Nigerian economy since 1999: Myths, lies and data

The average oil price in 1999 when President Olusegun Obasanjo returned as Nigeria’s civilian president was $17.80 per barrel. Our official foreign reserves that year amounted to just $5.4bn. GDP size was $50.48bn which at then exchange rate of N92.69/$ was only N4.6trillion. Throughout Obasanjo’s first term, the highest oil price was $26.10 in 2000, with slight declines to $24.50 and $25.40 in 2001 and 2002. In spite of relatively low oil prices, Obasanjo grew FX reserves to over $10bn in 2001 before falling to around $7.5bn in 2002 and 2003. The exchange rate depreciated by 30% by 2002 falling to N120.97. On the policy front, the main economic achievement of Obasanjo’s first term was telecommunications sector deregulation which transformed Nigeria’s telephony and later internet/data sectors. No rational person will deny Obasanjo the credit for the over 150 million active lines in Nigeria today. He also established the EFCC and ICPC. Obasanjo’s main political achievements in his first term were stabilizing our democracy and re-establishing Nigeria in the global community.

Obasanjo recorded more significant economic achievements in his second term, enabled by the arrival of Ngozi Okonjo-Iweala, Charles Soludo, Fola Adeola and others into economic positions. The most important milestones were pension reforms, banking consolidation and the revolutionary Paris Club Debt Write-off. Okonjo-Iweala introduced the oil price rule that enabled the accumulation of “excess crude” savings in addition to our foreign reserves. The “Excess Crude Account” (ECA) starting from nil in 2003 was $24.36bn by December 2006 while foreign reserves were over $42billion totaling over $66billion of sovereign savings. In 2003 average oil prices were still below $30 per barrel and GDP size was only $76.64! It was only in 2006 and 2007 that oil crossed $60 per barrel. The effect of Obasanjo’s reform cabinet on FDI manifested for the first time in 2005 (not surprisingly AFTER (!) the Paris Club Debt Write-off as foreign investment jumped to $5.1bn and $7.7bn in 2005 and 2006 respectively.

Obasanjo’s policy failures were the neglect of the social sector as poverty and unemployment began to rise, and crony capitalism began to entrench its roots. Boko Haram and “Political Sharia” were also birthed under Obasanjo and the public sector began to expand in that era. The signal failure of Obasanjo was not to transform the power sector in eight years; but the irony (and redemption perhaps) was that he laid the foundations for reform through enactment of the Electric Power Sector Reform Act. On the political side, Obasanjo diminished the quality of our democracy with scandalous elections in 2003 and 2007, and his third term bid.

Late President Umaru Yar’adua was in office from 2007 to 2010. His reign was dogged by poor health and eventually cut short by his demise. He also had an economic challenge in the global financial crisis and great recession of 2008-2009. Yet average oil prices ranged between $60-100 per barrel during Yar’adua’s time in power, higher than under Obasanjo. Yar’adua drew down significantly on both the ECA and foreign reserves falling to $6.5bn and $42.3bn by 2009 (having risen to $20bn and $53bn respectively by 2008 a legacy of the Obasanjo cabinet). This depletion of reserves was part-justified as a result of the decline in oil prices during the global recession and part-unjustified because the Yar’adua government wasted substantial time reversing pro-market initiatives of his predecessor and stalling the power sector reforms in favour of an unrealistic $85billion government spending programme pushed by Rilwanu Lukman. Under Yar’adua and as a result of the global recession-induced oil price decline, the Naira was devalued from around N120/$ to about N150/$.

Yar’adua’s most important achievement was the Niger-Delta amnesty which restored oil production after the regime’s attempt to deploy military force failed.

President Goodluck Jonathan enjoyed the bounty of high oil prices ranging from about $80 in 2010 to over $100 per barrel between 2011 and 2014, when oil prices fell again. He initially built-up foreign reserves from $32bn in 2010 to over $43.8bn by 2012 before it began to decline to approximately $30bn by the time he left office in 2015. The ECA also fell to $2bn. As president, Jonathan bore ultimate responsibility for the non-accumulation of reserves during a period of high oil prices, but he can plead some extenuation-first he indeed tried to do so, in fact setting up a sovereign wealth fund to institutionalise same instead of Obasanjo’s illegal ECA, but governors stalled the process in court; the CBN refused to countenance even minor adjustments in currency value as imported consumption (and export of capital by corrupt officials rose); governors (again!) insisted on sharing the illegal excess crude account and persistently used it as political blackmail against the hapless president; and Jonathan and Okonjo-Iweala (who had returned as finance minister in 2011 under less-auspicious circumstances as I presciently warned back then) can argue correctly that they also tried to force savings through conservative budget oil price benchmarks, which the National Assembly consistently raised. Jonathan also bears, more directly, liability for the escalation in corruption, which will also have contributed to decrease in reserves. The biggest embarrassment to Jonathan was seeing fuel subsidies rise from an average of N1trillion to over N2trillion in 2011. In this case as well he tried to fix the problem once and for all through deregulating the downstream in January 2012 but political opponents opposed deregulation, which we have now being forced to adopt under worse economic circumstances.

Nevertheless Jonathan’s policy achievements were important-the establishment of the Nigerian Sovereign Investment Authority (NSIA); the revival and substantial completion of the power sector reforms; successful reforms in agriculture and trade; GDP rebasing and growth resulting in Nigeria becoming the largest economy in Africa at $510bn; and the exponential increase in FDI crossing $20bn in 2013 and 2014! Politically Jonathan enacted the Freedom of Information Act and ensured free and fair elections including the one that saw to his displacement in 2015! His main failing was his weak leadership which manifested in a festering Boko Haram insurrection and large scale corruption in his government.

By 2015, Obasanjo, Yar’adua and Jonathan all bore varying levels of responsibility for worsening poverty and unemployment as policy pandered to crony capitalists at the expense of the mass, even though Jonathan made modest efforts through Almajiri schools, “You-Win” and SURE-P programmes and investments in the education sector. The cost of governance also escalated with both the executive and legislature to blame.

Opeyemi Agbaje

https://trwstockbrokers./2016/08/24/nigerian-economy-since-1999-myths-lies-and-data-businessday-news-you-can-trust/

This is well balanced article. Most people won't have attention span to read through this. What was the legal arguement for calling ECA illegal. The government did fight Jonathan on reasonable propasals to deregulate downstream oil is dumb.

in fact setting up a sovereign wealth fund to institutionalise same instead of Obasanjo’s illegal ECA, but governors stalled the process in court;

Hahaha
All yee Jonathanians keep lying to urself

Ratello:
Nigerian economy since 1999: Myths, lies and data

The average oil price in 1999 when President Olusegun Obasanjo returned as Nigeria’s civilian president was $17.80 per barrel. Our official foreign reserves that year amounted to just $5.4bn. GDP size was $50.48bn which at then exchange rate of N92.69/$ was only N4.6trillion. Throughout Obasanjo’s first term, the highest oil price was $26.10 in 2000, with slight declines to $24.50 and $25.40 in 2001 and 2002. In spite of relatively low oil prices, Obasanjo grew FX reserves to over $10bn in 2001 before falling to around $7.5bn in 2002 and 2003. The exchange rate depreciated by 30% by 2002 falling to N120.97. On the policy front, the main economic achievement of Obasanjo’s first term was telecommunications sector deregulation which transformed Nigeria’s telephony and later internet/data sectors. No rational person will deny Obasanjo the credit for the over 150 million active lines in Nigeria today. He also established the EFCC and ICPC. Obasanjo’s main political achievements in his first term were stabilizing our democracy and re-establishing Nigeria in the global community.

Obasanjo recorded more significant economic achievements in his second term, enabled by the arrival of Ngozi Okonjo-Iweala, Charles Soludo, Fola Adeola and others into economic positions. The most important milestones were pension reforms, banking consolidation and the revolutionary Paris Club Debt Write-off. Okonjo-Iweala introduced the oil price rule that enabled the accumulation of “excess crude” savings in addition to our foreign reserves. The “Excess Crude Account” (ECA) starting from nil in 2003 was $24.36bn by December 2006 while foreign reserves were over $42billion totaling over $66billion of sovereign savings. In 2003 average oil prices were still below $30 per barrel and GDP size was only $76.64! It was only in 2006 and 2007 that oil crossed $60 per barrel. The effect of Obasanjo’s reform cabinet on FDI manifested for the first time in 2005 (not surprisingly AFTER (!) the Paris Club Debt Write-off as foreign investment jumped to $5.1bn and $7.7bn in 2005 and 2006 respectively.

Obasanjo’s policy failures were the neglect of the social sector as poverty and unemployment began to rise, and crony capitalism began to entrench its roots. Boko Haram and “Political Sharia” were also birthed under Obasanjo and the public sector began to expand in that era. The signal failure of Obasanjo was not to transform the power sector in eight years; but the irony (and redemption perhaps) was that he laid the foundations for reform through enactment of the Electric Power Sector Reform Act. On the political side, Obasanjo diminished the quality of our democracy with scandalous elections in 2003 and 2007, and his third term bid.

Late President Umaru Yar’adua was in office from 2007 to 2010. His reign was dogged by poor health and eventually cut short by his demise. He also had an economic challenge in the global financial crisis and great recession of 2008-2009. Yet average oil prices ranged between $60-100 per barrel during Yar’adua’s time in power, higher than under Obasanjo. Yar’adua drew down significantly on both the ECA and foreign reserves falling to $6.5bn and $42.3bn by 2009 (having risen to $20bn and $53bn respectively by 2008 a legacy of the Obasanjo cabinet). This depletion of reserves was part-justified as a result of the decline in oil prices during the global recession and part-unjustified because the Yar’adua government wasted substantial time reversing pro-market initiatives of his predecessor and stalling the power sector reforms in favour of an unrealistic $85billion government spending programme pushed by Rilwanu Lukman. Under Yar’adua and as a result of the global recession-induced oil price decline, the Naira was devalued from around N120/$ to about N150/$.

Yar’adua’s most important achievement was the Niger-Delta amnesty which restored oil production after the regime’s attempt to deploy military force failed.

President Goodluck Jonathan enjoyed the bounty of high oil prices ranging from about $80 in 2010 to over $100 per barrel between 2011 and 2014, when oil prices fell again. He initially built-up foreign reserves from $32bn in 2010 to over $43.8bn by 2012 before it began to decline to approximately $30bn by the time he left office in 2015. The ECA also fell to $2bn. As president, Jonathan bore ultimate responsibility for the non-accumulation of reserves during a period of high oil prices, but he can plead some extenuation-first he indeed tried to do so, in fact setting up a sovereign wealth fund to institutionalise same instead of Obasanjo’s illegal ECA, but governors stalled the process in court; the CBN refused to countenance even minor adjustments in currency value as imported consumption (and export of capital by corrupt officials rose); governors (again!) insisted on sharing the illegal excess crude account and persistently used it as political blackmail against the hapless president ; and Jonathan and Okonjo-Iweala (who had returned as finance minister in 2011 under less-auspicious circumstances as I presciently warned back then) can argue correctly that they also tried to force savings through conservative budget oil price benchmarks, which the National Assembly consistently raised. Jonathan also bears, more directly, liability for the escalation in corruption, which will also have contributed to decrease in reserves. The biggest embarrassment to Jonathan was seeing fuel subsidies rise from an average of N1trillion to over N2trillion in 2011. In this case as well he tried to fix the problem once and for all through deregulating the downstream in January 2012 but political opponents opposed deregulation, which we have now being forced to adopt under worse economic circumstances.

Nevertheless Jonathan’s policy achievements were important-the establishment of the Nigerian Sovereign Investment Authority (NSIA); the revival and substantial completion of the power sector reforms; successful reforms in agriculture and trade; GDP rebasing and growth resulting in Nigeria becoming the largest economy in Africa at $510bn ; and the exponential increase in FDI crossing $20bn in 2013 and 2014! Politically Jonathan enacted the Freedom of Information Act and ensured free and fair elections including the one that saw to his displacement in 2015! His main failing was his weak leadership which manifested in a festering Boko Haram insurrection and large scale corruption in his government.

By 2015, Obasanjo, Yar’adua and Jonathan all bore varying levels of responsibility for worsening poverty and unemployment as policy pandered to crony capitalists at the expense of the mass, even though Jonathan made modest efforts through Almajiri schools, “You-Win” and SURE-P programmes and investments in the education sector. The cost of governance also escalated with both the executive and legislature to blame.

Opeyemi Agbaje

https://trwstockbrokers./2016/08/24/nigerian-economy-since-1999-myths-lies-and-data-businessday-news-you-can-trust/

1. The Federal Government collects about 52% of all monies accruable to FAAC while states and LGAs share the remaining 48%. Which means no state gets up 2% of FAAC.
Now if the man collecting 52% has no will to save how do you expect those who collect less than 1% to save?

2. The main reason the Governors refused him saving for them was coz he was stealing from them. GEJ and NOI turned the excess crude account to their piggy bank where dey dip their hands to collect monies forgetting that entire monies in the excess crude account belongs to all 3 tiers of government using FAAC ratio (FG - 52% States & LG - 48%).
(In a nutshell GEJ was reducing the amount of monies available to the Governors to steal and u know thieves don't like that)

3. The case between FG and States over Excess Crude account was started as far back as 2005 by Tinubu, Yaradua and all Governors (including GEJ), when Yaradua became President he pleaded with Governors (With Saraki as chairman of NGF) that an out of court compromise between both parties be reached.
That did not happen until he died.
Amaechi as NGF headed back to court when dey noticed that someone was stealing their meat pie, ALL Governors in Bayelsa and Akwa Ibom (strong GEJ supporters) joined Amaechi to get their meat pie back from the SS3 student who was stealing from the oven.

Hope this is clear enuff for you.

hardywaltz:
Hahaha
All yee Jonathanians keep lying to urself

Even when the facts are painted in white you still can't see them. How come you missed the Obasanjo part where he inherited $17 per barrel in oil yet was not blaming the military but swung to action. Receive brain in Jesus Name

Ratello:

Even when the facts are painted in white you still can't see them. How come you missed the Obasanjo part where he inherited $17 per barrel in oil yet was not blaming the military but swung to action. Receive brain in Jesus Name

Obasanjo did not inherit an economy that was already basing its budgets on 3x the price of crude barrel before he was swung in as President.
When he came in all our budgets were prepared with $ 17 per barrel and therefore our recurrent and capital expenditures were tailored to suit our projected income.
Same with states.
When PMB took over in May 2015 the budgets of 2007 - 2015 had all been operated with crude prices of over $85 per barrel with a recurrent expenditure that was hell over roof and 26 states were bankrupt due to excessive borrowing when the allocations were high.

Where would he get the money to maintain such high expenditure when the income has reduces less by over 500%.

Excellent Unbaised piece!!

hardywaltz:

Obasanjo did not inherit an economy that was already basing its budgets on 3x the price of crude barrel before he was swung in as President.
When he came in all our budgets were prepared with $ 17 per barrel and therefore our recurrent and capital expenditures were tailored to suit our projected income.
Same with states.
When PMB took over in May 2015 the budgets of 2007 - 2015 had all been operated with crude prices of over $85 per barrel with a recurrent expenditure that was hell over roof and 26 states were bankrupt due to excessive borrowing when the allocations were high.

Where would he get the money to maintain such high expenditure when the income has reduces less by over 500%.

Why can't you read silently and leave quietly before exposing yourself unnecessarily if only you know what Obasanjo inherited you won't be comparing orange to apple in your baseless analysis. It is very clear from that beautiful thread (that is if you read it at all) that Jonathan left some blueprint policies before he left that future administrations can leverage on yet you are analysing bullshyte on 2015 budget you can't even prove. Where did you see $85 ?

Ratello:

Even when the facts are painted in white you still can't see them. How come you missed the Obasanjo part where he inherited $17 per barrel in oil yet was not blaming the military but swung to action. Receive brain in Jesus Name

Whoever told you that OBJ regime didn't blame the military especially during its first tenure when things were at a standstill because of initial lack of focus of both the executive and the legislature. Where you a toddler then? In fact, the swansong then, for lack of progress in many fronts, during the first tenure, was that we were transiting from the military era which crumbled our institutions of governance. Though, OBJ tried in the end, his first tenure was a blame game.

Obasanjo was blessed with fewer kleptomaniacs and a smaller workforce. He also benefited from the aggregation of persons with nationalistic tendencies. Most of all, he was a good manager of the typical Nigerian politician.

Blue3k:
This is well balanced article. Most people won't have attention span to read through this. What was the legal arguement for calling ECA illegal. The government did fight Jonathan on reasonable propasals to deregulate downstream oil is dumb.

You really read through the article my brother. I love this part, Nevertheless Jonathan’s policy achievements were important-the establishment of the Nigerian Sovereign Investment Authority (NSIA); the revival and substantial completion of the power sector reforms; successful reforms in agriculture and trade; GDP rebasing and growth resulting in Nigeria becoming the largest economy in Africa at $510bn; and the exponential increase in FDI crossing $20bn in 2013 and 2014! Politically Jonathan enacted the Freedom of Information Act and ensured free and fair elections including the one that saw to his displacement in 2015! His main failing was his weak leadership which manifested in a festering Boko Haram insurrection and large scale corruption in his government.

All I know GEJ is a very poor and corrupt manager of resources, no amount of article can ever rebrand him. I cant imagine what would have happened to the Nigerian Economy if OBJ was to be in the helms of affairs during 2010-2015 we wouldn't have been faced with this kind of Economic challenges.

Jonathan sef.
How can a president be corrupt, weak, clueless , drunk, etc? Is that one a president?

Succinct analytical composition,

Dissecting the piece one at time,each of them got imperfections that cost us a great deal and the accumulation of this ordeals metamorphosed into the failures we have had all along,


Yaradua should have taken the baton of continuity in the gains of the privatization policy by his predecessor,

Reversing those policies was a lay back,
The refineries should have been on optimal performance, but he reversed it, and this took us aback and costed us much more for unyielding unsuccessful turn around maintenance over the years,

Goodluck was unlucky with the deregulation of the downstream sector, coupled with stoppage to the subsidization of premium motor spirit,
Now we have to pay dearly for it on the long run,

Dipping rapacious fingers into the cookie jar, is a badge of honour worn by our leaders at all strata of leadership,

As the federal echelon,misapprehended the corruption delimma, so did the state Orchestrate embezzlement and their tenures characterized by misgovernance,

After winning the case on the ECA, their own share of the patrimony was latched in monumental mismanagement,
Even today the Paris refund is inexhaustibly mismanaged and unaccounted for,

If we don't save today, then how do we secure tomorrow?
All leaders top-down have sworn never to do right,
They are less-visionary myopically shortsighted.

Buhari got the chance today, he should not runoff track, diversification is the solution,there are pragmatic steps taken to achieve this, though it is not yet uhuru,
he needs to articulate policies of inclusion, and the anticorruption war should be clinical and unbiased.

Nigeria is on the edge of cataclysmic implosion, if fundamental structural flaws are left unaddressed.

arinzeejikonye:
Succinct analytical composition,

Dissecting the piece one at time,each of them got imperfections that cost us a great deal and the accumulation of this ordeals metamorphosed into the failures we have had all along,


Yaradua should have taken the baton of continuity in the gains of the privatization policy by his predecessor,

Reversing those policies was a lay back,
The refineries should have been on optimal performance, but he reversed it, and this took us aback and costed us much more for unyielding unsuccessful turn around maintenance over the years,

Goodluck was unlucky with the deregulation of the downstream sector, coupled with stoppage to the subsidization of premium motor spirit,
Now we have to pay dearly for it on the long run,

Dipping rapacious fingers into the cookie jar, is a badge of honour worn by our leaders at all strata of leadership,

As the federal echelon,misapprehended the corruption delimma, so did the state Orchestrate embezzlement and their tenures characterized by misgovernance,

After winning the case on the ECA, their own share of the patrimony was latched in monumental mismanagement,
Even today the Paris refund is inexhaustibly mismanaged and unaccounted for,

If we don't save today, then how do we secure tomorrow?
All leaders top-down have sworn never to do right,
They are less-visionary myopically shortsighted.

Buhari got the chance today, he should not runoff track, diversification is the solution,there are pragmatic steps taken to achieve this, though it is not yet uhuru,
he needs to articulate policies of inclusion, and the anticorruption war should be clinical and unbiased.

Nigeria is on the edge of cataclysmic implosion, if fundamental structural flaws are left unaddressed.

We saw it back then now compare to now.

Please Op we would like to hear you dissect the performance of PMB in this present administration as objectively as possible.Thank you