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Tag: Nigerian economy

  • Likely outcome of rebasing the Nigerian economy

    Likely outcome of rebasing the Nigerian economy

    By Ayo Olodo

    In the last few days,especially after the National Bureau of Statistics (NBS) released its figures on the rebased  CPI , which indicated a reduction in inflation figures from 32.5% in December 2024 to 24.5% in  January 25, experts  have reasonable predicted a considerable difference in the rebased GDP figures when it is released  which was last released  in 2014  using   the base year of 2010. Between 2010 and 2019 , a period of about 9 years, must have understandable  changed  the  structure of the Nigerian economy.

    Generally speaking ,GDP rebasing would mean  updating the base year used to calculate the Gross Domestic Product (GDP) to reflect current economic realities. When Nigeria last rebased its economy in 2014, updating the base year from 1990 to 2010, it led to a significant increase in the reported GDP. It is reasonable to assume therefore,that as Nigeria undertakes another rebasing exercise, there are few things to expect.

    First of all there will be  a likely increase in GDP Size. The economy may appear larger than previously reported due to the inclusion of new and fast-growing sectors like fintech, e-commerce, entertainment, and digital services.

    This does not necessarily mean increased economic prosperity but provides a more accurate picture of Nigeria’s economy.

    There will also be a sectoral shifts in economic contribution.

    Technology, telecommunications, and entertainment (e.g., Nollywood, digital startups) will have a greater share of GDP.

    Agriculture and oil & gas may have a reduced percentage contribution as newer sectors gain prominence.

    Informal sector activities, which are often underestimated, may be better captured.

    Changes in Economic Indicators is also likely thing  to happen.

    For example , Debt-to-GDP ratio may improve, making it seem like Nigeria has more fiscal space to borrow, although debt servicing costs remain a key concern.

    Similatly Per capita income may increase, though this won’t necessarily mean improved living standards if inflation remains high.

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     The Implications for Policy and Investment are also worth mentioning here.

    Foreign investors may be attracted to newly highlighted sectors that were previously underreported.

    The government may adjust fiscal and monetary policies to better align with the rebased economy.

    Taxation policies may be reviewed, especially if certain high-growth sectors are found to be under-taxed.

     Yet this may affect the potential reclassification of Nigeria’s economic status;

    Foe example depending on the new GDP size, Nigeria may be classified differently in global economic rankings.

    If GDP grows significantly, Nigeria may move closer to upper-middle-income status, affecting eligibility for concessional loans and development aid.

    In all these however there are challenges to Consider

    One, rebasing does not solve economic challenges such as inflation, unemployment, and poverty—it only provides a clearer economic picture.

     Secondly, If not properly communicated, it may lead to public misunderstanding, with people expecting instant economic benefits.

    Rebasing therefore will provide a more accurate reflection of Nigeria’s economy, likely revealing a larger GDP size and shifts in sectoral contributions. 

    However, the real impact depends on how policymakers use the new data to drive economic reforms, improve employment, and tackle inflation.

    Olodo is public commentator based in Abuja.

  • The seemingly perpetual disequilibrium in the economy

    The seemingly perpetual disequilibrium in the economy

    By Vincent O. Akinyosoye

    This treatise on the Nigerian economy offers a simple technical explanation of the socio-economic malaise plaguing the nation. Unfortunately, this situation has been with us for the past 60 years or so. And may remain with us for a long time if we do not get the right set of persons to lead us for a sufficiently long period of restitution. Such group of persons must be sufficiently knowledgeable about the situation of things and find the pathways out of the woods. They must be sincere about the actions being pursued, have the capacity for hard work, be good managers of human and material resources and can govern and lead the society with the core values of service, passion, integrity, resourcefulness, inclusiveness, and teamwork (SPIRIT). It is such leadership that can bring us out of the present situation. In view of the almost permanent nature of this parlous state, which can be aptly described as a perpetual state of disequilibrium and a situation which can be perceived as hopeless, the task will be herculean!

    Generally, a disequilibrium situation is one that deviates from the norm or ideal position and needs restoration through serious thinking and hard work. A good example from the science of economics is that equilibrium is attained when the supply of a commodity is equal to the demand for the commodity in the market. In such a situation, the price of the commodity is optimum because at that price, the supplier of the community is willing to sell, and the customer is willing to buy. The optimum price is therefore the equilibrium price for the commodity at a particular time, ceteris paribus (all things being equal).

    When a disequilibrium situation occurs in the market for commodities, it is reflected in the prices gyrating up and down. For example, if the demand for a commodity is more than the supply at a particular time or place, the price of that commodity will be above its equilibrium price and vice versa. In an increased price situation, the market is sending signals to those that can influence the supply to increase supply of the commodity, in order to moderate the price and restore equilibrium. This market could be a “rice market” or “dollar market” as presently manifested in the Nigerian commodity markets. Such situation, however, occurs in a market in which some structural problems do not hinder the production and/or supply of the commodity. If any structural problem exists to hinder supply on a permanent basis, equilibrium will not be restored and the dislocation in the system continues, leading to a perpetual state of disequilibrium.

    Read Also: It’s challenging to govern Nigeria, says ex-President Buhari

    In the real world, the commodity space is multi-dimensional and complex with many commodities and prices. Imagine a market situation where there are no shortages, that is, demands are completely met with the available supplies in the various markets for goods and services and everyone gets all what he or she wants in the right quantities, at the right time, in the right places and at the right prices. Such a market situation can be equated to a bliss point in life, that is, a situation of extreme happiness close to what clerics preach about heaven. But is this the world of ours in Nigeria? Evidence abounds to demonstrate that we are very far from this bliss point. In our case, it is a situation of shortages galore from food shortages to limited availabilities of non-food goods and services, from very limited employment opportunities to shortfalls in foreign exchange, from poor supply of electricity to bad rural-urban and trunk roads, from dysfunctional rail networks to limited schools and health facilities that are equally below standards, from lack of potable water to ineffective security, and shortages of a host of other goods and services that can make life meaningful to the average human being.

    The foregoing itemization of deviations from the norms in the Nigerian economy is not exhaustive in any way. These signs of anomalies are obvious on a daily basis, and they have to be corrected, and equilibrium restored to make people happy. Restoring equilibrium is a herculean task that needs a large dose of strength, diligence, discipline, courage and intelligence that are generally in short supply amongst the core set of political and administrative leaders we have at the national and sub-national levels of government. The situation is more challenging at the sub-national levels where, for example, local government councils are completely dysfunctional and not performing any of their constitutional roles in grassroots development. And most state governments are poor managers of resources engaging mainly in wasteful and politically visible large projects (like building airports, universities, dual carriage city roads and mega schools) that eat-up their meagre resources with nothing left to perform their traditional development roles, failing to pay salaries of public servants and pensions and gratuities to retirees when due.

    The situation at the federal level is not different with constitutionally too much ascribed fiscal responsibilities and penchant for wasteful and relaxed spending. By the latest count, there are over 400 MDAs with other numerous cost centres in the executive and legislative arms of government and hundreds of thousands of federal public servants expending over 70 per cent of the annual budgets on recurrent expenditures with little left for development projects. A fundamental outcome of this approach to governance in which plenty of money from government is being continually pumped into the economy without a strong productive base and functional infrastructure results in too much money chasing too few goods with the attendant upward pressure on inflation. This is the situation we are today in all our various markets.

    In conclusion, it will make sense to borrow some lessons from Robert S. McNamara, an astute economist in the era of late President John Kennedy of the United States of America, who asserted in one of his brilliant essays some 60 years ago that there cannot be peace in a society without development. By development, we mean a society without food shortages, without population explosion, without low level of productivity in the agricultural and manufacturing sectors of the economy, without low level of personal income (aka poverty), without low level technology of production, without dysfunctional and insufficient economic and social infrastructure, and without high unemployment. If these ideal conditions do not prevail, that is, equilibrium is not restored in the markets, economic history teaches us that conflicts within the society will occur, often resulting in ethnocentrism with likely occurrences of violence, bloodletting and war as happened in Europe prior to the Second World War, before our own Civil War, and before the present conflict in Syria. The absence of development begets ethnic tension, tribalism, nepotism, corruption, and other unwholesome human behaviours common in poor societies. These are the societal problems government at all levels must strive to resolve through politico-social and economic interventions.

    •Akinyosoye is a professor of Applied Economics and Data Management. He is the immediate past Statistician-General of the Federation and CEO of the National Bureau of Statistics (NBS).

  • Financial Times reportage on Nigerian economy: standards are falling

    Financial Times reportage on Nigerian economy: standards are falling

    • By Manuel Agbakwuru

    Anyone used to the famed subtlety and the etiquette of understatement which the British have since turned to a culture and art form, would see clearly the sheer arrogance and disrespect, bordering on racist condescension that permeated and oozed through the recent editorial of the Financial Times titled ‘Shock Therapy Alone Will Not Cure Nigeria’s Economic Ills’. Such an editorial will hardly scale the barriers of most self-respecting Nigerian online newspaper or even a mere blog, making one wonder how such an uncouth writeup made it into what is otherwise a respected global newspaper which has been in existence since 1888.

    I will deal with the core issues in a minute, but first, it is important to consider the many inelegances of said editorial. When a newspaper decides to add its name, and the very integrity of members of its editorial board to statements like ‘(The President) removed a generous fuel subsidy, one of the few benefits citizens receive from their inefficient and corrupt state’ then this gives one cause for great worry. Was the newspaper engaging on a nation’s economy and policies that affect the wellbeing of peoples, or is this another subtle attempt by someone within to slyly vent their innate racist tendencies and entire disregard and disdain for a whole independent nation? That statement is at the same level as the one that was captured in a moment of indiscretion by former British PM David Cameron, as he told Late Queen Elizabeth that he was expecting some ‘fantastically corrupt’ nations at his anti-corruption summit in 2016. Nigeria was mentioned in that statement, too.

    The intention of the FT must be questioned, as it approbated and reprobated in a single editorial, when it veered off to lecture the world about how the same subsidies whose removal it had just excoriated in one statement was ‘necessary in correcting the country (Nigeria’s) long-term economic demise… (and was) ruinously expensive…distortionary, and channeling Nigerians’ energies into rent-seeking, smuggling and graft’. Knowing how unproductive the subsidies were, perhaps the FT believes that Nigerians were deserving of economic demise, or rather the people should harangue their ‘inefficient and corrupt’ government and collect subsidies on fuel since it was the only thing they could get? Is that how it is done in Britain and other so-called first world countries? Or perhaps to the FT that is what Africans deserve; immediate gratification and waste, and not a robustly rounded future.

    And in another breath, FT skipped financial and economic issues and while dripping with uncharacteristic haughtiness, wrote that ‘Moving to more orthodox policies is vital to reset an economy…where one of the most lucrative industries has been kidnapping’. This statement would have been concerning if it wasn’t a cheap blow of a despicable bully. The point about the need to manage optics, carrying the people along, and so on, could be well made without descending to the gutter and broadcasting for the world that kidnapping takes place in Nigeria. Every country has its own issues and incidences of kidnapping has reduced drastically in Nigeria, even when knife crimes and phone snatching in posh streets have become rife in the UK. There is no point or space here to go into the histrionics of how Nigeria was infiltrated by international terrorists some of whom have backing from some of the most sophisticated nations on earth. All we ask for is to be allowed to solve our own problems without anyone digging into our wounds and infecting them for us.

    And what was that talk about corruption? A January 30th 2024 report in The Independent headlines ‘Britain Hits Lowest Ever Score on Global Corruption Index’. Another news item in Central Bylines UK goes ‘United Kingdom Corruption Officially at its Worst in Modern Times’. The Financial Review calls it ‘Chumocracy’, following all the scandals that predated and preceded the Covid-19 pandemic and how multiple billion pounds contracts were awarded to chums (friends) of those in power. Indeed, who is Financial Times to talk about corruption in Nigeria when the UK itself is a global purveyor of corruption, maintaining territories around the world where corrupt money is laundered, tax-free, while London is built on illegal inflows into real estate from all over the world? If Nigeria is deemed corrupt, it must be because there are legacies our people learnt from departing colonial masters.  And it is trite to note that as the UK is dropping on the anti-corruption chart, Nigeria is improving; climbing 5 steps as at the same January 2024 above where she was in the same period of 2023. The same Britain is where the son of their former puritan PM Margaret Thatcher, Mark, was arrested in South Africa with his Eton chums, while trying to overthrow a government in Equatorial Guinea in 2004. Only the influence of ‘mummy’ got him out of that pickle. What could be more corrupt than sponsoring a coup or being a business mogul in that vocation? And what effect has several sponsored coups had on the progress of African nations, or a lack of it?

    Referring to the incidence in Kenya is tantamount to dog-whistling the violent in Nigeria. Surely FT – as an elite newspaper catering to the needs of elites like bankers and politicians, will not appreciate such dog-whistling to the violent in the UK who could be riled into destructive protests as happened under the David Cameron administration in 2011.  The unkind cuts in the editorial flowed on endlessly, with emotive and offhanded statements around ‘soaring’ hunger levels, lack of capacity, and judgmental statements about President Tinubu’s cabinet members. It really looks like the editorial – by its language – was farmed off to a disgruntled and disconnected Nigerian to write – with the typical effusiveness in Nigerianese –  without as much as the professional editing that is required to prevent a riposte like mine.

    What does FT mean by the ‘state’ being implicated in the wholesale theft of oil? Has the FT lost standard so much that lousy, untrue and wildly speculative statements such as that will make it into an editorial?

    Perhaps we should allow the Financial Times stew in its own self-foisted ignorance. Many indices are looking better for Nigeria and will increasingly do so under President Tinubu. Rather than the typical idea of mere cash transfers being pushed by FT and those behind it – and idea which they know to be inflationary and fleeting in impact, but as voyeurs they are not interested in finding real solutions for our issues but just opportunities to laugh and snigger – Nigeria is devising ways in which such monies will be used to power up the agricultural sector for better productivity, food security, and improved nutrition. The Tinubu government is aware of the need for nuanced policies that take Nigeria’s cultural peculiarities into account.

    Financial Times cannot cavalierly instruct Nigeria to send cash to wallets of poor people as a surefire way of ending poverty. Nigerians are proud people. They haven’t said they want just cash. Cash to buy what?  Food distribution is a valid strategy which cannot be demonized and vilified. The USA and the whole of Europe have laudable food support programmes. A focus on food distribution helps to increase Nigeria’s productivity in that sector and to eradicate hunger. We do not expect FT to know this. And if it did, given the editorial’s language and spirit, the FT is unlikely to advise Nigeria aright. Also, President Tinubu met the tax to GDP ratio at 7% but has now seen to its increase to about 12%, even as no new taxes have been introduced. The president has made clear that he is not here to make the lives of Nigerians harder.  As I type, the President has increased minimum wage to make the lives of Nigerians easier, dozens of programs exist to assist businesses, and businesses with turnovers below N25 million per annum don’t pay a dime in taxes. Looked at critically, there are many advantages and incentives people and businesses enjoy in Nigeria that can only be dreamt about in overtaxed and unduly expensive Britain. Even the inequality gap is being bridged because there is better income mobility, and a robust social capital system that can only be imagined elsewhere. FT and their ilk should give Nigeria a break and stop demeaning a struggling nation.

    The so-called Editorial ended on a base note, with the editors of FT going for a below-the-belt jab of President Tinubu. All of a sudden, the editorial lost track and forgot its essence as an advisory on the Nigerian economy, into a personal attack on the president. It is doubtful whether a true Brit will descend so low. Therefore, my advice to the FT is that the editorial board should take more interest in writeups about African countries and ensure it meets its very high global standards. Do not consign such editorials to low level staff shorn of maturity, who claim to have affinity or experience about some African country. The maturity for which FT is known must be guarded and projected at all costs.

    In spite of the many challenges of Nigeria, citizens trust is growing and will ramp up some more when they begin to see the results of Bola Tinubu’s efforts and their own sacrifices. What we don’t need right now is the destruction of the country which Financial Times has positioned itself behind as an instigator and agent provocateur. It is highly unfortunate that things have turned this way for the respected newspaper. But in spite of FT, Nigeria will move ahead and achieve greatness.

    Read Also: JUST IN: Nigerian economy grew by 2.9%, says Edun

    Unfortunately, this editorial has been shared by many Nigerians since it was published, read, digested and believed as if it was the Holy Grail. Nigerians and other Africans are advised to be careful about what they believe and who from. Nigeria is a 63 year old country, soon to be 64, which was granted independence by Britain in 1960. From a historical standpoint and compared with countries that have been around since the 11th Century, honestly, we are not doing too badly. A lot more hard work is required, with great imagination, vision, integrity and unity. Yes, we know we must run faster. Bola Tinubu is a big thinker and can get Nigeria running at the quicker clip that we all deserve. What we don’t need is for anyone to depress us as we solve our own issues, proudly and surely. No one should attempt to take away our dignity. It’s all we’ve got left.

  • Buhari to govs: economy in bad shape, tighten your belts

    President Muhammadu Buhari yesterday told the governors of the 36 states of the federation that the economy of the country was in a bad shape.

    The President met with the governors at the Presidential Villa, Abuja for about 30 minutes.

    Speaking with State House correspondents at the end of the meeting, the Chairman of the Nigeria Governors Forum (NGF), Abdulaziz Yari, said the President told them to tighten their belts.

    He said, “Mr. President, as usual, responded by telling us that the economy is in a bad shape and we have to come together and think and rethink on way forward.

    “So, Mr. President talked to us in the manner that we have a task ahead of us, so we should tighten our belts and see how we can put Nigerian economy in the right direction and how we can address the nation’s infrastructural decay.

    “So, all of us as leaders, especially those that are coming to the National Assembly and those coming back as governors and the president who will be re-elected by God’s grace, we should not think that things are going to be easy.

    “It is going to be harder than before. This was the message of Mr. President.” he said

    On the meeting of the National Economic Council, the governor disclosed that the Council deliberated extensively on new ways state governments could generate additional revenues for speedy economic growth and development.

    Asked what the decision on the N30,000 new minimum wage was, Yari declined to confirm whether the meeting with the president discussed the issue of the proposed minimum wage or not.

    The Minimum Wage Negotiation team had recommended N30,000 as the new wage while the governors had earlier rejected the committee’s proposal and the N24,500 proposed by the federal government, saying that they will only pay N22,500.

    The NGF chairman also disclosed that the President at the yesterday’s meeting lamented how the previous administrations under the opposition Peoples Democratic Party caused the nation’s infrastructure decay despite huge oil revenue.

    Yari said: “He wondered about what happened in the past; that for the 16 years of the now opposition party, the PDP in power and with oil at 2.1 barrels per day at an average of $100, many infrastructure are in bad shape.”

    Yari said that the President said he was going to open a vigorous campaign and “these are key issues that he is going to raise with Nigerians so that they can weigh their choices.”

  • Total Group: $10bn injected into economy

    Total E&P Nigeria, Ltd. Tuesday announced investments worth $10bn towards the Nigerian economy in the last five years.

    The Executive General Manager, CSR, Engr. Vincent Nnadi, said this at the Total Business Sustenance for New Entrepreneurs Graduation ceremony which held at Abuja on Tuesday.

    Nnadi, in an interview, disclosed that the oil and gas conglomerate is also planning projects worth $16bn and plans to use mostly local skills and talents in order to continue its fight against unemployment.

    “We have for the first time recorded a high level of local content on this project and 77% of it is fabricated in Nigeria,” Nnadi explained.

    “It is a very large contribution to the economy and will be using local expertise.

    “We have a very strong cooperative social responsibility.

    “We have to support our society to progress by helping to solve some of the societal problem. One of these major problems is the issue of unemployment.”

    On the skills acquisition training in conjunction with Toncia Energy Consulting and Professional Services Ltd., Nnadi said that the company will be monitoring the trainees to ensure smooth transitioning from training to practice.

    “This is the second level of skills training we are doing. The first level was basic skill acquisition.

    “We mentor them and will expose them backing them up with microfinance.

    “We are also working with some banks to financially support some of the best business plans and even creating market opportunities for them.

    “We will continue to monitor them along with Toncia Energy to make sure they are actually practicing what they have studied.”

    One of the trainees of the program, Christiana Titus, expressed her gratitude to Total in an interview.

    “I trained in catering. I experienced a lot, especially in the cooking, baking cakes, breads, making juices, yogurts, and lots more,” she said.

    “Total equipped us by supporting us with starter packs. I chose a deep freezer and blender.

    “I took it home and have set up a business where I get contracts to bake cakes, and I also have a restaurant.

    “We are grateful to Total and Toncia Energy for giving us this opportunity to change our lives for the better.”

  • FG poised to accelerate growth, development of economy – Labour Minister

    FG poised to accelerate growth, development of economy – Labour Minister

    Minister of State for Labour and Employment, Prof. Stephen Ocheni has said that the federal government has developed a special package of incentives aimed at accelerating the growth and development of the various sectors of the Nigerian economy, reduce poverty and promote economic recovery and growth of the nation.

    Speaking when he was honoured with an Excellence Award by the Chartered Institute of Taxation of Nigeria, Ocheni said the special incentives was designed by the government to restore Nigeria’s economy to the part of sustainable growth.

    He said “the federal government has developed a package of incentives for various sectors of the economy which will help to accelerate growth and development, reduce poverty and promote the government economic recovery and growth plan which is designed to restore Nigeria’s economy to the part of sustainable growth.”

    He describes the private sector as the engine of growth and wealth creation in any country while the government’s major responsibility is to provide the enabling environment for the private sector to operate.

    He describe tax incentive as a deliberate reduction in tax liability approved by government to encourage some corporate bodies to invest more, save more and import less, adding that reduction tax liability can be achieved through reduction in tax rate, tax deferment or outright exemption.

    He said “priority sectors of the economy such as agriculture, mineral, oil and gas are given. Incentives in order to influence production cost. One form of tax incentive is the granting of capital allowances because capital expenditure is not admissible in earning profits, but definitely capital expenditures results in the creation of fixed assets which contribute immensely to profits earning.

    “It is therefore reasonable to provide a form of relief in taxation in respect of these expenditure items. Therefore, special allowances called capital allowances are created to take care of this relief. When a fixed asset is put into use by a business, its value declines through physical wear and tear through passage of time.

    “The law does not allow the cost of these assets as direct debits or charges against profit hence it becomes reasonable for a tax payer to set aside some portions of the profit annually for the replacement of the asset on the expiration of its useful lifespan.

    He commended President Muhammadu Buhari for the huge success recorded in the implementation of the economic recovery and growth plan which led the country out of recession.

     

  • Senate elated at improvement in nation’s economy

    Senate elated at improvement in nation’s economy

    The Senate, on Tuesday, expressed delight at the report by the National Bureau of Statistics (NBS) that Nigeria’s economy was bouncing back.

    A statement issued in Abuja by the Senate Spokesperson, Sen. Sabi Abdullahi, said it was commendable that the economy grew by 0.55 percent in the second quarter of 2017 after five consecutive quarters of contraction.

    Abdullahi also said that the improved performance of the trade, manufacturing, agriculture and oil sectors were indications that with carefully aligned policies and legislative interventions, Nigeria’s economy could thrive beyond current forecasts and expectations.

    “The Senate received a second quarter economic report with great excitement.

    “We are delighted that government’s response to the economic recession has begun to yield tangible results.

    “The public will recall that in the days following the announcement of the 2016 recession, the Senate initiated steps and tabled 21 recommendations that it submitted to the executive for immediate action.

    “We also listed out economic priority bills, many of which have now been passed, or at the final stage.

    “We are also happy to note that many of the economic recommendations, specifically in the areas of re-tooling our agriculture and trade policies were adopted.

    “This shows that the ‘all hands on deck’ approach was necessary from both branches on government,” he stated.

    According to Abdullahi, although the nation was out of the recession, the Senate remained committed to seeing that the unemployment rate and high cost of living in the country was brought down.

    “The rising unemployment in the country is an issue that is of much concern to all of us.

    “Additionally, the rising cost of food prices and basic services in the country still affects millions of households.

    “We will continue to work on our laws, specifically in the areas of access to credit to promote more opportunities for small business owners and opening up of more sectors to private-sector participation.

    “We will also continue to work with the executive to ensure that our policy and legislative objectives, specifically as they relate to the economy, are well aligned,” he said.

  • Buhari-Jonathan crossfire

    Was the state of the Nigerian economy really healthy and buoyant on May 29, 2015 or heading for the rocks?

    This was the crux of the controversy between the immediate past administration of former President Goodluck Jonathan and the President Muhammadu Buhari’s administration.

    The fresh hostility started when Jonathan spoke at the 2017 PDP Special Non-Election Convention in Abuja penultimate weekend.

    He appeared to have stirred the hornet’s nest with his claim that his administration handed over a healthy and robust economy to President Muhammadu Buhari in May 2015.

    He declared that Nigeria’s economy would have been more robust if the Buhari’s administration had consolidated on the achievements of his administration.

    He said, “On the economic front, we provided focused leadership, through institutional and sectoral reforms which impacted positively on the fundamentals for growth, especially in the last four years of our time in power.

    “The effect was that we tamed inflation at a single digit, maintained price stability, grew the economy to become the largest in Africa with a GDP of over half a trillion US dollars, and the number one foreign direct investment destination on the continent.

    “And I tell all PDP members that from the days of Obasanjo, through the days of Yar’Adua to Jonathan, we have done well. Nobody should intimidate you.

    “I learnt that some people said that if PDP had remained in power beyond 2015, the economy would have performed worse. This couldn’t have been the case, because we had a sound economic team in place, managing the economy,” he said

    On 2019, he said “Let it be known, in all nooks and crannies of our country, that the PDP is back to claim its rightful place in the affairs of the nation. As we have always done, we are ready to return Nigeria to the path of unity, peace and prosperity,” he stated.

    But the Senior Special Assistant to the President on Media and publicity, Malam Garba Shehu, wasted no time to react to Jonathan’s claims.

    He said “With due respects to the former President Dr. Goodluck Jonathan, these are the facts about the economy you left behind, in case you have forgotten.

    “I hope this will help to erase the wrong statement credited to you at your party, the PDP Convention at the Eagle Square last weekend that you handed to President Buhari a robustly healthy economy.

    “To the same extent, this should also help to erase yet another false statement by Senator Ahmed Mohammed Makarfi, the Caretaker Chairman of the party, to the effect that under the previous administration there was money but now things are very hard.

    “Let me start by reasserting an obvious statement, which is that the President Muhammadu Buhari administration was handed an economy ravaged by years of mismanagement and corruption.

    “It is understandable that Dr Jonathan kept his comments short, because a cursory look at any sector clearly indicated that he and his Government presided over the most monumental and tragic economic mismanagement recorded in our national history.

    “The oil sector boomed under his tenure, with oil prices as high as US$ 120 and peace in the Nigeria Delta. Nigeria earned unprecedented dollar revenues. Sadly, that is where the story turns sour. There is nothing to show for the revenues earned, no major capital project was completed, neither power generation, road development, rail or agriculture benefitted from the windfall earnings.

    “Rather the administration presided over  the diversion of oil revenues on a  such a massive scale, that even without the protection now accorded to Whistle blowers, the   then Central Bank Governor blew not only a whistle but a trumpet. He was hurriedly shown the door.

    “Meanwhile, the acquisition by public officers and their cohorts of private jets, luxury yachts and the accumulation of expensive property portfolios world-wide continued unabated. Indeed the President once celebrated having the largest number of private jets, whilst our youth languished without jobs, our fields stood idle and our factories began the layoff of workers.

    “Government simply reticulated oil revenue through personal spending by corrupt leaders,  wasteful expenses and  salaries. This was done rather than investing in what would grow the economy.

    “Economies grow due to capital investment in assets like seaports, airports, power plants, railways, roads and housing. Nigeria cannot record a single major infrastructural project in the last 10 years. In short the money was mismanaged.

    “Such was the looting that even the goose that was laying the golden egg was being systematically starved. The direct contractual costs of oil produced , in the form of cash calls, remained unpaid.

    “The incoming , President Buhari’s welcome from the oil majors included  demand for US$6Bn owed by Nigeria for oil that had already been sold or stolen.

    “At the inception of the current administration, 21 States were unable to meet their salary bills and the spectre of workers arrears had commenced.

    “The PDP solution was the raid the Ecological Fund and selectively grant N2Bn each to the PDP States.  It was only aggressive borrowing by the Ministry of Finance under Dr  Okonjo- Iweala that prevented Federal Government from also owing salaries.

    “The economic wisdom of borrowing to pay recurrent bills  is a questionable one, particularly as those paid would have included over 45,000 that have subsequently been removed by the Buhari led administration as ghost workers.

    “It also included the lavish costs of chartering private jets, first class travel   and other wasteful acts that have been eliminated under this administration.

    “To compound the problem the government was borrowing heavily and owed contractors, and international oil companies. When this government took over we had accumulated debt back to the level it was before the Paris Club Debt Forgiveness.

    “All these factors  were building up to Nigeria heading for a major crisis if the price of oil fell. Nigeria did not have fiscal buffers to withstand an oil shock.

    “The oil shock should and could have been foreseen.  When Islamic State of Iraq and Syria, ISIS crisis started, it was clear that the United States of America wanted to cut off funds to terror groups by crashing the price of oil. When America granted permission for exploration of oil on land ( Shale) the warning signs were evident, but these were ignored by Nigeria’s economic managers.

    “In summary Nigeria earned a lot of money when oil prices were high but there is nothing to show for it. Now oil prices have fallen we are suffering.

    “The Buhari administration has taken a long term strategic view of supporting a stable naira on both the supply and demand sides. President Buhari has driven Import substitution to reduce demand for dollars to buy things we can produce thereby creating thousands of rural jobs in rice and other staples.

    “In addition, there is a credible plan to diversity our revenue sources away from oil, with focus on export crops as well as solid minerals, with the release of US$100M fund to develop solid mineral extraction.”

    With the resumption of the crossfire between the present administration and members of the major opposite party, spearheaded by the former President, it is becoming glaring that the race for 2019 has begun.

    But Nigerians are wiser and before informed now and would be very difficult to mislead for upcoming general elections.

  • Nigeria’s economy may be in trouble if…..Ogbeh 

    Nigeria’s economy may be in trouble if…..Ogbeh 

    The fast recovering Nigerian economy could fall into another deep trouble should the nation fail to realise a whopping $15 billion from agriculture by year 2020, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh has warned.

    The minister said it would be difficult for the nation to repay most of its debts in dollars, adding that the period falls within the maturity dates for most of the borrowing agreements signend by the country with various financial institutions and countries.

    Ogbeh, who made the disclosure during an interview at the weekend in Abuja, noted that it was important for the country to start building capacity in the areas of agricultural exports, especially cash crops such as gum Arabic, cocoa among others to really boost foreign exchange.

    He noted that the Indian government had indicated interest to import brown beans from Nigeria which has potential market value of $100 billion annually. He said, if the country can meet at least 25 per cent of the supply, it will boost the nation’s economy.

    “Then sesames seeds, bananas and Gum Arabic.  Those are things we don’t really consume here.  They are for export. The argument is this, if by 2020 Nigeria doesn’t have capacity to earn at $10-$15 billion from agriculture, we will be in serious trouble.

    “Because many of the debts we are taking now will be due for re-payment.  And if you don’t have the Dollars, you can have all the Naira in the world, nobody wants your Naira.  Then of course the Indians came here about six months ago with the Vice President of India.  India wants us to grow beans for them, the black-eye pea, brown beans and all that.

    Read about “one organ of government that has been on the hot seat since this whole brouhaha about recession started is the Central Bank of Nigeria (CBN)”

    “Do you know the market in India, $100 billion per annum? If we can tap up to 25 per cent of that, we will be quite happy.  And we can do it.  This is what is facing us and this is what we have to do to deal with them.  Agric is the lowest hanging fruit,” Ogbeh stated.

    Speaking on yam export in boosting our economy at a briefing on Zero Reject of Agricultural Exports organised by the National Agricultural Quarantine Service (NAQS) at the weekend in Abuja, the Minister expressed concerns that almost 30 per cent of yams grown in the country rot away due to poor storage facilities.

    He noted that the stock of old yam remaining in the country were very high while new yams are about to be harvested.

    According to him, yams exported to the United States cost about $15 per 3 kilograms and 30 Pounds per carton in the United Kingdom, thus more competitive to export than to process in the country due to high processing cost.

    The Minister further informed that the National Centre for Agriculture Mechanization has been tasked to locally produce machines that could help farmers make large ridges for yam production to boost both the farmers profit and the economy.

    He said once the Centre develops the mini-tractor, the nation will be capable of supply yams worth $20 billion to the world.

    He said: “We still have no facilities for preserving yams. At the time we started exporting yams; new yams have started coming out.  There was a fight in Kwara, last week.  It was reported that it was about the new yams festivals.  So new yams are here.

    “The stock of old yams is still heavy.  So they are going to rot away if we don’t do anything.

    I saw someone on TV in fact, he also tweeted that it was not a great achievement and that it would have been wiser if we converted the yams to yam starch so that pharmaceutical companies can buy it at a higher price.

    In his argument he omitted something.  He didn’t tell Nigerians the price of a 3kg tuber of yam in London or in the US.  I was in the US last year.  I went to North Carolina University and a group of Nigerians gave me lunch.

    “A 3kg tuber of yam sells for $15.  Multiply that by 350.  They say these things and confuse people and say it is nonsense.  He even said, oh, he was not sure that these yams will not be fed to animals.  That is a very bad point but it is totally unrealistic.  Totally illogical. And then there about 4 or 5 million Nigerians in the UK and they are looking for yams.   There are Nigerians who are entitled to feed, to benefit from what their country produces.From Texas, from North Carolina from California, Nigerians have been calling, ‘why are you exporting only to the UK’.  The World yam market is $10 billion worth.  Why shouldn’t we be part of it?.”

    He added that the Federal Government embarked on yam export because it has capacity to do so, “and because the demand for our products abroad is very high, other than oil and gas.  We need to be bold in what we are trying to do. If there is such a huge demand, rather than bemoan the export, let us grow yams.

    “We have 45 million hectares of land-a hectare is a football field- lying fallow.  What are we afraid of? Let us grow the yams.   The only challenge in the way of yam production is labour.   If you are in Benue, you have to get young men to make the heaps and if you are in Ebonyi the yam heaps are very high.  This is why Ebonyi yams are this high (gesticulates), very large because they are soft tubers.  Ebonyi , Northern Delta, and Onitsha area- big yams.”

    On rice, he said the country will be self-sufficient in rice production by end of the year.

    He said about 5 million tons of rice paddy was harvested in 2015 only.

    According to him, the federal government will soon commence distribution of 200 rice mills nationwide to complement it’s effort on rice sufficiency to improve the economy.

    Read about ‘Economy not ripe for new minimum wage’

    “Some 50 tons, 20, some 10 tons.  We will not need to import a grain of rice into this country from December this year. From December this year, anybody talking of foreign rice is joking.   We will have more than we need.  In 2015, we harvested 5 million tons of paddy rice.  This May, a report came out from the DFID -we grew 17 million tons of paddy.  November 17 will be Rice Day in Nigeria.

    “In another one year, the quantum of rice grown by farmers will be beyond what we can eat.  So the next stage in our operation is the export programme,”  which will in the end improve the economy he added.

  • Post-recession Nigerian economy and export diversification

    Post-recession Nigerian economy and export diversification

    There are indications that the economy is on the path of recovery. Oil prices have stabilised around $55 per barrel. The government’s peace overtures in the Niger Delta have helped to raise oil production from the nadir of 2016. In the last quarter of the year, the Gross Domestic product (GDP) contracted by 1.3 percent, an improvement over the 2.24 percent in Q3 and 2.06 percent in Q2. Moreover, various forecasts, including that of the World Bank, agree that the country will experience a positive output growth in 2017.

    But the growth projections are largely underwhelming, ranging from a half percent to 1 percent. This explains why the Federal Government continues to work hard at the economic recovery plan. From 2017, one anticipates that the economic trend will take a sharp upward turn. The corporates and the generality of Nigerians will savour such lease of positivity, and it will validate the current administration whose good intentions and programmes have been thwarted by a sharp fall in revenue as a result of the plunge in oil prices.

    The expected recovery will, at best, take the country back to that place of opportunity of the past years before 2015, when we could have built a healthy foreign reserves level and financed non-oil export diversification. In the last two to three years, we have experienced the pains of external shocks to oil revenue. The pains are attributable to lack of significant foreign reserves cover. But, fundamentally, the concentration on oil receipts to provide 70 per cent of government total revenue, or 90 per cent of its foreign exchange earnings, made the oil price crash much harder to bear.

    It is time for more determined actions on the diversification of the economy, and diversification of foreign exchange earnings through increased non-oil exports. Raising non-oil exports revenue is a key area government’s interventions are needed. Analysts agree, that the economy is broadly diversified, given that oil accounts for just about 15 percent of the country’s output. Agriculture, services – including finance, ICT, entertainment, hospitality – and their extensive value chains are major contributors to the GDP. Additional potential are locked in the solid minerals sectors.

    The Nigerian Export-Import Bank (NEXIM Bank) is statutorily mandated to facilitate the country’s non-oil export growth. NEXIM Bank has a range of tools, including credit financing in both local and foreign currencies, risk-bearing services in the form of export credit guarantee and export credit insurance facilities, special funds, loans for foreign input, export advice, and market information, to support the non-oil export sectors.

    Since I assumed the leadership of NEXIM Bank a little over a year ago as managing director, in acting capacity, the bank has maintained its unwavering commitment to its mandates. Last month, the Federal House of Representatives’ Committee on Banking and Finance embarked on an oversight tour of the businesses supported by NEXIM. One of the sites we visited was an agro-processing business.

    NEXIM Bank funds export producers and businesses with export potentials. We do this with the aim of increasing foreign exchange earnings for the country, boost industrial production and create jobs for Nigerians. We visited the Ladgroup, based in Ikenne, Ogun State. NEXIM’s facility of $5 million provided the company with the resources to import equipment for its production line for Shea Butter export, as well as working capital. With its newly installed capacity, the company aims to earn $5 million in the first year of operating the new facility, and $100 million in the next five years. Ladgroup will create at least 300 direct jobs and more than 600 indirect jobs.

    However, the global demand for Shea Butter is estimated at $10 billion annually. Demand is expected to reach $30 billion by 2020. Shea Butter is a derivative of Shea Nuts, grown primarily in the Sahel region of West and East Africa. Nigeria accounts for 53 percent of the 680,000 metric tonnes (MT) of Shea Nuts produced annually in West Africa, according to reports by Central Bank of Nigeria (CBN), and Oil Seeds Association of Nigeria (OSAN). Interestingly, NEXIM also financed Karite Oil Limited’s 22MT Shea Butter processing plant in Akure, Ondo State – a company formerly known as Fagow Oil & Gas Nigeria Limited.

    The Shea Butter market serves here as an index case for the many opportunities to fund Nigerian export businesses. These opportunities are unmatched by the funding available. Private financiers usually have low risk appetite for such projects in nascent industries. Access to funds is difficult except for oil and gas services and trade sectors. This puts significant responsibility on the government to provide needed interventions, in this case through NEXIM Bank. Indeed, the scope of the requirement is reflected by the vast opportunities in the focal areas of the Bank’s financial intervention, namely agriculture (agro-processing), manufacturing, solid minerals and services sectors.

    To reduce the wide gap in the supply of needed resources, the CBN last year created two funds. NEXIM Bank is the managing agency for the N500 billion Export Stimulation Facility (ESF) and the N50 billion Export Rediscounting & Refinancing Facility (RRF). Since the CBN released the guidelines for the funds in June, 2016, we have embarked on various sensitisation sessions in Lagos and Kano as well as capacity-building programmes with Banks and key stakeholders.

    The responses have been swift. We have received applications worth N111.02 billion under the ESF and N3.59 billion under the RRF. Having done our appraisals, applications worth N33 billion under the ESF and N3.59 billion under RRF are under consideration, approval and disbursement by the CBN.

    NEXIM Bank has continued in the broader areas of removing non-tariff barriers to Nigeria’s non-oil exports. One of the key projects we are facilitating with partners is the Sealink Project, to provide direct maritime links within West and Central Africa. The Sealink will dramatically cut the time and financial cost of shipping sea cargoes within these regions through trans-shipment through Europe. The Board of the Sealink has concluded arrangement with a major operator to commence a pilot scheme by deploying ships along the routes that have been designated.

    Last October, the Ministers of Transport of the ECOWAS member-countries met in Lome, Togo where far-reaching decisions were taken towards a smooth and efficient operation of the shipping company. During the meeting, the Sealink company was granted a Community Enterprise Status.

    NEXIM Bank is making additional arrangements to realise the potentials of the project by working with Nigeria Shippers’ Council and Nigerian Inland Waterways Authority on the commencement of annual exports of about one million tonnes of coal, iron ore and lead/zinc using self-propelled and/or dry bulk cargo barges in the dredged inland waterways channels from Lokoja/Ajaokuta to Burutu Port.

    We have also been working to improve the packaging of agricultural exports to Europe and other countries, to minimise incidents of rejection. The use of hydrocarbon-free jute bags is critical in this regard. Currently, jute bags are imported to the country. The high cost has led to the problem of recycling old bags and the use of unsuitable packaging materials. As part of efforts to mitigate this challenge, we have commenced discussions with major investors to resuscitate and commence the production of jute bags in the country for packaging of exports.

    In pursuing the agenda of boosting non-oil exports, the bank has been working with partners and stakeholders to promote a bill towards developing factoring in the country. Global factoring transactions in 2015 reached €2.3 trillion with Africa contributing 0.7 per cent. The major players in Africa were South Africa, Tunisia, Morocco, Egypt and Mauritius, while Nigeria did not feature in the African statistics. Factoring entails the purchase of receivables from an exporter, with the Factor assuming full credit and collection responsibilities. This will enable export manufacturers, especially SMEs, to maintain steady liquidity as well as take the burden of pursuing cross-border payments off the businesses, leaving them to concentrate on their core activities.

    Neither government agencies nor private sector businesses can do enough in supporting the agenda for diversifying the sources of foreign exchange earnings for the country. We are coming out of a crisis that, in large part, has been characterised by foreign exchange scarcity, leading to sharp depreciation in the value of the naira. The overarching lesson we should take from this experience is that diversification of foreign exchange earnings, through non-oil export growth, is the way to build resilience against the next episode of oil price shock. Nigeria’s economy of the post-2016 recession should thrive on export diversification.

     

    • Wali is Acting Managing Director/CEO, Nigerian Export-Import (NEXIM) Bank