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Nigeria faces up to cold, hard facts about its dwindling oil revenues

By Tom GilroySpecial to The Christian Science Monitor / April 28, 1982



Douala, Cameroon

Nigerian President Shehu Shagari has taken some brutal steps to correct Nigeria's rapidly deteriorating economic situation. In doing so, he has for the moment silenced critics who suggested the Nigerian leader might not face up to the nation's problems in a campaign year.

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The measures - curbs and a few outright bans on imports, and limitation on the flow of money - should slow the heavy drain on the nation's foreign reserves in the short run. In the long run, they may force Nigerians to change their eating and buying habits, weaning them away from growing dependence on Western foods and goods.

The drain on Nigeria's foreign reserves is more than a half-billion dollars a month, and imports are about double receipts from exports, President Shagari says. Financial reserves have dropped from a comfortable $10 billion in January 1981 - the last month Nigeria produced its ''normal'' output of about 2.1 million barrels of oil per day - to just over $2 billion, or about six weeks' import cover.

Shagari's tough program calls for a return to a strong Nigerian agricultural system. The country, once self-sufficient in food, now spends more than $2 billion a year on rice, frozen chickens, and other Western foods and consumer goods. Urban Nigerians, in fact, have become somewhat consumer-crazed with Western products - from Kellogg's Corn Flakes to Mercedes-Benz.

The history of attempts to retool the Nigerian economy shows President Shagari, who is up for reelection in 1983, has an uphill battle ahead of him.

Wide-ranging import controls imposed by the former military government after the 1977-78 oil slump forced hundreds of small businesses to close for want of goods and further stimulated an already-thriving smuggling trade. Hoarding and scarcity combined to inflame prices, particularly in the cities.

''Food prices will probably increase 30-to-40 percent again,'' said a British architect, who added that ''we've seen all this before.''

''I think there'll be a fair amount of inflation and smuggling,'' agreed a Western diplomat in Lagos not long ago. ''I don't know if they can control it,'' he added, implying they could not.

Nigerian authorities have never really managed to control inflation and smuggling. In a tacit acknowledgement of the problems to come, Shagari's announcement of economic restriction said that customs services would be reinforced and informers rewarded for information on smuggling operations.

The best the Nigerian leader can hope for is reduction - not elimination - of contraband, say businessmen both here and in Lagos, the capital. Aside from endemic corruption in many of the country's agencies responsible for controlling smuggling, Nigeria's geography works against smuggling-control operations.

Inland waterways that connect Nigeria and Cameroon are good smuggling routes. Five-ton dugout canoes make the five-to-eight-hour journey several times a week with little or no control on either side of the border.

Similarly, the juncture of Chad, Cameroon, and Nigeria, in the north, a traditional crossing point for nomads and Hausa merchants, poses enormous control problems, both because of the volume of traffic, and the lack of natural barriers.

Even Shagari's efforts to control the outflow of foreign exchange faces difficulties. According to a French banker who visited Maiduguri recently, open-air ''exchange markets'' flourish in the northern city.

''They've got piles of dollars, pounds, French francs, CFA, and naira (Nigeria's currency), each with a stone on top to keep the money from blowing away,'' he explained.

The seriousness of Nigeria's economic situation is also in some ways an asset for Shagari. The Nigerian Congress, renowned for its contentiousness, agreed to Shagari's request for emergency economic powers in a day even though it has not yet been able to agree on a 1982 budget.

Likewise, the country's freewheeling press has spared the President from criticism, despite the severity of the import restrictions and the pinch it will produce for the urban elite and middle class.

''I think it's starting to sink in here that this thing is for the long haul, rather than a short-term problem,'' a Western diplomat in Lagos said.

Whether that will be enough to maintain the solidarity evident now in Nigeria remains to be seen. But for now at least, Shagari's harsh economic measures - and his honest assessment of the country's financial situation - has struck a responsive chord among a populace that has come to the conclusion that sacrifices are long overdue.