April 6, 2014, Nigerians woke up to the headline- Nigeria’s economy now the biggest in Africa.” A rebasing had just happened and overnight, Nigeria’s economy became a “success.”
The Government and financial managers rolled out the drums and were preparing for a big bash. Nigeria was about to host the World Economic Forum for Africa. It would be a good place to flaunt our new economy.
Then Chibok happened, and the celebration was dampened. The world refused to focus on the new economy. All eyes were directed at the Chibok girls.
The Nigerian Government waited for a better time to brandish its economic success.
That opportunity came during the election campaigns. The PDP never misses the opportunity to tell us how well it has done in making Nigeria’s economy Africa’s biggest.
However, ordinary Nigerians remain perplexed. How could our economy be said to have done so well when the people are suffering?
Professor Charlse Soludo made a powerful allegation in his recent write up in response to finance minister Ngozi Iweala.
Tucked in somewhere in his response to the finance minister, Professor Soludo had this to say
“……To the best of my knowledge, the last published household survey by NBS was in 2011. The World Bank does not conduct household surveys in member states to determine poverty incidence. So, when and by whom was the survey that gave the World Bank figures?
What worries me is that this government is the first in our history to attempt to manipulate our national statistics under Okonjo-Iweala. When NBS published the poverty figures in 2011, she felt indicted and incensed. She called upon the World Bank to come and examine the ‘methodology’ and get NBS to ‘review’ its numbers. Oby Ezekwesili (as VP Africa Region rejected the call to try to tamper with a country’s statistics). Once Oby left, the ‘World Bank’ started talking about ‘new figures’, without conducting any new surveys. I was told about it by a World Bank economist, and I cautioned that it was a dangerous gamble that would damage the credibility of the NBS. If you want to ‘review methodology’, you conduct another survey but you can’t change ‘methodology’ because you don’t like the published figures. No government in our history has tried it: even Sani Abacha allowed a poverty survey that put poverty at 67% under his regime. At this rate, who will believe statistics coming from the Nigerian government again? Is it now the World Bank that sits in Washington and allocates poverty numbers to Nigeria? Something smells here!”
Thus far, this issue seems to have been left lying low for now. Perhaps Soludo touched on a sensitive issue that may create a scandal of global proportions. Hence The Finance minister decided to back down and refused to respond to these allegations.
There are many reasons to doubt the rebased Nigerian GDP, some of which include
accuracy of the population figures
Accuracy of other statistical data
Strong possibility of political manipulates.
Questionable data in some sectors such as Agriculture, manufacturing
The only obvious beneficiary of the rebased GDP seemed to be the Nigerian Government and its financial managers.
They benefited in two ways:
Firstly, an “improved” GDP against the current debt profile meant Nigeria’s tax to GDP ratio had greatly improved from 19% to 11%. Now the economic managers could borrow more money. They took full advantage. Within a weeks after the new GDP figures were announced, Nigeria had drawn down its first loan from the Africa Development bank, who “co-incidentally” happened to be one of the partners in the rebasing exercise. By the end of the year, several billions of dollars had been borrowed, bringing our debts profile to worse than it was before the Obasanjo debt write off.
Second benefit was the opportunity to increase taxes. The increased GDP meant that our tax to GDP ratio was too low. The mandate was extended to the various federal revenue collecting agencies to increase the taxes. And this they did. Everything went up. For example import duties and taxies at pots soared. The average Nigerian bears the pain of these increases while the rich tycoons get tax breaks and exemptions.
On the 25th of Feb 2015, Soludo said
“….neither the World Bank nor CNN conducts comprehensive independent surveys on the economy— they comment based on the data they are given— and their subjective “opinions” cannot substitute for hard facts. The World Bank is not a statistical agency. I can provide a long list of countries that World Bank reports praised as ‘star performers’ and they slumped into deep crisis almost immediately after. Check out the World Bank and IMF reports on the US and other countries’ economies shortly before the unprecedented global financial and economic crisis in fifty years (the Great Recession of 2008/09). Actually for many countries once they start getting such ‘praises’, then perceptive officials begin to worry…..”
This allegation again implies collusion between the World Bank and the Nigerian Government to create a false success story.
However, what our financial and economic managers may have forgotten is the wise saying that a lie may go half way round the world, but the truth will catch up in one step. And that is exactly what we are seeing today.
The PDP campaign machinery never fails to trumpet the “success” of becoming Africa’s biggest economy. However what they have not told us is that
In November 2014, the naira was devalued by 8%, hence wiping $ 40, billion off the GDP figures.
Currently the Central bank today 25th Feb 2015 listed the naira exchange rate on its website at NGN 199 to the US dollar. This combined with the initial 8% devaluation in November 2014 has wiped of 28% of our GDP. We sit today with a GDP about $ 364 billion. And we do not yet know where the bottom is. The parallel market rate today is NGN 220 to the dollar. Some international agencies peg their deals on N 260/dollar.
The effects have seen occurrences like business man Aliko Dangote losing almost have of his value (over $ 12bn) in 6 months.
PDP continues to boast about a CNN documentary showing Nigeria’s economy as third fastest growing in the world at 7%. What they fail to disclose is that those so called growth projections have been revised downwards to below 5%. It continues to boggle my mind how a continue where business has shut down in some parts continue to get these so called growth forecasts. It defies all business sense. But that’s a discussion for another day.
In the midst of the chaos surrounding the upcoming elections, it is possible to miss out on these important issues. I believe it is necessary to record them for posterity.
Nigeria’s economy has inherent potential, and perhaps a new Government will set in place the structures to bring about true economic growth.
However, it is likely that the new Government will see a downward correction before a growth. It is necessary to place on record that the current economic managers failed. They should not be celebrated as economic heroes. Nigerians and the world should know where things truly stand. The incoming economic managers should not be judged as having failed when they take over and the numbers are corrected downwards.
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