Let's Talk Afro-Geopolitics II: The Future of the Nigerian State

[The Odum of Ala Igbo]

@The Odum of Ala Igbo the GDP per capita sharply rose from $1098 to $3227 from 2009-2014

Then it fail from 2014 to 2017 from $3227 to $1986.

SO to sum it up it had to have been a combination of factors right? Drop in oil prises, instability, Boko Haram, something!? But thst was also a sharp increase from 2009 to 2014, moreso then any other African nation.

In comparison, Equatorial Guinea, the "richest" country in SSA, had a gdp per captia of $19245 in 2014 which was comparable to western countries, than it dropped to $9200 in 2016. Something happened in 2016 which made these gdp's drop. Like a change in oil prices since both EG and Nigheria is dependent on oil.

It was largely oil and Buhari’s monetary policies

 

[phcitywarrior]

@The Odum of Ala Igbo the GDP per capita sharply rose from $1098 to $3227 from 2009-2014

Then it fail from 2014 to 2017 from $3227 to $1986.

SO to sum it up it had to have been a combination of factors right? Drop in oil prises, instability, Boko Haram, something!? But thst was also a sharp increase from 2009 to 2014, moreso then any other African nation.

In comparison, Equatorial Guinea, the "richest" country in SSA, had a gdp per captia of $19245 in 2014 which was comparable to western countries, than it dropped to $9200 in 2016. Something happened in 2016 which made these gdp's drop. Like a change in oil prices since both EG and Nigheria is dependent on oil.

This is actually quite an easy one to explain.

GDP per Capita is simply GDP/Population. In the instance where your population is rising faster than you GDP, then your GDP per capita will fall. It should be known that Nigeria's economy is only about 15% Oil and Natural Gas. However, it (O&G) accounts for more than 70% of the government's income (the Nigerian government does a poor job of collecting taxes). So when oil prices crash, so too, thus government spending (and usually we also see a drop in foreign reserves).

But, 2015 saw the election of Buhari into office. His anti-corruption agenda spooked a lot of people from spending money out of fear for being reprimanded in the anti-corruption crusade.

In the words of some people on ground in Nigeria "Everyone dey fear so money no de flow".

 

[The Odum of Ala Igbo]

This is actually quite an easy one to explain.

GDP per Capita is simply GDP/Population. In the instance where your population is rising faster than you GDP, then your GDP per capita will fall. It should be known that Nigeria's economy is only about 15% Oil and Natural Gas. However, it (O&G) accounts for more than 70% of the government's income (the Nigerian government does a poor job of collecting taxes). So when oil prices crash, so too, thus government spending (and usually we also see a drop in foreign reserves).

But, 2015 saw the election of Buhari into office. His anti-corruption agenda spooked a lot of people from spending money out of fear for being reprimanded in the anti-corruption crusade.

In the words of some people on ground in Nigeria "Everyone dey fear so money no de flow".

You're missing something bro. Buhari's anti-corruption war is largely one-sided against members of the PDP. Members of the APC (like Ganduje, Babachir Lawal, Oshiomole, Tinubu) are getting away with stealing hundreds of millions of dollars. Corruption didn't scare away investment. Buhari's policies did.

Read this great assessment of Buhari's economic policies:
Buhari 365 Part 3: The President and His Shibboleths

Prices Clear Markets
Consider for a minute that a particular type of jeep sells for N15m. Those who can afford N15m go to the car dealer and buy it. At that price, there is no scarcity of this particular jeep. Now imagine you open a shop on Lagos-Ibadan Expressway and decide to start selling the exact same jeep for N8m. Not only will you attract the people who can afford to pay N15m for the jeep (they will now want to buy 2), you will also attract a lot of people who cannot afford N15m but can afford anywhere from N8m to N15m. That is, the demand for your jeeps will be higher than that of the person who is selling theirs for N15m. But you only have 2 jeeps to sell.

This is a simplification of what Nigeria has done in the last year as a response to the forex crisis. The Buhari government has adopted a strategy of selling a scarce resource at below its market price because… I wish I knew. On what is the official rate of N199 to $1 built on? There is no explanation for this. President Buhari has simply drawn a line in the sand at N199 and nailed his reputation to it? Why? If N199 is good, then N100 to $1 must be even better. So why not move to that rate? How do you run an economy by simply stubbornly refusing to use prices?

What this rate has done is to increase demand for a scarce resource that Nigeria is supposedly trying to conserve. People who do not need to travel now want PTA. People who really have nothing to import are demanding dollars. Alhaji Dangote has been getting roughly $15m every week allocated to him at N199 to $1. The arbitrage opportunities on offer are so great that even a nun will be tempted to try her luck. In an economy going through shrinking demand and weak consumer spending, this is the number one game in town. Over there you’re fighting corruption, over here you’re creating corruption.

Of course, there are not enough dollars to sell to the mass of people who are demanding it at N199 (investors will also not bring in their dollars under an unrealistic exchange rate). And since you have decided not to use pricing to allocate that scarce resource, you must bring in other arbitrary allocation methods. This one is patriotic enough to get dollars, that one is not. If you know someone at the CBN, you might get some. If you don't know anyone, nothing for you. If you are travelling on holiday to go relax or even for shopping, you are ‘entitled’ to dollars at N199. But if you want to bring in tomato concentrate right now to alleviate the current tomato crisis, you can’t get dollars. Because tomato concentrate is not ‘approved’.

This is how a supposedly $500bn economy is being run — on whims and caprices. Glamorous dresses, no. ‘Raw materials’, yes.

 

[The Odum of Ala Igbo]

During a gathering with Nigeria’s business elites, he reportedly said that he did not see the benefits of Nigeria’s currency peg against the U.S. dollar being removed. In addition, he said “I’m not an economist, neither a businessman — I fail to appreciate what is the economic explanation.” This statement comes after a Wall Street Journal opinion piece, published under Buhari’s name, explained why Nigeria was moving towards having a more flexible naira. What can Nigerians glean from Buhari’s contradictory statements regarding the country’s monetary policy?

 

[The Odum of Ala Igbo]

For instance, Nigeria is now in recession. An economic condition which should be familiar to Buhari since he governed during Nigeria’s devastating 1980s economic crises. Like during that recession, Buhari probably aggravated (if not caused) Nigeria’s recession which was triggered by an oil glut which has lowered the value of oil on the global market. Buhari’s refusal, likely based upon a self professed ignorance, to lower the value of the naira in the face of declining oil prices spurred foreign investors to take flight. Why stick around and lose money when you know that eventually the naira will lose its official exchange rate. In addition, his administration’s grasping attempts to preserve forex in the face of falling export revenues have hurt Nigerian businesses by restricting their economic activities — hitting manufacturers and traders the hardest.

 

[The Odum of Ala Igbo]

@Benjamin Sisko - This should answer some of your questions

Why Buhari Supporters Should Blame Him For The 2016 Recession

 

[The Odum of Ala Igbo]

 

[MikelArteta]

northern nigeria is

Imaging waking up in zamfara

 

[MikelArteta]

shocking zamfara aka hell on earth

 

[The Odum of Ala Igbo]

northern nigeria is

Imaging waking up in zamfara

Nigeria, even if we don’t get Biafra, needs to be divided. The North is cursed

 

[The Odum of Ala Igbo]

Note how Buhari (Jibril) denied his true character in English and didn't remove his hat?

 

[The Odum of Ala Igbo]

 

[MikelArteta]

Lagos ranked 212/218 in terms of worst cities to live in

 

[MikelArteta]

Report says Lagos, Nigeria is one of worst places to live in

 

[The Odum of Ala Igbo]

Report says Lagos, Nigeria is one of worst places to live in

Naija no dey carry last