Search This Blog

Wednesday, April 16, 2014

REFLECTION on NYT - New York Times - Revising Nigeria's Economy

Nigeria recently, after an overdue revision in the way its government measures gross domestic product, replaced South Africa as Africa’s largest economy. The country’s G.D.P. almost doubled, rising to $510 billion, after better assessment of the growth of telecommunications, retail and other service industries.

- putting some figures into perspective
USD 510 Billion is the GDP p.p.p (purchase power parity)
USD 292 Billion o.e.r (official exchange rate) is more reliable for people not to get confused.
USD 93.5 Billion are derived from exports. 95% or USD 88.8 Billion thereof is crude oil or derivatives of oil.

Taxes and other revenues amount to some USD 23.8 Billion (8.2% of GDP o.e.r)
Government expenditure accounts for USD 31.5 Billion leaving the country with a Budget defizit of 2.6% of the GDP or USD 7.7 Billion.

Public debt 19.3% of the GDP o.e.r amounting to some whooping USD 56.35 Billion or USD 331.5 per Capita. [Tell a Nigerian father of five children that he is owing USD 1989 (USD 331.5 per Head) to some nameless people ot known by him . He will not believe.]

The external debt of Nigeria is roughly USD 15.7 Billion. This is money the Nigerian people owe to investors abroad in foreign currencies mainly such as USD, EUR, GBP, Renminbi Yuan and some others.

This external debt cannot be paid back in NGN (Nigerian Naira) it can only be paid back by money derived from exports. (remember 95% of the exports is oil for USD 88.8 Billion) It is highly vulnerable to changes of the oilprices. The latter (Brent) being fixed abroad.

The revision offers a chance for the country to reflect on why more of its 170 million people are not benefiting from the booming economy.

It is clearcut as to why the majority of the 170 million Nigerians do not proft from that "booming" economy. In reality it does NOT boom.

Nigeria has been one of the world’s fastest-growing economies of late, with growth driven primarily by oil and gas production. This has generated billions of dollars and created many jobs. But corruption and mismanagement have kept the benefits from trickling down. The government estimates that 61 percent of people lived in “absolute poverty” in 2010, up from 55 percent in 2004.

Nigeria's economy is also boosting due to significant amounts (BILLIONS of USD changed into TRILLIONS of NGN) flowing in from the vast Nigerian Diaspora (Nidoe) people supporting their families.

As the Nigerian economy is highly depending on oilprices the latter's development over the last ten years is showing where that famous growth came from.

Source: trading economics

also read
NIGERIA - OILDREAMS - a lot for the country - not much per capita
The illusion of giving Oilmoney to every Nigerian
Source: Cia The Factbook
Waiting for the government of Nigeria to share Oil-Money with each of the citizens does not help the population. The amount of oil sold to abroad is looking high. Per Nigerian citizen the oil export accounts for USD 502 per year, USD 41.84 per month, USD 1.39 per day.

Sadly, the administration of President Goodluck Jonathan has not done enough to improve his people’s lives. In fact, Mr. Jonathan undermined public confidence by firing the respected head of the central bank, Lamido Sanusi, in February. Sanusi was trying to find out what happened to $20 billion from oil sales that should have been deposited in the treasury. This reinforced suspicions that politicians and oligarchs are helping themselves to the oil wealth.

Nigerian central banker Mr Sanusi calling for end to imbalances
Maybe the USD 20 Billion upon laundering are sitting in some accounts in the US state Delaware.

Raising USD-Debt allows heavy "legal" moneylaundering
Raising USD-Debt will be the number one money laundering activity. As the materials needed to fullfil such tasks are being bought in the region, the USD raised can be exchanged for looted bundles of NGN.

The mechanism thereof is easy. Nigerian debt raised abroad is bought by Nigerian residents. Those residents fulfill the liberation of the allotted Bonds/Obligations/Debentures by selling the USD-countervalue in NGN (derived from whatsoever source) to the Nigerian Central Bank.

Once they own Nigerian Debt-Capital denominated in USD they are free to diversify into other asset classes in Non-Nigerian markets.

The missing money could have been used to improve public services and diversify the economy. Nigerians’ average life expectancy at birth of just 52 years is nearly 10 years less than the average life expectancy in nearby Ghana, according to the World Bank.

The low life expectancy is mainly due to polluted and infected environments. Some of them could be upgraded by applying simple low priced procedures. E.g. Cholera, diarrhoea and other deseases affecting the intestines.

Water can be cleaned by everybody in a simple cheap way. Clean drinking WATER for free - As sometimes bottled water or sachet-water cannot be afforded, there is a simple way to purify (disinfect) the water for drinking.
Also doctors do not treat people before they produce the money. I personally witnessed people dying because of lack of money in a governmental hospital. I was even not able to find ONE single doctor. Only white garmented nurses hustled up and down with their ultimate goal of protecting their gowns from getting dirty.

Nigerians are incredibly young — about 44 percent of them are 14 or younger, and that has helped attract foreign direct investment to Nigeria. But these advantages could easily turn into liabilities — or disappear — if Nigeria’s leaders don’t start fixing its problems.

It must not only be Nigeria's leaders' duty to "fix" the problems. But also the entire world - mostly the northern hemispherians and their politicians - must recognize what the real problem of the future will be; the development of the demography.

If the demographic conditions are beng synoptically looked at, it is evident what MUST be done.

European Union EU