Jerry Uwah
Even with a budget proposal that appears dead on arrival, there are glimmers of hope for road users in all parts of the country during the year. The federal government has an elaborate plan for road rehabilitation and construction. In the south-south, the planned rehabilitation of the Odukpani-Ugep stretch of the Calabar-Ikom highway in Cross River State would bring a measure of relief to commuters.
In November 11, 2007, I lost a bosom friend, Samuel James Mendie in a fatal accident caused by one of the hundreds of craters on the Awi section of the road. Mendie would still be teaching electronic instrumentation in the University of Calabar if that road had been rehabilitated 11 years ago. Memory of my handsome friend flashed into my mind as Nigeria’s puerile lawmakers heckled President Muhammadu Buhari when he listed the award of contract for rehabilitation of the road as one of his administration’s achievements.
When the contract is executed, the journey of about 90 kilometers would not only be reduced from six hours to one hour, but the number of deaths on what has become a slaughter slab would be reduced drastically.
The other good thing that would happen in 2019 is the planned rehabilitation of the Odukpani-Itu-Ikot-Ekpene Road. The road was built in 1975 as the only link between Calabar, capital of Cross River Sate and what is now Akwa Ibom State.
The road became practically impassable during the administration of former President Olusegun Obasanjo. He used it to punish Victor Atta, the then governor of Akwa Ibom State for championing the campaign for 13 per cent derivation for oil producing states. Since then, only cosmetic repairs have been effected on the road. It remains the death trap it has always been. Commuters would heave a sigh of relief when the contract is executed this year.
The federal government has finally decided on the thorny issue of how to finance the Second Niger Bridge. The project has suffered setbacks in the last decade primarily due to government’s lack of will power to finance it. The present administration decided to fund the project when the private participation plan eventually hit the rocks.
However, people are not impressed by the snail’s speed of the project. The federal government plans to finish it in 2022. So far only a paltry N33 billion has been allocated to the essential project. Those who see the Second Niger Bridge as a south-east project are making a colossal mistake.
The bridge is a major link between the entire east and western Nigeria. It links the south-south with the west and is a passage to some north-central states. More than a century after the emergence of rail system in Nigeria, there is no rail link between the east and the western parts of the country. Niger Bridge is the only link.
The First Niger Bridge which was commissioned in 1966 is now creaking under excess load. Onitsha, the commercial nerve-centre of Anambra State is congested because of the massive traffic to and from the east and some north-central cities. That is why work on the Second Niger Bridge should be faster than it is programmed at the moment.
In the 2019 budget speech, Buhari passively mentioned government’s plan to commence work on east-west rail line. No one expects the tracks to be laid in the next 10 years. In the absence of the east-west rail line, the Second Niger Bridge remains the only hope for easing the traffic jam in Onitsha. Nigeria is perhaps the only economy of its size with 90 per cent of land transportation system concentrated on roads.
Everyone in the country has adjusted to the disproportionate role of roads as a dominant land transportation system. That is why the expectation on the Second Niger Bridge has been excessively high. Government owes the south-east, south-south and even north-central an obligation to fast-track work on the Second Niger Bridge. It would be a huge relief to half of the country.
One of the Herculean tasks set out in the 2019 Appropriation Bill is the exchange rate of the naira. Architects of the Appropriation Bill predicate projections in the budget on an exchange rate of N305 to the dollar. They also expect to drive inflation rate down to 9.9 per cent during the year. That amounts to controlling two opposing rates simultaneously.
The Central Bank of Nigeria (CBN) would need a steady flow of funds from oil, Nigeria’s predominant source of foreign exchange, to sustain the exchange rate set by the 2019 Appropriation Bill. Ironically the funds are not likely to flow freely.
During the year, funds would only flow freely from domestic sources. Unfortunately, funds from domestic sources would only reduce the chances of sustaining the exchange rate at N305 to the dollar. Sixty per cent of the money in circulation in Nigeria is outside the banking system. The apex bank has absolutely no control over such funds. The situation is even worse in an election year. Politicians have hundreds of billions of naira outside the banking system.
Even with the law restricting campaign spending by presidential candidates to N5 billion, politicians would unleash hundreds of billions of naira into the system during the campaigns and flood the economy with liquidity that would be chasing the dwindling stock of forex in the foreign exchange market. The excess liquidity from campaign funds would put unbearable demand pressure on the country’s lean foreign reserves forcing the CBN to devalue the naira.
The forex inflow during the year would not be sufficient to allow the CBN to continue with the generous interventions that sustained the official exchange rate last year at N305. Oil price is already tumbling below the oil reference price of the 2019 Appropriation Bill. No analyst in the international oil market expects the price of crude oil to rise above $64 during the year.
Besides, the Organisation of Petroleum Exporting Countries (OPEC) has ordered Nigeria to peg its production at 1.6 million barrels per day.
That directive from OPEC would cut Nigeria’s oil revenue drastically. With oil price tumbling along with production and capital flight worsening, it would be extremely difficult to sustain the exchange rate perceived by architects of the 2019 Appropriation Bill.
In fact, economy watchers at home and abroad are worried that capital flight and low forex inflow might compel CBN to allow the official exchange rate of the naira to drop perilously close to N320 to the dollar.
The truth is that excess liquidity at home engendered by uncontrollable campaign funds used by politicians to buy votes would unleash so much naira on the apex bank’s dwindling stock of forex that the only sane thing left for the generals in the CBN exchange rate war room would be the battle equivalent of tactical withdrawal.
The situation would be worsened by the on-going capital flight where foreign portfolio investors are fleeing Nigeria’s capital market for improved returns on investments in risk-free debt instruments in developed economies in North America and the European Union (EU).
Even foreign direct investors would be weary of Nigeria’s economy in an election year. They would be watching the scene from a safe distance until the election determines the country’s new ruler. Even after the general elections, the inflow of forex from foreign direct investors would have to wait until the new ruler forms a cabinet and articulates his economic policies. No one expects forex from foreign investors to tumble in before the third quarter of the year. From all indications, the budget’s exchange rate of N305 to the dollar is just not realistic.
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