The devaluation of naira occasioned by the fall of crude oil price at the international market has turned to a thorn, not only in the flesh of members of OPEC nations alone but the world at large. Reason being that, a chunk of the revenue generated from the proceed of the sale of crude oil is used to boost other economy of the world by way of patronage.

Since the negative circumstances hit the airwaves in recent times, stakeholders begin to express concern and look for a way forward. Though analysts believed that what has relegated Nigeria to this state of economic crunch is the inability of the government to hitherto look beyond oil as a major source of income. However, others remain optimistic that if only the government can increase the production of crude oil and block some of the leakages at the oil producing states, Nigeria can navigate through these economic challenges.

While the search for solution continues, industry watchers postulate that, to increase the production of crude oil is likely not to be the right solution, because of dwindling customers. United State of America (USA), which happened to be a major customer of Nigerian crude stopped importing from Nigeria completely in July as it continues to pump more shale oil to its refineries. Even Angola, producing similar blend of oil like American shale has experienced much reduction I her exports.

To cushion the effects of dwindling oil revenue therefore, government announced a number of austerity measures. This implies a cut in expenditure and raising taxes to minimise budget deficits. Nigeria, being a mono-product economy depending almost solely on oil and whatever affect the price of that commodity will equally affect planning and budget. Therefore, what government has done is to cut expenditure in order to still meet its obligation. What this means is that instead of government to negate its primary responsibility in the area of security, healthcare, education, among others for the people, it will rather forego others that do not have a direct link with the need of the people.

Speaking against this backdrop the coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala said the decision to trim down revenue projection was part of measures to maintain economic stability, boost oil revenues, reduce waste and plug loopholes. She said the cuts would not affect priority sectors – infrastructure, health, education and security – that would focus on the poor and average Nigerians.

So, the government will introduce Luxury Good tax and restrict foreign travels and training for civil servants, among other measures. The new austerity measures are meant to insulate the economy from the falling crude oil prices which is a global issue.

Though some financial analyst remained pessimistic, others considered it a welcome development. For some of them, every time and season in life come with its own challenges, the oil producing countries of the world are currently passing through their own trying time, and Nigeria is not an exception. All Nigerians need to do now is to ensure that all hands are deck in order to come out with a workable solution.

Speaking on likely the impact of austerity measures, a public affairs and financial analyst, Adewale Okoya said “life is definitely going to get more difficult for the average Nigerian as poverty rate will worsen. There will be job losses as companies operating in sectors where prices cannot be increased anyhow would be forced to scale down operation or close shop. For instance, producers of goods and services that have many alternatives will find it difficult to increase prices because a slight increase will drive customers to competitors.

The effect will be particularly telling on companies that rely on inputs from foreign manufacturers because cost will rise astronomically. “Let no one be deceived, subsidy on petroleum products will also be affected. Already, sellers of Keke Marwa have raised prices. Others in the private sector will soon follow. Goods and services will become more expensive, yet income will dwindle for the average Nigerian.

“To put this in perspective, when the naira was massively devalued during Ibrahim Babangida/ Sani Abacha regime, civil servants suddenly became so impoverished that they had to devise means of survival including unauthorised weekly holidays among staff. Some will go to the office for three days in one week while others will go for two days. This will then be reversed the following week. I was a banker at the time and I can assure you that majority of us in the bank found it difficult to meet our societal and personal obligations despite earning at least five times what civil servants were earning. There was also massive emigration by young people. This will happen again. Brain-drain

“But the rich will get richer”.

Reacting to issues that in his thinking are responsible for this menace, the analyst maintained that “over dependence on proceeds from sale of crude oil in the international market and profligacy on the part of government. Government officials spend on themselves in a manner that indicates money is not a problem. It is absurd that those who manage our common wealth have arrogated more than 70 per cent of all revenue to their welfare while the remainder is what the rest of us struggle to benefit from through provision of infrastructure.

“It is also unfortunate that government has consistently refused to listen to the opinion of others. Efforts to diversify the economy were always reduced to tokenism or mere propaganda. Obasanjo may have his deficiencies, but his observations regarding this government in recent days provide food for thought. Corruption has assumed a new dimension and people are no longer afraid of the EFCC (Economic and Financial Crimes Commission) again. Rather than tackle the insecurity plaguing the nation, government is using it as an avenue to siphon money for party activities.

“Lack of strong leadership poses a huge challenge. It is as if no one is really in charge at the helm of affairs. The judiciary is being battered while the bygone days of impunity by the police are resurfacing.”

For Okoya, aside from austerity measures, other ways that the government would have adopted to help in solving this problem is levying of tax. According to him, “we are all citizens of this country and as such government must ensure that tax is paid by all that are eligible to pay tax. Yes there may be higher taxes levied on luxury items but what we need more than anything else is to evolve a system that will bring most of the people in the private and informal sector within the tax umbrella

“I can assure you that an effective tax regime alone will earn more revenue for government than any other source. Indeed, when citizens pay tax as they should, no one will need to educate them to demand accountability from government unlike now when majority pay little or no tax to government.

“I am of the opinion that every eligible Nigerian should pay at least 50 per cent of his income as tax to enable the emergence of a welfare state. This is a topic for another day. Finally, government should consider enacting a punitive inheritance tax to discourage the penchant for primitive acquisition of wealth among Nigerians because corrupt persons will think twice if they realise that most of the property left behind will go to government after they die”.

Some analysts however, lamented the politicisation of the issue. A member of a civil society advocate, Nathaniel Gumniba told Economic Confidential that, the situation has sadly been reduced to politics. “It is quite difficult to separate genuine concern for the welfare of citizens and politics these days. The government of the day is equally not helping matters. It is too focused on next year’s election to recognise when genuine advice is on the table. We have passed through a period of steady economic growth. The table is about to turn. Let us hope that sanity will prevail and our leaders are able to work together in this hour of greatest need.”

In his own view of the impact of austerity on Nigerians, the unionist held “we will soon feel the impact. In fact, we need to be apprehensive now because strikes, protests and riots may soon be commonplace when the austerity begins to bite real hard”.

Commenting on what government should do in order to avoid future occurrence, a religious leader, Emmanuel Ugbu told Economic Confidential that, “you cannot talk about the future now when there is potent danger staring us in the face. To be sure, there are a myriad of plans in government archive, which are good enough to take us out of this dire situation. We have NEEDS 1 & 2; we have the MDGs and Vision 20:2020. These, among others, are fantastic road maps for economic success. What is missing is implementation.