Ibrahim Apekhade Yusuf, who fact-checked President Muhammadu Buhari’s claims on state of the oil sector from 1999 till date, shares the outcome of his findings
President Muhammadu Buhari last Tuesday while speaking to members of the Buhari Support Organisation (BSO) at the Presidential Villa, Abuja, heaped praises on the late head of the military junta, Gen. Sani Abacha for building roads and developing infrastructure in the country.
Abacha was Nigeria’s military Head of State from 1993 to June, 1998 when he passed away.
Buhari said “No matter what opinion you have about Abacha, I agreed to work with him and the PTF road we did from here to Port Harcourt, to Onitsha, to Benin and so on… On top of other things in the institution, education, medical care and so on.”
President Buhari also wondered why the country is still in debt despite the huge income from crude oil realised by previous administrations.
Speaking inter alia, President Buhari said: “I have to repeat what I want public to know here. Some of you may not have heard it. Either there is no power in your place or even in the television, I said and I challenge anybody to check from Europe, Asia and America. Between 1999 and 2014, Nigeria was getting 2.1 million barrels per day at average cost of $100 dollars per barrel.
“It went up to $143. So Nigeria was earning 2.1m million times 100 times 16 years seven days a week. When we came, it collapsed to $37-38 and it was oscillating between 40 and 54 sometimes. I went to the Governor of Central Bank; thank goodness I did not sack him; he is still there! I went with my cap in my hand but there were no savings, only debt.”
However a fact check on some of the claims made by Buhari showed that he was mostly wrong.
The claims
He had claimed that oil prices averaged $100 per barrel between 1999 and 2014, when in actual fact, Brent crude, the benchmark grade for Nigerian oil, sold for an average of $55.8 per barrel in nominal terms within that period, according to data compiled from the Organisation of Petroleum Exporting Countries (OPEC).
Specifically, the BP Statistical Review which list oil prices since 1861 till 2016 showed that the average prices from 1999-2004 was $44.
Buhari had said ‘‘I challenge anybody to check from Europe, America and Asia; between 1999-2014, Nigeria was producing 2.1 million barrels of crude oil per day at an average cost of US$100 per barrel and it went up to US$143.”
Buhari was elected in May 29 2015, on that day a barrel of Brent crude traded for $65.56 according to a historical price compilation on the Financial Times markets portal.
Brent would average $57 that year and it wasn’t until December 2015 that the price slipped to an all-year low of $37.93 per barrel, perhaps this is the period the President was referring to, as a supply glut exacerbated by American shale output and the resumption of Iranian exports, combined with slowing Chinese demand to send prices tumbling.
Buhari is however closer to the actual daily production average with his claim of 2.1 million barrels daily.
Between 1999 and 2014, the average daily production was 2.3 million barrels.
The low point in that period was in 2002, when Africa’s largest oil producer pumped an average of 2.1 million barrels daily. Three years later, in 2005, the country pumped its highest volumes of the period- some 2.6 million barrels daily. However there was a huge slump in production to as low as 700,000 barrels per day at some point at the height of the Niger Delta militancy between 2006 and 2009, before President Umaru Yar’Adua declared an amnesty that helped oil output rebound.
Buhari’s statement that he went to the CBN Governor cap in hand to get a bird’s eye view of the state of the economy while it is true hardly means anything. The external reserve is the dollar equivalent of oil revenue that the country earns and has already been disbursed to the government in naira by the central bank, meaning it shouldn’t be considered as the government’s savings, except if adjusted for cash stashed away in the ECA or federal government savings.
The Excess Crude Account (ECA) is used to save oil revenues above an amount derived from the budgeted benchmark price and was created in 2004 by then President Olusegun Obasanjo.
There was $2 billion in the account as at May 2015 when Buhari came into power. The savings in the ECA was as high as $20 billion before the Goodluck Jonathan administration.
It is unclear if federal government savings were factored into the gross $30 billion external reserves with the Central Bank in May 2015.
Regarding debts, according to the Debt Management office (DMO), Nigeria’s debt profile was N12.12 trillion as at June 2015, a month after Buhari assumed office.
The domestic portion amounted to N8.4 trillion, with federal government bonds accounting for the largest chunk at 63 percent, while the external portion was $10.3 billion, with multilateral loans from the World Bank Group and Africa Development Bank Group dominating the pack at $7.23 billion.
As at December 2017, the domestic debt had nearly doubled to N12.6 trillion, with bonds still accounting for the largest share- 69.23 percent, while external debt rose 83 percent to $18.9 billion.
It would appear that the debt has all but risen since Buhari rode into power, but then he could point to ailing oil revenues as a reason why his administration racked up record debt to stimulate an economy that choked under the pangs of the oil price and production downturn and slipped into its first recession in 25 years in 2016.
The President’s claim that his administration splurged on capital budgets in 2016 and 2017 is not far from the truth, as far as it is in naira terms but not in dollar terms.
In defence of Buhari
With the Buhari administration’s chaos sucking up all the attention, it’s been able to move forward on a range of issues, according to Femi Adesina, Special Adviser to the President (Media and Publicity) on some 10 good things accomplished so far by the administration.
- According to the National Bureau of Statistics (NBS), the economy has recovered from the slow-down and eventual recession, which started in 2014. There has been improvement with stronger growth for three successive quarters. From contracting by 0.91% in Q1 2017, the economy has grown by 0.72% in Q2 2017, to 1.17% in Q3 2017, and 2.11% in Q4 2017.
- The Q1 2018 GDP shows that the economy has recorded a GDP growth of 1.95%, compared to a contraction of 0.91% in Q1 2017.
- The growth is driven by Agriculture and Industry, which shows that finally, after more than 50 years of lip service, the Nigerian economy is on the road to diversification. The oil sector’s contribution to GDP is 9.61%, while non-oil sector’s share is 90.39%.
- One of the factors responsible for the positive performance of the economy in Q1 2018 was the spending of about N1.5 trillion on infrastructure projects in 2017.
- For the past 15 months, inflation has declined consistently from 18.72% to 12.48%. The country is steadily on the road to single digit inflation rate.
- The first quarter of 2018 saw a continuous growth in total capital importation into the country, the fourth consecutive quarterly increase since Q2 2017. The total value of capital imported is $6,303.63 million, a 17.11% growth over the figure reported in the previous quarter.
- Foreign reserves stand at $47.79 billion, compared to $29.6 billion inherited in May 2015, after about six years boom in oil prices in the international market. The increase came at a time of modest oil prices, showing transparency and accountability by government.
- Nigeria’s Stock Market ended 2017 as one of the best-performing in the world, with returns of about 40 percent.
- Tax revenue increased to N1.17 trillion, in Q1 2018, a 51% increase on the Q1 2017 figure.
- Milled rice production has increased from 2.5MT to 4MT, and rice imports have dropped from 580,000MT in 2015 to 58,000MT in 2016. Millions of dollars have been saved.
These are just little among the good things happening to the Nigerian economy. Only the wilfully blind will not see it, but it does not stop the good work, which continues.
On exiting recession last year, President Muhammadu Buhari had said he would not consider the job done, until the ordinary man feels the impact of the rebounding economy on his life and pocket. We are inexorably on that road, no matter what scoffers may say.