The lesson from Venezuela


Both Venezuela and Nigeria are developing countries. They are both oil-producing nations and members of the OPEC

Victoria Ngozi Ikeano

We should not turn a blind eye to what is happening in Venezuela nor be unconcerned with goings on there in the simple belief that that country’s current travails cannot occur here because the two countries are different and miles apart. Venezuela and Nigeria are similar in some ways. What is more, in this epoch, in today’s world, once rich countries can become poor overnight literally, due to circumstances that were thought unimaginable.

Consider Iraq, a once bubbling, rich country with a sophisticated people and rich history reduced to rubbles, a nation still struggling to find its feet to date after years of devastation. Libya, a once shining example in Africa of an affluent country with an affluent people as its wealth was shared amongst all, now in ruins and disjointed. If aforementioned countries were undone by war, what do we say of Venezuela an oil rich nation like Nigeria, that is not at war with any country or group within it but is currently on its knees, desolate more or less.

According to a BBC report, Venezuelans are leaving their country in droves everyday in search of basic necessities of life. Social amenities as electricity, water and health services among others are said to be hard to come by. So much so that pregnant women have to cross to a neighbouring country for something as routine as vaccination and to put to bed abroad if mother and child are to stand any chance of survival. Inflation has overshot the roof in that country, put at over 2,000 per cent and prices are said to double every 26 days. We should not ask for whom the bells are tolling in Venezuela for they are also tolling for us. We should pay attention to what is happening in Venezuela today for it could have happened to us and may yet happen to us if our leaders do not learn the lessons therefrom.

Both Venezuela and Nigeria are developing countries. They are both oil-producing nations and members of the Organisation of Petroleum Exporting countries (OPEC); Venezuela is the sixth largest oil producing nation of OPEC while Nigeria is the fifth in addition to being the largest in Africa. Venezuela has the largest oil reserves in the world while Nigeria has about the largest gas reserves. For both, oil is their major revenue earner – some 95 per cent for Venezuela and over 70 per cent for Nigeria. Venezuela’s economic crisis is said to be rooted in fall of international price of oil. This dealt it a heavy blow as it is heavily dependent on foreign exchange earnings from oil exports. And Nigeria was veering towards that situation.

READ ALSO: Oil prices fall as OPEC increases production

Recall that whispering rumours that all was not well with Nigeria’s economy grew louder in 2014 with some pundits even insinuating that the country was broke. But the then federal government debunked it, maintaining that the economy was healthy while averring that the nation had enough cash in its coffers to cover three months imports which is a factor for gauging condition of import-dependent economies like ours. Then, some state governments started owing workers salaries. And then the then finance minister hinted that the government was going to roll out some austerity measures due to decline in government’s expected revenue receipts. Thereafter, the CBN devalued Nigeria’s currency by eight per cent and raised interest rates with one dollar exchanging for N168 officially and N186 in the black market.As their share from the federation accounts dwindled and with elections around the corner, state governments pressurized the federal government to share out monies in the excess crude account, thereby depleting it. Oil prices continued to fall by the time President Muhammadu Buhari took over and salary arrears became more widespread. So much so that the federal government had to bail out states with some emergency funds. Still, they could not all meet up.

President Buhari’ attitude in not quickly setting up his cabinet, hitting the ground running and generally getting to grips with real governance, preferring instead to study things on ground for a rather long time, apparently enabled some shenanigans to take place. I suspect he was trying to see if he could save some money by delaying appointments for that long. However, the president was later to confess that he met an “empty treasury”, lamenting that huge sums of our commonwealth were carted away abroad and diverted to personal pockets. In the first one and half years of his regime we had what could be described as runaway inflation. Prices of consumer goods were rising practically every week. I remember a bottle of palm oil which previously sold for N200, rising gradually to a peak of N800 per bottle and N1, 000 in some other places, something that was once thought impossible. A mudu (measure) of garri began to increase from some N80 to N500! It was as though we were heading the Venezuela way. President Buhari who had vowed not to devalue our currency nor deregulate the retail prices of fuel had to bow to pressure and succumb to the dictates of market forces. The naira was further devalued and pump prices of petrol increased; after all, the country operated a mixed economy, notwithstanding that it is a progressive government in name that is supposed to lean to the left. This laissez faire approach somewhat helped matters.

Quite apart from the fundamental problem of falling oil prices, Venezuelan government’s ironclad price control also contributed to its present economic predicament. It is governed by a socialist-oriented government that had been in power since 1999. Yet a third factor is the United States’ sanctions on Venezuela. Things are gradually and slowly picking up in Nigeria compared to where we were in the first 18 months of the Buhari administration.

We are not out of the woods yet as there are still much ground to cover. There are no international sanctions against us but there is another factor that could push us to the Venezuela path – a civil war in whatever form or guise. That is why all militancy must be firmly and quickly dealt with, whether in the Niger Delta region , the Biafran agitations in the South East, Boko Haram sect in the north east, herders/farmers crises in the north central, whatever and wherever.

It should also be noted that should Nigeria find itself in the same situation as Venezuela is today, we shall be harder hit than Venezuela for the simple reason that we have more population. Venezuela is made up of just 14 million people while we are over 150 million. How many neighbouring countries can accommodate us in the event of a huge crisis?

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Ikeano writes from Lafia via vikeano@yahoo. co.uk

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