Nigerian Recession: Diagnosis and Prognosis

The fall of the Nigerian economy from its African plateau is earth-shaking, raising dust of confusion as the populace struggle to hold their breaths through the tunnel. The collapse is earthly and has only shown the fallibility of the character flaw of a tragic hero. Recession is not mistletoe that grows on financial branches. It does not just happen, it is caused. Any untended economic garden is expected to be overgrown with weeds of recession. The Nigerian economy had suffered so much in the hands of economy rapists fondling its breastful milk and honey with inept managerial skills, holding it tight at the jugular and wrestling it down to recession. It took us years to see our problem as sickness so we could begin early treatment before it reached fever pitch. Now that the economy has slumped into financial coma, thinking of its recovery is very costly and counting the cost of its funeral is suicidal. Our Hobson’s choice lies in reviving it from its present vegetative state — recession and an ailing economy cannot just be started like a car and expected to cough out sound answer immediately from its illness. Economists are forced to pay the price of bringing equilibrium back to the economy.
Economists measure the economic strength of a nation by the growth in Gross Domestic Product (GDP) annually or quarterly. The word GDP came into use in 1937 in response to the Great Depression which originated in the United States and became adopted in 1944 after Bretton Woods Conference as the measurement of a nation’s overall economic activity. GDP is simply the overall monetary output of all sectors of a nation’s economy. It is “Gross” because it is the overall monetary value of production without any deduction on the monetary value of loss of assets. It is “Domestic” because it is National, that is, production takes place within the borders or boundaries of the nation and it is “Product” because it involves final goods and services. It is no longer news that the Nigerian economy has been led into recession. Nigeria has been groaning under the weight of accumulated debt since 1960 and then worsened with accumulation of arrears and interest between 1985 and 1998 due to inability to service the public debt. Then, Nigerian leaders could not control the rabid appetite to borrow. The introduction of Second Tier Foreign Exchange (SFEM) in September 1986 by General Babangida Administration depreciated naira by 66% to 1.57per $1 and declined further in July 1987 to 3.74 per $1 from its original N2 to £1 when it was introduced on 1st January, 1973. The free fall of Naira from 1986 till now has pitched N460 against $1 adding to the economic downturn of recession. Companies are folding up in great number, people are losing their jobs, prices of commodities are sky-rocketing, state governments cannot regularly pay salaries, students are dropping out of schools for inability to pay school fees, people are committing suicide on daily basis, kidnappers are demanding ransom, ritualists are springing up, crimes are on the increase and unemployment is still in vogue. We do not need the International Monetary Fund boss, the Central Bank of Nigeria governor and the Finance Minister to tell us that these are the symptoms of economic recession — a period of intense famine in the nation.We have so much wasted time and resources treating the symptoms of our ailing economy with pain relief pills and covering its festering sore with bandage while the virus still lives and bites deeply into the fabric of our economic system. It is high time we stopped treating the symptoms but rather, diagnose the mental illness and administer the right medicine, coupled with strict dieting and symptoms will vanish.
I have come with this message of hope that the fall of the Nigerian economy is not a sickness unto death. No! No need to shed tears on the sleeping giant of Africa. The collapse of the economy shows it is earthly (Heaven had no gain in the fall of Adam’s economy) and I must say that our economy has only fallen into a deep sleep to allow economic surgeons cut deep into its flesh and put out its rib, robe it with the flesh of a new economy. Nigeria will no longer walk alone with one economy.
Oil has been flowing in the veins and arteries of Nigeria to keep it alive since 1956 when it was discovered at the heart pump of Oloibiri District of Ogbia in the Niger Delta, making the district the first in West Africa to produce oil in commercial quantities. The Oloibiri heartland pumped the oil through the two vessels in operation — Shell Petroleum Development Company (SPDC) which managed the rich veins of the upstream activities (exploration and production) and Nigeria National Petroleum Corporation (NNPC) which managed the arterial downstream activities (processing and distribution). The continued exploration of crude oil from 1971 to 1977 witnessed an unprecedented boom, the action which intoxicated the key drivers of the economy to over concentrate on its quick money that could easily be siphoned, to the neglect of agriculture, our main source of revenue then, because money earned with little efforts is often abused. In the 1970s, agriculture lay on its sick bed begging for attention from economy drivers who showed no attention with its ailing 40% GDP but were busy draining the financial pipes of the crude oil. It was in the 1990s when the price of crude oil began to rise and more funds were made available to financial leaders who held it tight at the jugular vein that the symptoms of recession started showing in the form of high rate of unemployment. Then, it slumped to its persistent vegetative state of 10% GDP and remained unresponsive to treatment till date.

When diagnosis is incorrect, prognosis won’t bring cure.
The problem of Nigeria is not oil. Crude oil, the blessing for many nations and the envy of countries who do not have it, shouldn’t be a curse to Nigeria. Crude oil did not lead Nigeria into recession, our leaders did. The major sickness that needs urgent cure is the wasteful propensity of the Nigerian government. The flamboyancy and fanfaronade of the Nigeria government is virtually felt in every nation of the world. In August 25, 2015, Vanguard Newspaper claimed that the “Nigerian lawmakers are the highest paid in the world.” There are 109 senators and 360 members of House of Representatives. A senator in Nigeria earns 240 million naira (about 1.7million US dollars) in salary and allowances and a member of the House of Representatives earns 204 million naira (about 1.45 million US dollars). What on earth should make Nigerian lawmakers receive this outrageous oil money for saying “Yea, Yea, Nay, Nay.”? What an injustice is it to compare it to an average civil servant who earns 46 to 120 US dollars per month? In reference to the International Monetary Fund World Economic Outlook (October, 2016), the United States of America has the highest GDP of $18, 561.930 while Nigeria is the 26th with $415.080 billion. Yet, an American Senator earns $174,000 and a Member of Parliament in the UK earns about $64,000 every year. No doubt, the Presidential System of Government is expensive and Nigerian politicians are wasteful. What determines a wealthy nation is not the pompous display of available resources but a judicious cultivation of good managerial skills and utility of the resources available to the populace. Nigeria is in dire need of a pragmatic leader with good managerial skills to effectively utilize the available resources. I beg to say that appointment of personnel into key areas of the economy should not be politicized. Politicians are not economists that manage money or poets that economise words. They waste words and human resources. We need technocrats. We have had series of leaders that lacked vision and become wasteful starting from when juntas seized power and raped the economy to the time when the elected civilians bribed their ways or rigged election to secure votes. How could these principalities and powers in high places not become wasteful when they hold power? Where is the vision in seizing power? Where is the vision in bribing to rig election? The blind will only lead the blind to the pit. When a leader lacks vision, corruption becomes free. Just like it is explained in The Holy Bible, when Isaac’s vision became dim, Jacob could feign Esau’s appearance to steal his blessings. This could only happen where there is lack of vision and people perish with hunger.
At the 52nd Annual General Meeting of Nigerian Bar Association in Abuja in 2012, Dr. Oby Ezekwisili, while presenting a paper titled “Corruption, National Development; The Bar and The Judiciary” said that Nigeria lost $400 billion oil revenue to corruption since independence. She stated that while oil accounted for about 90% of the value of Nigeria’s exports, over 80% of that money ended up in the hands of one percent of the population.
At the interim report on financial and asset recoveries made by the Federal Government of Nigeria from 29 May 2015 to 25 May 2016, the Minister of Information and Culture stated that 55 Nigerians have stolen over 1.34 trillion naira from the country’s treasury. That’s more than a quarter of last year’s budget. The Federal Government made cash recoveries totaling N78, 325, 354, 631.82 (Seventy eight billion, three hundred and twenty five million, three hundred and fifty-four thousand, six hundred and thirty one naira and eighty two kobo). There is talk that the recovered funds could take care of 30% of the deficit in the current budget.

Goodluck Jonathan’s administration from 2010 to 2015 witnessed sudden disappearance of money. The shock that made Dr. Oby Ezekwesili to panic “where did all the money go?” and the president replied, “at any time the earnings (from oil) drop, the governors would insist that there is no place in our laws that actually say that the federal government should keep the reserve. They always insisted that a part of it (the excess crude revenue account) should be brought” was former President Jonathan’s reply at Bloomberg TV blaming the governors for pressuring him for spending $18 billion of excess crude savings. The argument that the governors coined to seduce Mr. President was that “we cannot say we are saving money when people are hungry, you cannot save money when your child is in the hospital, if your child dies, you are a fool.” The statement appears too good to be ignored and one would really think that the governors cared for those innocent children, but where is the outcome of the money now that the economy has plunged into recession, children are dying for lack of medical bills for hospital treatment, some are driven out of school for inability to pay school fees, and hunger is biting hard on the people to the extent that news has it that some couples have started stealing pot of soup. And these governors flaunt ostentatiously in their Jeeps, feed their Alsatian dogs at home and save enough wealth for their unborn children. And they think they would give account of the money committed into their care to God at Heaven’s gate? Truth will dawn at the Judgment day.
As if that was all, the founding director of Transparency International, Dr. Oby Ezekwesili stated further about “the squandering of the significant sum of $45 billion in foreign reserve account and another $22 billion in Excess Crude Account being direct savings from increased earnings from oil that the Obasanjo administration handed over to the successor government in 2007.” In our local term, $67billion is about N10 trillion just disappeared.
In late 2013, Sanusi Lamido was replaced after he claimed that $20 billion of oil revenue went missing. In his letter to the president Goodluck Jonathan, Sanusi said “I am constrained to formally write your excellency, documenting serious concerns of the CBN on the continued failure of the NNPC to repatriate significant proportions of the proceeds of crude oil shipments it made in gross violation of the law.” After NNPC’S account audit, it was learnt that the non-remitted revenue was actually US$1.48 billion. Upon release of both PwC and Deloitte report by the government at the eve of its exit, it was however determined that truly close to $20 billion went missing.
Several running scandals including BMW cars purchased by the Aviation minister, Princess Stella Odua, were worth $250 million dollars plus security contracts to militants in the Niger Delta.
The 2.2 naira billion illegally withdrawn from excess crude oil accounts of which $1billion was supposedly approved by Jonathan to fund his re-election campaign showed the wasteful propensity of Nigerian leaders.
There was massive scam in weapons and defence procurement, coupled with the misuse of 3 trillion naira of defence budget since 2011 under the guise of fighting Boko Haram.
Wasteful spending didn’t start from President Jonathan, a few steps backward to historical facts could import more stubborn rules from past leaders. I might step on bones and disquieten the spirits of some leaders. I beg your pardon. The bitter truth is always sweeter than lies. In fact, Wikipedia traces the history of corruption in Nigeria as far back to the questionable practices of Nnamdi Azikwe in 1944 and then submits emphatically that Babangida’s administration legalized corruption. His administration refused to give account of the Gulf war windfall which was estimated to be $12.4billion. He rigged the only successful election in the history of Nigeria in June 12, 1993. The near revelation of his loot led to the assassination of Dele Giwa through letter bomb.
Abacha’s administration from Nov. 1993 to June 1998 witnessed massive looting of public funds. It was after his death that the global nature of graft began to unfold. Nigeria is yet to recover from the suicidal amount of $1 billion stashed in various accounts throughout Europe. The money Nigeria is still recovering till date.
Obasanjo’s administration from May 1999 — May 2007 was said to widely lobby for his failed campaign to alter the constitution to get a third term bill actively bribing the legislators. The action that made the Senate Deputy Leader, Bala Ibn Na’Allah to publicly declare that “for the records, I was the only member from Kebbi State who did not find it worthy at that time of collecting the sum of N50 million as an inducement to subvert the constitution and provide a constitutional framework for the third term ambition of President Obasanjo.”
To be candid, many of our leaders lack vision and become wasteful, and worse still, they lack the discipline of reading to correct their visual defects. Our leaders do not read, so their ability to learn to lead right becomes dim. If they truly read they will learn from history how not to fail or carry over the compulsory History 1983 to 2016. Leadership is a place of development. How many of our leaders have private library at home where they go to refresh their minds and sharpen their vision and then come out fresh with innovative ideas. They are busy attending to files and other inanities of life that drain them down through the battery of tests with no place to recharge. When I talk of reading, I do not mean reading newspapers to scavenge for what somebody had written against you. I mean reading good books on vision, leadership and governance. A good reader is a good leader, and a leader needs to keep soaring on the wings of reading to keep the vision of leadership flying high. Isn’t funny that a speech writer plagiarized Obama’s speech for the president to make his public gaffe? A director that could not be creative with words. It was the follower, not board of leaders that detected the president’s plagiarism.
Apart from being wasteful, our leaders lack maintenance culture. Is it not painful to say that the Nigeria’s first oil garden of Eden had become a den? The site of the dried up well of Oloibiri whose foundation stone was laid by President Olusegun Obasanjo in 2001 has been overtaken by weeds. The weather beaten signboard now has the inscription of an epitaph that says “Oloibiri well 1, drilled June 1956, 12,000 feet” like the epitaph of a tragic hero. Infrastructural development in the oil producing areas is nothing to write home about. Nigeria has four oil refineries that were dead to infrastructural decay. Old Port Harcourt, Alesa Eleme with the capacity of 60,000 barrels per day was built in 1965 and the New Port Harcourt Refinery with the capacity of 150,000 barrels per day was built in 1989. In 1993 they were merged into one. Warri Refinery with the capacity of 125,000 barrels per day was built in 1978 and Kaduna Refinery with the capacity of 110,000 barrels per day was built in 1980. They are just being revived now. Nigeria’s lack of refineries means that it has to export about 90% of its crude oil and import back petroleum products at international prices. The government then sells fuel to its citizens at subsidized prices. So many scandalous activities trail subsidy activities in Nigeria. In fact, corruption breeds its worms there. Is it not lack of maintenance culture that made Nigeria to privatise some government’s corporations?
Another look at the Nigeria’s lack of maintenance culture is the dereliction of Ogoniland. It was said that “Ogoniland has suffered pollution from oil spills and oil well fires.” The basic problem with the land was a widespread of oil pollution and contamination by the activities of oil companies. Their waters are destroyed, fishes died from oil spillage, farmland degraded and denizens are living in constant fear of fuel fires that had resulted in destruction of lives and properties. Nigeria did not manage the crude oil, so much reason the Niger Deltan militants are blowing up oil wells because they felt that Nigerian government is only interested in the produce from the oil to the neglect of environment. The major hazards such as NNPC spillage in 1992, Oshaka oil spill in 1993, and Ibeno oil spill in 1998 resulted in environmental hazards forcing the denizens to react violently. The Group Managing Director of NNPC, Dr Maikanti Baru’s presentation on “Global Prices, Militancy and Terrorism and its Impact on Government Revenue in Nigeria” on Friday, 28 October 2016 in Abuja at the Fiscal Liquidity Assessment Committee Retreat held that from January 2016 till date, government lost $7bn, about N2.1tn, to the activities of militancy groups and oil pipeline vandals in the Niger Delta region. “Over 7000kpd of crude oil has been lost due to vandalism this year. This implies that 60% of oil production lost is NNPC-FGN equity. At an estimated price of 45 dollars per barrel, the total 2016 revenue loss to the Federation Account translates to about 7 billion dollars. This loss is equivalent to a new 7,000mw power plant; new 350kpd refinery; over 30% of National budget; and a new 1,700 kilometre pipeline.” No doubt, Niger Deltan militants are carriers of the philosophy of Movement for the Survival of the Ogoni People (MOSOP) headed by Ken Saro Wiwa and other Ogoni people who lost their lives in mass protest against government’s lackadaisical attitudes towards the environmental degradation of the Niger Delta. The loss has its share in the present economic recession in Nigeria.
Nigeria should diversify its economy. Nigeria derives 70% of its revenue and 90% of its foreign exchange earnings from crude oil. Nigeria’s dependence on oil for over 90% of its foreign exchange earnings makes it fragile and vulnerable to instability and fluctuations so much that she can develop high blood pressure at any slight headache the economy suffers. So there is an urgent need to diversify the economy and develop the agriculture potentials of the country. It is good to state very clearly that there is the possibility of less demand for crude oil in the nearest future. Technological developments and advancements have started showing the decline in the demand for crude oil and the prices of crude oil might continually wane. For example, there are alternative ways for fuelling some vehicles and generators. We have electricity charging vehicles, we have solar cables powering electricity and some vehicles, and water is being equally used to power some generators. In the nearest future, fuel propelled vehicles and generators might fade off from the world market with fast technological advancements. So, he who fails to plan, plans to fail.
Nigeria’s agricultural potentials remain untapped. Nigeria was the world’s lead exporter of cocoa from the west, pyramid of groundnut from the north, rubber and oil palm products from the east in the 1960s. Malaysia came to Nigeria to collect oil palms free, today palm oil is yielding billions for Malaysia and many vibrant and productive Nigerians are running there. What if the crude oil from the South adds to the three? The four cardinal points of Nigeria — Cocoa in the west, Pyramid of groundnut in the north, rubber and oil palm in the east and crude oil in the south — Nigeria would have been flowing in ceaseless wealth like an ocean.
If the US government could engage the services of less than 10% of her population in mechanized farming to the extent of exporting agricultural products to other countries, how much more will Nigeria accomplish if she actively engages the services of more than 60% of her population. Research shows us that Nigeria has over 80 million hectares of arable land. What are we doing with this? Nothing. It’s a mere waste of space, waste of natural, mineral and human resources. A land flowing with milk and honey, yet having millions of unemployed human resources, uncultivated natural resources, and the untapped mineral resources are wasting away. Eight out of ten unemployed Nigerian youths prefer loafing around cybercafés and surfing the net for scholarship opportunities to travel out of the country. An average Nigerian student in Secondary school sees agriculture as a punishment and his Agricultural science teacher as the Devil himself. Yet, agriculture was the main base of the Nigeria economy in the 1960s, contributing around 68% to the GDP until the discovery of crude oil in 1956, coupled with the oil boom in 1970s made our leaders trifle agriculture and it fell at roughly 40% and between 1970 and 1974 Nigeria spent N112.88 million annually on food importation. Nigeria’s food import bill today stands at 1.3 trillion naira ($6.5 billion). It was in the 1990s that agriculture slumped to its persistent vegetative state of 10% GDP and remained unresponsive to treatment till date. Even the various agricultural development programs channeled to revive it through Operation Feed the Nation (OFN) by General Olusegun Obasanjo in 1976, River Basin and Rural Development Program in 1976, Agricultural Development Projects (ADP) funded by World Bank, Alhaji Shehu Shagari’s Green Revolution in 1980 and the Agricultural Agenda of Goodluck Jonathan through disbursement of loans to farmers, provision of subsidized agricultural materials, equipment and input failed because the aids package hovered like “giant hawks” in the space of Federal Ministry of Agriculture. How many farmers visit Federal Ministry of Agriculture? How many farmers living within FCT territory know where the office is located in Abuja? Agriculture is not practised at the federal level, so it is not about Federal Ministry of Agriculture, it is those villages across the Local Governments. Let funds be made accessible at the grassroot level. Let the Federal Government send its representatives into the crooks, creeks and marshes of Nigeria. Let them comb the nook and cranny of the interiors of Nigeria or partner with Local government officials to encourage farming at the local level. Nigeria must greatly invest in its agricultural potentials.
There is an urgent need to revive our local industries. It is high time Nigeria stopped depending and demanding for foreign goods. Our insatiable appetite for foreign goods should be discouraged. When are we going to develop our own industries? No country builds a great economy by depending on the industries and industrial products of other countries for importation. We must build our local industries.
For decades, Nigeria’s bitumen potentials have remained untapped. According to Foraminifera, a marketing and research firm, Nigeria’s bitumen deposits sit at 42.74 billion metric tonnes, the second largest in the world. The bitumen deposits cover 120 kilometres coastal belts of Lagos, Ogun, Ondo and Edo States. Yet Nigeria spends 2 billion naira annually to import asphalt, a derivative of bitumen. It was said that the occurrence of bitumen deposits in Nigeria is twice the amount of existing reserves of crude petroleum.
What about tourism? The Deputy Governor of Imo State, Eze Madumere said on November 18, 2016 that the exploration of the nation’s tourist potentials was the only way out of the lingering economic recession. Speaking in an interview on Sunday, the Director General, Nigeria Tourism Development Corporation (NTDC), Mrs. Sally Mbanefo said Nigeria can make over 4 billion US dollars annually from tourism once the different tourist sites across the nation are properly harnessed. An article written in the Punch Newspaper on the 7th June, 2016 on “Maximising Nigeria’s Huge Tourism Potential” claimed that “The World Travel and Tourism Council estimates that revenue from the Tourism sector in 2007 was $10 billion. It reportedly contributed 6% to Nigeria’s Gross Domestic Product. No doubt, Nigeria has tourism magnetism in the Obudu Mountain Resort and Tinapa Free Trade Zone in Cross River, Coconut Beach in Badagry, Lagos Bar Beach, Ibeno Beach, Yankari National Park, Old Oyo Natural Park, Biafra War Museum in Umuahia, Osun Osogbo Grove — a UNESCO heritage site — Ancient Kano Walls of 14 kilometres radius earth monument — another UNESCO history/culture heritage site — tropical rain forests and mangrove swamps on the coastal zones, among others. The country has no fewer than 56 national monuments and sites. “
How can Nigeria have all these untapped potentials and still has the world’s unprecedented level of unemployment. UNDP Human Development Index tags Nigeria as one of the poorest nations of the world. It is unfortunate to hear that this is being said of Nigeria, the sixth (6th) exporter of oil in the world. This made Dr. Oby Ezekwisili to lament that “The trend of Nigeria’s population in poverty since 1980 to 2010 suggests that the more we earned from oil the larger the population of poor citizens.” To be candid, Nigeria needs pragmatic and visionary leaders.
In conclusion, I will implore all Nigerians never to lose hope in the nation. “Tough times never last but tough people do.” Even the US plunged into the dark Great Depression, an economic misery worse than recession until the economic recovery plan embarked upon by President Franklin Delano Roosevelt pulled America out of it. Today, the United States of America has the best economy in the world. I will encourage every family to be prudent in their spending in this period of economic recession. They can engage in subsistence farming to take care of their family and little for market.
I will advise the present governments to ensure sanity in all sincerity by blocking corrupt leakages. Just as the present Minister of Finance, Mrs Kemi Adeosun had said that corruption can only be fought by good governance. The government should have no fear in pumping money to the economy if it truly believes it has best hands in its management team. This is not the best time to tighten financial belt but rather be judicious in spending. Austerity measure does not cure recession. One gains money by spending money judiciously. John Maynard Keynes became a well-known anti — austerity economist, argued that “The boom, not the slump, is the right time for austerity at the treasure” so government must pump money into the economy because “reductions in government’s spending during economic downturns worsen the crisis”. A good back up to this fact is the wisdom of an ancient economist in The Holy Bible. He saved corns in Egypt when there was boom so much that seven years of farming could not deplete the barns. Let’s learn from the wisdom of Joseph. God bless Nigeria.