Let me tell you – the biggest risk in Nigeria as we enter 2019 is not the national election. People, if oil price continues to go south, Nigeria could see massive dislocation where even public sector workers may go months without salaries. Our 2019 national budget was anchored on $60. Today, oil is $46.

President Muhammadu Buhari has presented an N8.8trn budget for 2019.

According to the president, who gave the figure Wednesday during the 2019 budget presentation before a joint session of the National Assembly, the amount is higher than the N8.6 initially proposed.

The budget is predicated on $60 per barrel of oil benchmark at 2.3m litres per day, a GDP growth rate of 3.01 percent and inflation rate of 9.98 percent.

According to President Buhari, NNPC has been directed to take all measures to achieve the targeted 2.3m oil output per day.

But get the problem: the oil gods, legends who used to predict oil movements, are incapable now because oil is now produced from many channels, beyond OPEC, for them to model price points. Yes, unlike in the past where knowing the production volume of few countries and putting all into global GDP growth, manufacturing indices, etc, you can say oil will be $AB price. Today, some men in Oklahoma are pumping oil and no oil can track them. So, like how Internet works on digital distribution, the entry points have been unbounded, tripping markets. Supply glut is here and managing it is moving away from the powers of OPEC.

The bear market in oil keeps getting worse as worries about global growth and a supply glut ratchet higher.

US oil prices plummeted 7% on Tuesday to settle at $46.24 a barrel. It was crude’s weakest close since August 2017.

The deepening downturn in the oil patch is yet more evidence of investors fleeing risky assets as they brace for an economic slowdown. The same growth jitters that are rocking Wall Street — the Dow and S&P 500 are on track for their worst December since 1931 — are infecting commodities. Small-cap stocks plunged into a bear market on Monday.

Few days ago, the DG of the Budget Office challenged government institutions to re-double efforts on revenue collections in Nigeria. They need that because if Nigeria cannot improve revenue collection, next rainy season would be challenging.

It is a fearful trajectory – I am worried. I hope Mr. President and his teams are watching because his 2019 budget is already off by 20% and we are not even in 2019 yet. That “emergency” declared by the DG of Budget Office and Mr. President’s admission that the economy is in “bad shape” are reasons why everyone must put the country first. We need to deal with our over dependence on oil – that nation’s weakest link – in this generation. But we need to survive rainy season of 2019, hoping that shale gas entrepreneurs would have distractions.

You may not have noticed it – our telecom sector is going through serious paralysis. The players are seeing multiple-whammy from OTT (over the top services like WhatsApp and Skype), satellite players and the ICT utilities. WhatsApp has eaten their margins bare, and yet the dislocation and associated disintermediation are still at infancy.

Over The Top (OTT) solutions like WhatsApp have been a concern to telecommunication companies like MTN, Glo and Airtel. But while these companies are looking at OTT, a huge challenge may be coming from Facebook and Microsoft. Microsoft has been building capabilities on TV whitespaces.

Yes, I expect the penetration of WhatsApp to remain unbounded until SMS usage fades. Some people in Nigeria are already receiving broadband services from satellite providers who are operating in their own worlds, unconstrained by any rule which NCC – our telecom regulator – has put in place. Then, you have the ambitions of Google Stations which technically means “free internet”. Microsoft is testing TV whitepapers to use the “free frequency” In TV airwave to pipe data. Add the startups which are giving users free Internet for watching adverts, you will see why the telcos are stressed!

When you look at these trajectories, the long-term view of the telecom sector is one where more resources would be needed for infrastructural investments even as revenue per user will continue to do down. I do not see how growth can happen without a total re-invention of the business model. Just look at this cut (see below) from the Guardian; 9Mobile, Smile and Swift Networks may see service challenges as IHS takes action because of non-settlement of facility charges.

We will continue to see all kinds of business models in the sector, the one which I expect to happen in order to save the industry is contract-based billing where once a subscriber has paid for the month, it would be irrelevant what that user does online. Yes, you can live on WhatsApp for the month but I have collected my N5,000 for the month as a telco. Today, someone can pay N500 and use that on WhatsApp for the month. The implication is that telecom companies are powering huge services even when they are not making money on them. They need to find a novel business model to fix that revenue – service dislocation.

As I look at NITDA (National Information Technology Development Agency) budget and numbers, it is evident that our telecom companies are not making money. More than 99% of them are not profitable. They are required by law to pay 1% of their profits to NITDA but largely all are not sending money to NITDA. Simply, they have no money to wire to NITDA because they are not making money in Nigeria.

Case Study I: NITDA gets 1% of all profits from Telcos. MTN has been the most reliable to NITDA as it makes profit. But MTN declared loss last year owing to the huge fine it paid. Others like Etisalat (9Mobile), Glo, and Airtel rarely pay or pay very little, because they rarely make much. For NITDA, in the short-term, it has to look for other ways to fund its activities. Had Airtel, ET and Glo made money, NITDA would be fine. Sure, customers enjoyed their Skype and WhatsApp, but the government agency gets its zero revenue.

All Together

We should not take it for granted that 5G would come to Nigeria as it happens in other parts of Africa. If the telcos are not making money today, no one will give them money to fund 5G deployments. If 9Mobile, Swift Networks and Smile are seeing challenges that are preventing them from paying facility charges, you would agree with me that the paralysis is deeper than anyone had imagined.

Yet, the telcos have data from the registration of SIM Cards and ideally can fix the challenges. All they need is to transform the data into a system to unlock new revenues in the sector. The prepaid or pay-as-you-go business model does not make sense anymore especially in a world where ICT utilities like WhatsApp and Skype are encroaching into new territories. You need to secure your flanks!