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NIGERIANS SHOULD BRACE FOR A DIFFICULT TIME AHEAD BECAUSE OF ALMOST 76% Shortfall in Revenue to Service 2020 Budget - Conserve Your Resources



As of yesterday, March 24, Brent Crude - class of petroleum abundant in Nigeria, sold for $25/barrel. Nigerian Minister of State for Petroleum said it costs the nation about $15 to drill and ship a barrel of crude oil. What this implies is that Nigeria's revenue is just about $10/barrel today at the current $25/barrel price. Often revenue from crude oil sold today will be not be cashed until about a month or two. What this is saying is that the revenue the Federal government of Nigeria is spending today was from petroleum sold around January to February 2020, when crude oil sold for between $50 and $60 per barrel.

About 65% of Nigeria's revenue comes from petroleum - the remainder comes from taxes and tariffs at our border. The latter is seriously diminished in the wake of covid-19. The 2020 budget in Nigeria was based on $57/barrel. What this implies is that revenue from petroleum will reduce by about 76% by the beginning of May 2020, government across every length may find it difficult to pay salary - often they pay themselves first before the rest of you - they will not be able to service their debt and this may be about the time COVID-19 will crest in Nigeria, and the nation will not be solvent or liquid. With a poorly funded health care sector over the decades, only divine intervention will cause the nation not to tank under the heavy burden of the recklessness of successive government in Nigeria. The evidence that this may be the case is 2014 when crude oil price only dropped to $40/barrel and Federal allocation to states decreased by as much as 60%.

My advice to well-meaning Nigerians is that you should stock up on essential items - food and common sickness medicine. Do not waste your money on unnecessary projects - parties, cars, building constructions, even school fees that are not paid yet can wait. Conserve your resources because when this thing lands, only heaven will save those of his own who heed the warning.

I pray that my projection fails - that will be better for all. I will be glad if this analysis is not proven right, but if this is what we know, everyone needs to be ready for what is coming - praying alone will not save you, you will need to add WORK to your faith, and act smartly now.

Akinbode Adedeji

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