Business Day: African petrostates must manage financial resources better

African's biggest economy and its biggest oil producer is reeling from the downward spiral of the oil price. Just as politicians had started feeding from the national trough to support their ambitions for Nigeria’s elections, due to be held in February, the finance minister has warned that official perks will have to be cut and taxes raised on luxury goods such as cars and champagne. Wealthy Nigerians consume a lot of both.

The austerity measures come just as the nation heads for what is likely to be the toughest electoral battle yet for the ruling Peoples’ Democratic Party (PDP). It is now facing a tough opposition in the form of the All Progressives Congress, a coalition of three opposition parties and large numbers of defectors from the PDP.

Over the past few weeks, the Nigerian government has twice reduced its benchmark oil price used to set the national budget and fill the coffers of the excess crude account, money intended for a rainy day but that is regularly tapped for consumption spending.
MORE