Some secret documents were recovered from the archive of the
Central Intelligence Agency (CIA) recently. These files focused on
many
sectors of the Nigerian economy and also made predictions about the
things that are most likely to happen in the future.
File photo of the CIA logo and Nigerian coat of arms.
Most
of the CIA files have been declassified and approved for release; there
are different files treating different issues in the nation. The
Central Intelligence Agency (CIA) also made some predictions about the things that could happen in Nigeria shortly after the country gained independence.
In
one of the declassified CIA files approved for release, Nigeria's
financial position was evaluated to have deteriorated. The file's date
read 6 April, 1983 and it predicted that the country's economic
difficulty would become more severe in months to come.
It
also predicted that the government could avoid implementing politically
difficult austerity measures until the voting processes have been
completed because it was close to the period of the general election.
Amazingly,
the world oil market began to soften and the nominal crude prices
reduced. It was declared under those circumstances that Nigeria's import
spending will have to be cut by 30 percent in that year because there
was already a deficit of $4 billion.
Find below
some of the information recovered as well as the predictions made from
the secret files of the CIA, they show that Nigeria was already having
financial crises before Buhari took over in 1983:
1. Lagos will not lower price to keep strict parity
The
retrieved CIA files stated that Lagos will not lower price to do keep
strict parity with the north sea price cuts despite pledging to do so.
Nigeria, along with other oil producers,
was hoping that the international oil market will be stabilised with the
new price level with production and exports picking up almost
immediately.
There were speculations that
Lagos will be forced to match north sea cuts in order to maintain its
share of the market if the market does not improve and the north sea
prices fall.
2. The soft oil market forces Nigeria's hand
The continuation of weak oil market conditions and Nigeria’s lack of
price competitiveness with similar north sea and Libyan crudes caused
oil production to plummet in the first two months of the year this
assessment was made.
This was the period of
highest demand of Nigerian oil to the lowest was 1967-1970. The pressure
on Lagos to lower the cost of its oil intensified the decision to cut
down the prices of Nigeria’s oil. Nigeria’s ability to raise its
production will depend on how flexible Lagos is with its pricing
policies.
3. Adjusting to reduced revenues
It was stated that the daily output for
the year will average 1.2 million barrels even if the nation is able to
keep production at its quota. That amount was slightly below the
previous year’s level.
The drop in earnings
indicated that the government would have to make more painful
adjustments in importing than the adjustments made the previous year.
The
importation reduction by 30 percent was done to limit the account
deficit to $4 billion. Some international bankers doubted Nigeria’s
ability to come up with the fund and tried making President Shagari sign
an agreement with the International Monetary Fund (IMF).
The
government resisted the move because they were sure it would lead to
devaluation and other measures that will be politically unacceptable.
4. The implication of having a further decline in importation
Any
additional decline in oil prices would make the adjustment process even
more painful. In order to offset the loss incurred with the reduction,
Lagos would have to decrease import flows by 50 percent.
The
prediction also revealed that the reduction would serious repercussions
on the modern economy. The estimates made by the CIA showed that the
capital and intermediate goods absorbed the bulk of Nigeria’s import
needs about 75 percent of the total.
5. There were limited funds
The
sources of government monies are limited. Foreign reserves are
slightly more than $1 billion roughly one month’s worth of imports at
that time.
As at the time the assessment was done, there was about $1.7 billion remains undisbursed on previously arranged credits.
It
revealed that Nigeria had been looking for bilateral assistance to help
fill the gap. It also stated that Lagos had been exploring the
possibility of obtaining funds from Saudi Arabia.
6. The already failing economy and sectors
The
US ambassador to Nigeria reported that Lagos was trying to arrange some
possible finances before resorting to borrowing from IMF and the
conditions attached to it.
The US embassy
reported that the import restrictions were taking their toll on the
availability of raw materials and manufactured goods. The automobile
assembly industry was affected most by the scarcity of the spare parts.
The
Peugeot factory in Kaduna (Nigeria’s second largest then) stopped
production for two weeks because it could not get spare parts and France
was unwilling to extend additional credits until the $240 million owed
for past deliveries got paid.
The Volkswagen plant in Lagos also shut down for days at a time and production was one third of the normal rate.