John Campbell

Africa in Transition

Campbell tracks political and security developments across sub-Saharan Africa.

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The State of Nigeria’s Economy

by John Campbell
May 18, 2012

Nigerian Finance Minister Ngozi Okonjo-Iweala speaks during a media briefing in Pretoria March 23, 2012. (Siphiwe Sibeko/Courtesy Reuters)


In a recent Wall Street Journal interview, Nigerian finance minister Ngozi Okonjo-Iweala reviewed Nigerian economic issues, notably, that the anticipated sovereign wealth fund would start operating during the next few months, with U.S. $1 billion from the Excess Crude Account to start. She promised a governing council including representatives from civil society, media, and academics would oversee the account “to ensure that the money is transparently invested.”

In other issues, she emphasized the importance of diversifying the economy to create more jobs. (Nigeria’s economy is growing at the rate of 7.4 percent; she said that most of the growth took place in the non-oil sectors of the economy.)

She also referred to the success of the overhaul of the banking system and defended Nigeria’s conversion of 10 percent of its foreign currency reserves from U.S. dollars to yuan last year because of the country’s growing trade with China.

On the controversial fuel subsidy, the finance minister said that the government remains committed to ending it completely. She did acknowledge, however, that the fuel subsidy “is a very emotional issue in Nigeria,” and that the Nigerian people had a “trust deficit” because of the government’s historical misuse of resources.

Her comments are promising. Okonjo-Iweala’s discussion of the “trust deficit” was frank, and if implemented in the way she describes, the governance of the sovereign wealth fund would introduce a new level of transparency.

Nevertheless, she said nothing about the growth of dire poverty over the past year or income inequality.

Only a few days after the finance minister’s interview, President Jonathan appealed for popular support in countering the Boko Haram insurgency in the North, and Nigeria’s leading opposition figure, Muhammadu Buhari, raised the specter of mayhem if the elections of 2015 are rigged, prompting calls for his arrest which would only further inflame his supporters.

The question remains: how long can the formal economy–as described by the finance minister–be seen in isolation from the insurrection in the north, ethnic and religious violence in the middle belt, and the prospect of renewed militant activity in the oil rich Niger delta?

Post a Comment 12 Comments

  • Posted by Sardonicus

    The trust deficit may have something to do with the $8 billion fraud discovered in the fuel subsidy scheme in 2011 by the National Assembly. It is somewhat surprising this gets no mention in an article about Nigeria’s economy. The populace are unsurprisngly “emotional” about the issue.

  • Posted by James Kimer

    It strikes me that much of the moral panic being made of Gen. Buhari’s comments is based more on the ruling party’s spin than what actually occurred.

    Even here in South Africa, where I am currently writing from, the major dailies such as BusinessDay are reporting the Buhari comment as something treasonous, as though he had promised to instigate violence.

    But this is nonsense. What Buhari actually said was a simple and true observation: if there is massive vote rigging per usual in the next election, there are many elements among the North that are likely to act upon their deep-seated (and often legitimate) grievances.

    Since when is it an act of treason to recommend that transparency and genuine democratic procedure is observed as opposed to voter fraud? As with many things in Nigeria as viewed from the outside, we seem to have it backwards.

  • Posted by Maduka

    The problem with Ngozi Okonjo-Iweala isn’t that she is incompetent – she is supremely qualified. The problem with her is that she is increasingly becoming irrelevant.

    If most of most of Nigeria’s growth can be attributed to the non-Oil sector of the economy, be rest assured that most of that growth is taking place in Lagos.

    If most of that growth is taking place in Lagos, the forward looking Lagos State government has a bigger role to play than Abuja.

    Inclusive economic growth in Nigeria isn’t simply a matter of balance of payments. Ms. Ngozi Okonjo-Iweala has no problem meeting the balance of payments – she is a banker. The tricky issue is how to translate fine policy statements into tangible progress – and neither Ngozi Okonjo-Iweala nor the World Bank has a track record of doing that.

    The Lagos State Government though, has that experience and Raji Fashola should be consulted, he has more to offer than Ngozi Okonjo-Iweala.

    Muhammadu Buhari had a wonderful opportunity to position himself as a credible opposition leader. Instead, he decided to anoint himself as “Sarkin Hausawa”. Unfortunately, most of us non-Hausas have little time for a vocal, tactless and angry perpetual Hausa “presidential candidate”.

    He hasn’t created a viable opposition structure and his party the CPC, is a disorganised mess.

    (Nigeria’s leading opposition figure is Bola Tinubu, the ACN leader, not Buhari).

    P.S: Your predictions of immediate doom in the Niger Delta haven’t exactly come to pass and the Middle Belt has been on fire since at least 1999 (in the wake of Sharia). The far North never contributed much to the economy, anyway. So the economy may just do fine.

  • Posted by AJimisinmi ilemobayo

    corruption is Nigeria’s behemoth! Tell me ,who amongst these political leaders alive can tame it? So frightening!

  • Posted by AJimisinmi ilemobayo

    corruption is Nigeria’s behemoth! Tell me ,who amongst these political leaders alive can tame it? So frightening! The present civil government is too compromised to lift a finger against corruption, which every Nigerian agrees is our underbelly. Regionalise Nigeria a la Alex Ekwueme’s model, 6 regions, each has autonomy, drug supporting, increase concurrent matters in our constitutions to weaker center, stronger geopolitical zones! each zone self supporting, differing economies! We need confederation not this stifling, unitary federalism! leave every geopolitical zone to grow at its endowed pace, you will be amazed in a decade what giant steps we would have made!

  • Posted by Adetunji A

    Just to understand Mr Campbell:
    Is there ANYTHING positive about Nigeria?
    Why do you always take the worst case scenario? Can’t you be a bit more balanced?
    Nigeria is a country of contrasting and opposing forces: positive and negative. When you paint a picture of only the negative forces, you do not flatter your own competence or the depth of your insight, but lead one to wonder about the true degree of your understanding.
    I enjoy listening to balanced analyses of goods and bads, but your analysis of Nigeria has only bads, consistently, and you are the only international analyst that is true of.

    Surely you ought to give some thought to that

  • Posted by Emmanuel Areke

    The rate at which the unemployment is rising in this nation is a sign that we are still living in bundle of promises in Nigeria. When shall we feel the impact of our present govt? Thanks.

  • Posted by Dave @ Nigeria Facts

    In our country Nigeria, we hear good news and positive statements often from leader and people in power, what we hardly witness is the execution of their promises and long list of “things to do.”

    The press and well-meaning Nigerians are fully aware of the high level of corruption and deception In Nigeria government. They just tell us that all will be well, they give us a pat in the back and watch us starve to death, God help Nigeria.

  • Posted by Philip Abode

    Nigerians should leave John Campbell alone. We need to get away from petiness and begin to understand that we have found the enemy and it is us. I do not think the brazen looting of the treasury that has gone on in Nigeria should be seen as corruption. Corruption is something that happens on the margin, a side show. When it becomes a way of life of our political entrepreneurs, it is called PRIMITIVE ACCUMULATION (PA). Primitive accumulation is usually the first stage of capitalist development in a society. When it has run its course, it will give way to market capitalism.

    A visitor to Nigeria will no doubt be greeted with an unmistakable neglect of the people by the State. Though in theory, the State derives all her powers from the people. Nigerians are suffering from accumulation of deficits —foood, housing, transportation, education, healthcare, employment, ad infinitum. These are deficits that have resulted as the State and its agencies have chose to infomalize aka impoverished or “talikalize” the population.

    Have not quite a few Nigerians enriched themselves to the tune of billions of petro-dollars while neglecting the population and the Nair a, the monetary tool for our collective, organismal development. And now these people want Nigerians to believe in some weird doctrine of settled issues. They say Nigeria is a capitalist country, a doctrine that suits their position. One day, we shall have our “truth and confession” commission.

  • Posted by Austinsagay

    How do we effect A change?,rather than paying lip services,promises of transformation but we hav seen little or nothing that resemble transformation,oh wat A shame,sixth oil rich nation in d world but more than half of her population live n abject poverty,some familes hav no food on thier table,they hav no where to go,thier daughters has result prostitution being patronise by rich politicians,who hav enrich themselves wit govrnment funds,dis boko haram menase cud b traced to some of our unscrupulous politicians.why?

  • Posted by joe

    nigeria economic growth is mediocrate because it has no reflection positively in the lives of its citizen. How could a country with acute shortage of electricity boast of economy growth. The president promise by december electricity supply would be stable . My simple question How ? With under 6, 000 megawatts to serve over 160 million people not to mention the industrial consumption and with such statement the president continue to mislead the people. Considering nigeria population a minimum of 15 megawatts needed to stabilize power supply in the country. No wonder many past and Present Africa leaders often say Nigeria is not the giant of Africa because of our leaders failure to say the truth .Its very desheartened . a country a president openly say he was not the cause of the country problem. How could a president made such a damaging statement and expect the country to expect in a viable transformation in his government.?. Any nation growing economy that fail to support and creating jobs is a regressive growth.Mr president Prof Nnaji had relieved as minister of power .Please needless to appoint any minister and let anything to do with electricity be under your control.Travel all over the world is good but not the best as the country is at the cross road now with the acute shortage of electricity. By building a solid foundation to stabilize electricity supply in the country instead to continue playing politys where the next minister should come from. People like TY DANJUMA and few greedy people from the south east are the main problem in the country because of selfish interest and already set a stage to collapse all the program in the power sector in place. Mr president you do not need minister of power.

  • Posted by joe

    Buhari is an enemy of Democratic society and civilized world. The era of military domination udoubtly gone for ever in nigeria. How could Buhari rule the country when he stood against the rail sub way project lagos the nerve center of the country . His argument then was that Kano should has the rail system before any other part of nigeria despite the fact that Lagos remain the economic center of the country. Infact by now the french company ought to have got their investment back to say the least and thank to Fashola few years ago embark on the same project nearly in the phase of completion soon though with triple cost . Buhari is a leader of woe and enemy to nigeria progress. His legacy would not be written well among nigeria military leader because of his utterances before and after the last election and one would not surprise to be among of the sponsor Boko Haram. Buhari is a member of islamist fundermenlist. To this end never can Buhari rule nigeria again.

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