group have not stopped. Ventures Africa spoke to Dr. Joseph Bolarinwa, an expert in Defense Studies and a Research Fellow at the Nigerian Institute of International Affairs, Lagos, Nigeria. He provided a candid view of the insurgency so far. “They are inside the forest now or scattered. Though they have bombings here and there, it’s a testament to their failing strength. Then the international community is assisting Nigeria in the war. The British army is currently training the Nigerian army on how to tackle an insurgency. So, between June 2016 and December 2016, we should be expecting an end to the problem and then people can return home.”
The new administration’s resolve to end corruption in Nigeria has given the people a slither of hope. Already, the country’s foremost agency in the fight against corruption, the EFCC, has been picking up high profile names implicated in a fraud case in the last administration. Many Nigerians hope that these people stand trial and the guilty ones be convicted, a process that has eluded the EFCC for some time.
3. Diversification of the economy
Considering the continuous fall in the price of oil globally, President Buhari has resolved that most of the 2016 budget will be devoted to diversifying the country’s oil-dependent economy. However, the how of it all, remains to be seen. Dr. Emmanuel Ani of the Nigerian Institute of International Affairs, mentioned that corruption could be the only debilitating factor to diversify the economy since previous administrations had the same plans but the money for their execution was nowhere to be found. “If Nigeria can get rid of corruption, then diversification is possible considering the matrix devoted to it in the 2016 budget,” he said.
4. Agricultural growth
Nigeria once had a thriving agricultural sector with a culture of exporting crop produce. The advent of oil and the subsequent disinterest in agriculture has lead to a near death of the sector. However, in a presidential media chat late last year, Buhari shared plans to resurrect that culture, in a bid to revive the economy and shift its dependence on oil to other things. “We will make sure we get the machinery, fertilizer and other input and ask people to go to the farm so that we do not import food…” he said. However, asking people to go to the farm to work might prove a daunting task, considering that most of the youth population is not used to the culture of agriculture.
5. Disease outbreaks/Health intervention
Nigeria had an Ebola scare in 2014 that was quickly nipped in the bud. However, few days into January 2016 and there have been reported cases of Bird flu and Lassa fever in the country, two diseases that seem to be recurring in Nigeria. The Federal Government has approved a cash intervention of $140 million to battle this. However, that amount of money glosses over the real problem which is that the health sector is abysmally underfunded and has been for some time.
6. Foreign exchange and Nigeria’s currency
Nigeria’s currency, right now, is free-falling as global oil prices reduce and its foreign reserves become depleted. The Central Bank of Nigeria has been unable to halt the foreign exchange rate and its easing and the ban placed on forex shows its helplessness. The Naira will continue to rise, but the extent to its rising can only be determined by the CBN.
7. Power supply
Nigeria’s epileptic power supply is a big issue that has affected and stalled the growth of many other sectors in the Nigerian economy. Already, the new Minister for Power, Works and Housing, Babatunde Fashola, has made plans concerning how to revive it. It however remains to be seen if he can achieve his goals before the end of his tenure.
8. Petroleum pricing
Nigeria’s 2016 budget has an oil benchmark of $38 on which it would be executed. That number is set to be lowered now that analysts have predicted that oil prices will still go lower in 2016. The global fall in the price of oil has affected the Nigerian economy in a very big way. For an economy where 70 percent of its revenue is gotten from oil, this problem is not likely to ease soon. Nigeria’s borrowing could increase, while the naira is set to further weaken this year. Nigerians look on to see how President Buhari’s finance team solves the problem.
Nigeria’s unemployment rate increased to 9.9percent in the third quarter of 2015 from 8.2percent in the second quarter of 2015. President Buhari’s solution to this problem this year is to provide more jobs in the Education and Agricultural sectors. “…We are trying to mop up the unemployed youths; do a crash programme in teaching; post them to teach in primary schools and junior secondary schools…” he said last year December. With the Naira still rising against the dollar, inflation might arise in the country, and the number of Nigeria’s poor would increase. The Federal Government should look to make this more than a stop-gap solution to unemployment and modify it into being a long-term one.
10. Salaries of Civil workers
Many states last year were unable to pay workers’ salaries as their debt profiles increased and oil revenue from the Federal Government that accrued to them reduced. This trend could continue this year if most of these states do not find an alternative source to funds. One of the alternatives would be to focus on how to generate more revenue internally; another would be to merge less viable states with the viable ones. However, the focus might be placed on the former for 2016.