2018 from the Cynics

The year is 2018. Election preparations are exposing frail loyalties. Presidential aspirants are popping up all over the country. No one is sure of what economic policies will be rolled out. And across the country, actions or inactions, are shaping lives, and by extension a generation that is as divided as the one before it.

This is an SB special feature aptly named ‘2018 from the Cynics’. It is an intellectual exercise to identify worst-case scenarios that could test the country’s ability to survive. As with all things, issues that could appear negative could end up being positive.

These are not meant to be forecasts. What we have done is to ask the members of our Writers’ Network what kind of worst-case scenarios they could reasonably analyse going into 2018. We have compiled them into a series of provocative scenarios that we hope will lead to important discussions.

Scenario 1: Fayose wins the PDP Presidential Nomination

Cynic's view: As the APC has already started experiencing, the alliance of 'convenience' that makes a political party in Nigeria makes it vulnerable once members begin to disagree. Fayose’s combative and abrasive style brings an interesting mix to the presidential debates and PDP’s movement. If, and only if, he gets the ticket, President Buhari might not be able to avoid the debates. President Buhari may find it difficult to face a populist South-West candidate, setting the scene for unforeseen results in the presidential elections. We could be looking at more splintering of parties, and hints of a new political party, especially while men like Atiku continue to campaign.  

What could make this scenario possible?

•  An open nomination format attracts some defectors back to the PDP

•  Fayose's populism attracts more attention than Atiku's campaign strategy

•  Fayose shocks the party and wins the ticket, he names Kwankwaso as running mate

•  A third political party emerges as a result of other aspirations, nominating Atiku Abubakar

If you agree, tweet 'I think Fayose win in Scenario 1 is possible in 2018'

Scenario 2: Fiscal crisis triggers financial market collapse

Cynic's view: Nigeria’s financial markets did very well in 2017 and are generally expected to remain healthy this year. However, a government debt crisis and another currency debacle remain distant but potential threats given the high levels of foreign borrowing in recent months. As the country’s financial markets are still reliant on foreign investors, any concrete concerns in these areas – especially approaching the 2019 elections – may encourage foreign investors to flee and rout the financial markets.

What could make this scenario possible?

• Weak oil earnings reduce the government’s ability to fund its budget and service its debt while also putting pressure on the currency

• Growing concern over the size of the Federal Government’s interest payments increases the yields on government bonds

• Fearing a debt crisis and put off by an unstable currency, foreign investors flee the country’s financial markets – selling off both equities and fixed income instruments

• The rise in government interest payments and exit of foreign investors purges the market, with the Nigerian Stock Exchange losing over 30% during the year and government bond yields rising to recent record highs

If you agree, tweet 'I think the financial crisis in Scenario 2 is possible in 2018'

Scenario 3: High oil prices pose a political dilemma

Cynic's view: Though oil prices are projected to average below $60 per barrel during the year, instability in the Middle East or prolonged disruptions elsewhere could prop them to levels not seen since late - 2014. Despite the positives of the Treasury Single Account and a Federal Government push for greater transparency, the temptation of the impending elections and the opaque and discretionary nature of the Excess Crude Account leave room for leakages and diversion.

What could make this possible?

• Tensions in the Middle East and weak United States production propels oil prices to $70 per barrel level

• Difference between budget benchmark oil price of $47 per barrel and realised oil price bloats the Excess Crude Account (ECA)

• Controversy trails the ECA as government opposition claims that extra funds are being diverted to electioneering rather than capital projects

• Despite high oil prices, the looming elections and political bickering prevent the masses from feeling the positive effect of higher government revenues

If you agree, tweet 'I think the high oil price in Scenario 3 is possible in 2018'

Scenario 4: Nigeria threatens to leave ECOWAS

Cynic's view: In growing numbers, countries are turning inwards and rejecting international cooperation. Nigeria pays 60% of the ECOWAS budget and hosts three of its institutions including the Headquarters (Commission); Court and the Parliament. However, Nigeria's influence in international organisations has been largely checked by less contributing and populated nations. An unclear foreign policy, lack of substantial trade with regional neighbours and the increasing rate of illegal migration might make membership of this organisation an issue in the months ahead.

What could make this possible?

• Illegal migration into the country becomes an issue when stretched financial resources are revealed  

• Buhari’s lack of leadership in the region leaves a lacuna that Senegal’s Macky Sall, Liberia’s George Weah and Benin’s Patrice Talon strive to fill

• The government fails to roll out an effective border and migration policy; costs for hosting ECOWAS and other regional commitment bills incite nationalism in a bleak financial projected year 

• PDP Presidential Nominee Ayo Fayose promises a referendum on ECOWAS membership if he wins 

If you agree, tweet 'I think ECOWAS threat in Scenario 4 is possible in 2018'

Scenario 5: Déjà vu as Nigeria slips back into recession

Cynic's view: Despite encouraging economic steps in 2017, Nigeria’s economic health remains too reliant on stability in agriculture, oil output and government spending. With more political manoeuvring expected in 2018 and consumer spending power still weak from the recent recession, an economic relapse is only one misstep away. 

What could make this happen?

• Bad weather and high transport costs disrupt agricultural production and put upward pressure on food prices in the country

• High-interest rates and high import costs constrain manufacturing output even as consumer wallets remain squeezed by high prices

• Political uncertainty stokes greater uncertainty in Niger Delta with some resulting disruptions in oil production, while electioneering diverts government spending from productive uses

• 2018 is a step back as the country slips back into recession amid high inflation and perpetual insecurity; social unrest intensifies as the year comes to an end

If you agree, tweet 'I think recession in Scenario 5 is possible in 2018'

Scenario 6: Energy price hikes squeeze Nigerians

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Cynic's view: The December 2017 petrol scarcity was a timely reminder that the current system of petroleum importation and distribution is unsustainable given global oil prices. Political expediency means that the necessary adjustments to energy prices may be delayed till after the elections, but a downturn in government finances may force our hand.

What could make this possible?

• Federal Government bows to pressure of high global crude oil prices and increases the retail price of petrol, easing the financial pressure on the NNPC and avoiding a protracted fuel scarcity

• Simultaneously, the FG supports an increase in electricity tariffs across the country in a bid to address the challenges that plague power distribution companies, stepping aside a mid-2016 court ruling

• The sharp rise in energy prices feeds through to the prices of all goods and services and pressures household and business costs

• Severe inflation puts pressure on the naira and keeps interest rates in the country high; higher rises in prices erode any increases in wages and salaries

If you agree, tweet 'I think the energy price hike in Scenario 6 is possible in 2018'

Scenario 7: Buhari invites mediocrity into his Cabinet

Cynic's view: The electoral calendar will give ample ammunition to APC stalwarts to encourage the president to reward more political leaders ahead of the elections. With Aisha Alhassan still smarting from her endorsement of Atiku to rumours that Kayode Fayemi may be seeking a return to Ekiti State Government House, there may be enough organic changes to force a reshuffle. The wrong appointments may derail current plans and lead to more uncertainty. 

What could make this happen?

• In an attempt to shore up his base before the elections, President Buhari announces a cabinet reshuffle

• Trusted advisers are replaced because of their inability to provide political bases ahead of the re-election campaign. The foreign, finance and defence jobs are rejigged

• Foreign investors react to political changes amid transparency concerns and policy uncertainty. The economy struggles, foreign policy is realigned and there is a lack of oversight of the Armed Forces ahead of elections

If you agree, tweet 'I think the cabinet reshuffle in Scenario 7 is possible in 2018'

Do you agree with any of our seven scenarios? What scenarios can you predict in 2018? Share your thoughts with us on Twitter and tag @StearsBusiness to let others know too! Subscribe to read more Stears Business articles here.

Contributors: Fadekemi Abiru; Afolabi Adekaiyaoja; Tokunbo Afikuyomi Jnr; Mitchell Aghatise; Akinwunmi Akingbade; Tola Ariyo; Chukwuka Ezeh; Preston Ideh ; Ebehi Iyoha; Anselem Kadiri; Joachim MacEbong; Korede Ologun; Keleenna Onyeaka; Martha Sambe; Merlin Uwalaka; Mustafa Yusuf-Adebola ; Abdul Zakariya.