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________Leadership and advancement

The Dollar, Recession, Obasanjo, Jonathan, and Buhari……….The Unknown Truth behind the Economy.


________Why we must look at data before reaching a logical conclusion!!!…….

Naira Vs. dollars

Data allow your political judgements to be based on facts, to the extent that numbers describe realities. ——-Hans Rosling

There are 3 preliminary fundamental factors investors look at before investing in an economy, if these factors are good then they move to the next phase of country assessments before investing their funds… these factors are:

  1. Stability (Political, Regional, and State)
  2. Return on Investments (ROI)
  3. The country’s balance sheet

If these factors are good, investors will flood your economy, but if these factors are not in good order, the investors will either not come in or those already in the country will start divesting their investments…..

In the book “The End of Poverty” by Prof. Jeffrey D. Sachs the renowned Harvard Trained Professor of Economics and Director of The Earth Institute, and Professor at Columbia University describes and lays out the 8 factors that can push a country into what is called “Poverty Trap”……….a situation where it is almost impossible to get the citizens of the country out of poverty. Why countries fail to achieve economic growth and how something as complex as a society’s economic system has too many parts and why you cannot focus on one part alone, and how problems can occur from one part and spread to different parts of the economic system bringing the economy to a halt.

He goes on to explain that just like Clinical Medicine where a simple convulsion can lead to brain problem, or heart problems which can spread to the liver, kidneys, and the rest of the organs of the body and may eventually kill the patient…… Clinical Medicine, doctors sit a patient down to examine the cause of an illness by taking comprehensive qualitative data like history of the illness in the family, what kind of diet the patient eats, past injuries, etc…….these data are collated and transformed into a quantitative data to help trace the PAST source of the illness, how it affects the PRESENT and should be treated, and how it can be averted in the FUTURE to help the patient live a normal life.

Like Clinical Medicine, Professor Sachs describes Clinical Economics as how to diagnose and trace the cause of every economic problem by looking at all the components and how these components have interacted with one another from the past and how they have brought the economy to its present state. To understand Nigeria’s present economic challenges we will look at the major contributing factors from year 1999 to 2016.

Obasanjo, External Earnings, Foreign Reserve, Excess Crude oil Account, and Foreign Direct Investments……..

Between 1999 and 2008, Foreign Reserve increased by USD$47.75 billion (845%) and Foreign Direct Investments net yearly inflow increased by a marginal of USD$7.2 billion (716%).

When President Obasanjo took over office in May 1999, Foreign Reserve was about USD$4 billion, FDI into Nigeria that year was USD$1 billion, and Crude oil price as at May 1999 was USD$24.5. On average, Obasanjo sold crude oil in 1999 for USD$32, his first 4 years in office Obasanjo sold crude oil at an average of USD$46, and his second term he sold crude at an average of USD$70.6, and overall 8 years at an average of USD$58…….Obasanjo ensured political, regional, and state security.

Obasanjo also had the advantage of privatising most government agencies and companies, BPE was said to have privatised over 400 companies and agencies, and the administration racked in billions of dollars from both non-refundable bidding prices and outright purchase. Obasanjo also had the opportunity of launching the innovation of that time “GSM”…..this also brought in billions for the government…..Obasanjo knowing the essence and strategic importance of an increased foreign reserve decided to save most of the funds from both crude sales and the privatisation exercise. Between the Foreign reserve and Excess Crude Account (ECA) Nigeria had USD$102 billion.

Having a large foreign currency reserve is an important indicator of a country’s ability to repay foreign debt, for currency defence, and also used for credit ratings which ultimately attracts Foreign Investors into the country…….and as Nigeria foreign reserve grew with Obasanjo paying off both the London and Paris Club debts, the increasing foreign reserve was able to defend the local currency (Naira) and the naira started to appreciate, when Prof. Soludo became governor of Central Bank in 2004, Naira was N147 to a dollar and by the time he was leaving in 2009, the Naira had appreciated to N117 to a dollar.

What this means is that if an investor brought in USD$500 million in 2004, by 2009 the USD$500 million will be worth USD$628.3 million (500m x 147/117)……..a whopping USD$128.3 million in 5 years just by investing in the economy, an average of USD$25.66 million per year in profits through the currency (Naira) appreciating……..this is not taking into account profits generated through operations in the country.


“Nigeria reached a deal last October with the Paris Club, which includes the United States, Germany, France and other wealthy nations, that allowed it to pay off about $30 billion in accumulated debt for about $12 billion, an overall discount of about 60 percent”……..The New York Times April 22, 2006.

In 2006, seeing Nigeria’s economic progress Standard and Poor’s, Fitch, and Moody’s started credit ratings on Nigeria, in general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of a country thus having a big impact on the country’s borrowing costs and investments through FDI’s, Nigeria’s S&P credit rating was BB- (stable outlook), by August 2009 S&P moved Nigeria up to B+ (Stable outlook)……..Why?……..With a reduced external debt, increased foreign reserve and external earning of 43% of a GDP of USD$169.5 billion, Nigeria’s balance sheet was looking good, and investors flooded Nigeria. What this means is that we had huge savings (assets), our income was good (revenue), and most of our debt (liabilities) paid off.


“The big three of the credit rating industry, S&P, Moody’s, and Fitch holds 94% of the credit rating market share. S&P includes the factors of the political score, economic score, external score, fiscal score, and monetary score. These broad factors can be classified into two categories and they are political and economic profile, flexibility and performance profile. In terms of Moody’s evaluation process, it includes four factors. They are an economic strength, institutional strength, fiscal strength, and susceptibility to the event of risk. The Fitch’s process for evaluation is quite similar to that of other two”…….Alpha Rating.

“Earlier this year, two credit-rating agencies rated Nigeria’s credit as BB-, which is below investment grade but puts it on a par with developing nations like Turkey, Ukraine and Brazil”…The New York Times April 22,  2006.

At the end of 1999, Nigeria’s Foreign Reserve was USD$5.65 billion and Foreign Direct Investment Net Inflow was USD$1 billion, by year 2004 and Obasanjo’s diversification of the economy Foreign Reserve increased to USD$17.3 billion and Foreign Direct Investment inflow was USD$1.87 billion. By 2005, as Foreign reserve increased to USD$28.6 billion, foreign direct investments inflow was USD$4.98 billion, by 2007 foreign reserved reached USD$52 billion and Foreign direct investments inflow reached USD$6.035 billion……and by 2008 with a foreign reserve of USD$54 billion, Foreign Direct Investment reached USD$8.2 billion. Between 1999 and 2008, Foreign Reserve increased by USD$47.75 billion (845%) and Foreign Direct Investments net yearly inflow increased by a marginal of USD$7.2 billion (716%).

Explanation in Layman’s Term: Suppose you want to invest in a company, you look at the balance sheet…..the assets which is equity plus the liability…….if total assets exceeds total liability (debt) then you know the business is solvent, it can pay its debts, if total assets is increasing and liability decreasing, then you know it’s a good company, but if total liability (debt) is increasing and assets reducing then it is not a good company to invest in.

Or if you want to loan money from the bank…..what the banks does is calculate your net worth, your assets plus your liabilities……this will give the bank a total of what you are worth, but it does not stop there….the bank also looks at your income to see if you are able to service your loan….once your assets exceeds your liability with a good margin and you have a good income to service your debt the bank approves the loan…..this is how the credit score of an individual is calculated.

This was exactly what Obasanjo did with the economy……..he increased Nigeria’s assets (Foreign Reserve), reduced our debt (London and Paris Club debt), and our external earnings (Income) increased as a percentage of our GDP……..this increased our credit ratings and investors flooded the country. This basically showed the investors that the economy was properly managed and it boosted their confidence.

Jonathan Administration!..…Data Shows the FDI had been shrinking since beginning of 2012, and the Economy was in Steady Decline with companies moving their funds out.


During the late President Musa Yar’Adua’s tenure in office before his death… fact Obasanjo left USD$52 billion in the Foreign Reserve, it was Yar’Adua who increased it to the all-time high of USD$62 billion, what Yar’Adua did was to follow the economic policies of Obasanjo….which boosted investors’ confidence.

When Jonathan assumed office he started out by doing the direct opposite of what Obasanjo had done, the direct opposite of economics……..he was decreasing the Assets (Foreign Reserve), increasing debt (Liabilities) and at the same time External Revenue (Revenue Income) was decreasing. This greatly affected the economy…..most people failed to look at data and hence don’t know this fact……those who support and commend his administration support out of ignorance…..

From 2009, the Jonathan Administration should have seen the warning sign, in fact the warning signs were there but greed they say blinds everyman from reality, as the US produced more oil so did they cut down on import and Nigeria being a monolithic economy that depends on about 90% of its external earning from crude started to take the hit…

The blame has consistently been heaped on President Buhari and his body language, with many claiming that the President brought the economy of the country to a standstill by causing investors to leave the country……but a critical look at the data says otherwise…..Like Investments banking which follows the flow of liquid cash, Foreign Direct Investments follows regional or a country’s stability, Return on Investments, and a country’s good balance sheet.

Amidst the growing believe that the economy was healthy, the economy had been in a steady decline since 2011, Foreign Direct Investment had been reducing, and most of the companies must have been following the country’s balance sheet and security situations, and in-house economists and consultants warning of the dangers ahead.

By 2010 when Jonathan became President, our External earnings as a percentage of GDP had started falling as compared to the size of the GDP…….25% of the GDP….it meant that our External Earning was not growing but our GDP was increasing. Nigeria at this point still enjoyed the S&P rating which put the credit rating of the country at B+ (Positive outlook) till December, 2011.

While crude was sold at an average price of USD$110 per barrel, the depletion of the foreign reserve had not started taking its toll on the country’s balance sheet at this point…..and ironically this was the same time HRH Lamido Sanusi Lamido, then governor of Central Bank started raising the alarm over the long term implications of depleting the foreign reserve. Still enjoying the ratings, FDI reached all time high of USD$8.841 billion in 2011….by this time regional and state security started breaking down.

All that was to change at the beginning of 2012, the depletion of the foreign reserve started taking its toll on the balance sheet of the country coupled with the fact that debt was increasing, by the end of Jonathan’s tenure his administration had added USD$21.8 billion, as debt increased, foreign reserve decreasing, and external earning decreasing, investors started becoming weary of investing in the country as confidence declined in the market.

By 2012, S&P had downgraded Nigeria’s credit ratings to BB- (Negative), this grading according to the Credit ratings is below investment grade, and as soon as they did this investors’ confidence eroded from the market, this rating remained till March 2014 when Nigeria was now placed on BB- (Negative watch outlook) what this means is that they had to monitor the economy……by this period external earnings had reduced to 18% of new GDP…….Nigeria’s credit rating remained in BB- (Negative) till February 2015, it wasn’t until March 2015 before it moved to B+ (Stable outlook) just days to the elections…….while the dollars that should have been saved found their ways into the economy expanding it, making it look as if it was good, the opposite was happening to the balance sheet of the country, people spent like there was no tomorrow, but refused to understand the long term economic consequences.

Ironically……this was the same time Nigerian’s were celebrating Jonathan, but the implications was to follow……….in 2012 as Nigeria was getting ready to rebase its economy showcasing that it was now the biggest economy in Africa……investors were staying away, by 2012 FDI had reduced from a yearly inflow of USD$8.841 billion in 2011 down to USD$7 billion in 2012……by 2013 FDI net inflow had further reduced to USD$5.6 billion, by 2014 with a foreign reserve of USD$37.5 billion…..FDI net inflow further reduced to USD$4.6 billion, and by 2015 with a foreign reserve of USD$31.3 billion, FDI net inflow had reduced to USD$3.1 billion. All time low since 2004.

It was simple!!!!!!!…….investors had seen it coming……Foreign Reserve was being depleted, debt was increasing, external earnings was decreasing……the US which is Nigeria’s biggest oil customer was now producing oil and buying less quantities from Nigeria, and above all, Nigeria as a monolithic economy where oil accounts for about 90% of its external earning…….if crude price should fall they will lose the value of their investments. From 2009 to 2015, Nigeria’s foreign reserve had reduced by about USD$31 billion (50%), ECA reduced by about 95% and Foreign Direct Investments net inflows reduced by a marginal of USD$5.712 billion (65%)……companies had seen it coming and have been moving their funds since 2013……

On February 23, 2015, before the presidential elections the Vanguard Newspapers reported “Capital flight: Economy hard hit by USD$22.1 billion outflow in 5 weeks”….in a survey made by CBN, the apex bank confirmed that USD$22.1 billion went out of the economy in 5 weeks with an average of USD$4.5 billion per week. USD$3.083 billion went out the week ending 31st July, 2014, USD$4.2 billion the week ending 30th, August, USD$4.1 billion week ending 30th of September, 2014, USD$5.29 billion week ending 31st October, 2014, and USD$5.35 billion week ending November 30th, 2014.

“A great deal of intelligence can be invested in ignorance when the need for illusion is deep”……Saul Bellow

Nigerians must not invest a great deal of intelligence in ignorance because of the dislike they have for the president who have stood his ground that it is no longer business as usual… is tough, but Nigerians must understand that the economy cannot collapse in one month….it is a series of systematic failure over a period of time. Those who saw the problems in its anticipatory stage, the reactive stage and did nothing before it got to the crisis state are those that did the damage.

For those blaming the presidents body language and policies… don’t lie, foreign companies spend hundreds of millions of dollars annually studying market, industry and world business trends before investing, those who have already invested perform either quarterly, bi-annual, or annual review of whatever country they are operating considering these factors, and if they perceive any danger, they divest their funds and move the funds out while they may still remain in the economy for skeletal operations.

Analysing Nigeria’s Balance Sheet and its Credit Ratings……..2006 to 2015

As President, Obasanjo managed the economy with a good balance sheet for the country…..this was what attracted FDI’s into Nigeria. Between 2008 and 2009…..we had USD$102 billion between the Foreign Reserve and the Excess Crude Oil Account (ECA), this represented our assets and was also our Equity. Our liabilities (debt) had being reduced and our External Earnings (Revenue Income) as at 2006 was 43% of our GDP. What this means is that our DEBT TO EQUITY RATIO was low, our Equity superseded our debt, and this was why Nigeria was moved from BB- to B+ in 2009, this was a good balance sheet for investors.

By 2010 the depletion of the external reserve started, and with sales of Crude oil averaging USD$110 per barrel a year, and nothing added to the External reserve, by 2012 Jonathan’s government had started borrowing which further compounded our problems and the country’s balance sheet……by the time Jonathan was leaving External Reserve (Assets) had been reduced to USD$31 billion, Excess Crude Oil Account (Assets) empty, he had increased Nigeria’s debt (Liability) as confirmed by Okonjo-Iweala by USD$21.8 billion to reach USD$USD$63.7 billion, External Earnings as Percentage of GDP (Revenue Income) was 18% of GDP……..which meant that our liquid assets had been reduced from USD$102 billion to USD$31 billion, and our liabilities increased from USD$40 billion to USD$63.7 billion.

This was the disaster!…what this means is that he reversed everything……our DEBT TO EQUITY RATIO as a nation now became higher,……this was the reason that from 2012 when the debt started increasing, our credit ratings started dropping, FDI’s started reducing into Nigeria and were taking out their funds….though Nigeria’s external debt as at 2015 stood at about USD$10 billion, up from less than USD$4 billion Obasanjo had left it….the rest being internal debt…..the problem is that Nigeria does not have a structured system where government can raise taxes to pay these debts, hence the burden on the payment still much rests with government revenue from oil.

IS DEBT BAD????……..OBVIOUSLY NOT!……..But this is the difference, China has a Debt of USD$27 trillion (Liability) though over 90% in internal debt and an External reserve (Liquid Assets) of about USD$3 trillion, China has a DEBT TO EQUITY RATIO of 9 to 1, if we do not value its fixed assets……China’s borrowings (Liabilities) are being converted into fixed assets… when you eventually value the TOTAL ASSETS of China it might be greater than its Total Liabilities or a little below it. That is why China’s credit ratings has revolved around A-, A+, A2, A1, Aa3, AA-…..all graded by S&P, Fitch, and Moody’s… can see why investors are flooding to China.

SO how did GEJ and Okonjo-Iweala get away with it?…….it was simple!……..dollars flooded the market through both spending and corruption……which falsely created a healthy economy but with a bad balance sheet.

  1. All the Excess crude oil sales were diverted into private pockets that eventually ended up in the economy which would have given Nigeria between USD$30 billion to USD$40 billion.
  2. Depletion of the foreign reserve ended up in private pockets and flooded the economy…USD$31 billion.
  3. The emptying of the Excess cruse account…..USD$40 billion
  4. The borrowing of dollars was used for re-current expenditures (salaries and travels) and they also ended up in people’s pockets and flooded the economy……..USD$21.8 billion.

In essence the supply of the dollar was so much that it created stability for the demand in the economy even when the companies were mopping funds and leaving.

President Buhari and his many challenges!…………

The dangerous assumption is that if something makes sense (at least to the people proposing it) then everybody will fall in line and change their ways of doing things to conform with the new demands. Unfortunately, this seldom happens as easily as anticipated. People do not fall into line, sometimes because they just do not have the understanding and the skills required, and sometimes because they perceive, accurately or not, that the changes are not in their best interests….. From the book “Strategic Analysis and Actions”

What Buhari simply did was to open the books and show Nigerians the true reality of things…..the Jonathan administration only gave the illusion that all was well while things were going bad…..the credit ratings, limited inflow of FDI’s and massive withdrawals of dollars by companies are there to confirm this.

What Buhari is simply doing which many do not understand is the fact that he is restoring the three preliminary factors that encourage Foreign Direct Investments, namely?

  1. Stability (State and Regional).
  2. Increasing the Foreign Reserve to defend the Naira which will increase ROI for investors.
  3. And as Foreign Reserve is increased, it increases the assets base of the country and puts the country’s balance sheet back in green….

Without these factors in good conditions no foreign investors will want to come into the economy, those who feel the president don’t know what he is doing don’t really know how things work…..these are what he is doing and he is taking them one by one because they demand huge funding.

While oil companies were still operating in Nigeria and trying to break even with the new oil prices…..the Niger-Delta militants reduced the country’s capacity from 2.2m bpd to 1.4m bpd…..reducing Nigeria’s capacity by 800m bpd (36%)…..the implications of this is as oil prices fell, companies need more output to break even….so a company that is allocated 300,000 but can only pump 180,000 because of the reduced output might not be able to breakeven…..such company will not wait, they will move their funds to where they are able to make profits….as corruption fights back the economy suffers….the truth is we are our own worst enemies….money does not remain idle, it is always looking for where there are opportunities.

Buhari has been able to restore if not in total……about 95% order back to Borno State and the North East where Boko Haram held sway for years under Jonathan…..regional and state security is one of the main drivers of FDI’s. Buhari is massively investing in Infrastructure…..he has paid for most of the railway lines and construction is fully going on…and most of the funding to be paid for the projects under his administration to take off he has paid…..all with selling crude oil at less than $55 per barrel, output of 1.4 m bpd and he is still increasing the foreign reserve. The recently oversubscribed Euro bond show that investors’ confidence is returning to the market but all these will not happen overnight.

The United States Economy, Fracking, and Crude Imports!……

By end of 2016, the US trade deficit had reached USD$762.5 billion, Budget deficit had reached USD$590 billion and total debt was at USD$19.9 trillion. Without closing both trade and budget deficits, debt will continue to increase.

President Barack Obama inherited a USD$10.4 trillion debt, after he  took office and had to fix the economy, the United States had to borrow massively and as at the end of 2016, the US debt stood at about USD$19.9 trillion.

Apart from borrowing to finance the wars and fixing the economy, the United States have been recording both trade and budget deficits for years. By end of 2016, the US trade deficit had reached USD$762.5 billion, Budget deficit had reached USD$590 billion, Without closing both trade and budget deficits, debt will continue to increase No sitting government likes to raise taxes…why?…..they become unpopular, so the only option is to keep borrowing and each time the government does that the debt increase.

According to the US Energy Information Administration, in the year 2000, fracking accounted for less than 2% of the United States oil production, by 2016 Fracking accounted for more than 50% of the United States oil output.


Prior to 2008, US multinationals had been investing in Hydraulic Fracturing Technology but yielding very little dividends and results, but all that was to change when technology started getting better paving the way to extract crude from huge shale deposits. According to the Energy Information Administration, in the year 2000, fracking accounted for less than 2% of the United States Internal oil consumption, by 2015 Fracking accounted for more than 50% of the United States oil output.

From just 23,000 fracking wells in year 2000 producing 102,000 barrels of oil per day, the US now has 300,000 fracking wells pumping out 4.3 million barrels per day……a whopping 3500% increase in output over 16 years……

By 2009 when the Obama administration took over the Whitehouse, government had to embark on a massive economic bailout to avoid a collapse of the economy, by this time fracking technology had started yielding positive results and the administration seeing the positive impact of reducing trade deficit through local oil production supported the industry with policies in 2013. By 2015, the US Senate also threw its weight behind the move by approving a measure to lift the 40-year ban on crude oil exports as part of a USD$1.1 trillion spending bill approved that will fund the US government until 2016.

From January 2009, oil output from Fracking continued to increase with a decline in net import, by September 2013, both Crude oil Net Imports and Production reached an equilibrium of 7.79 million barrel per day, and by May 2015, the United States Crude production had reached 9.69 million barrel per day and import reducing to 6.62 million barrel per day.


We cannot continue to depend on oil…..the US output is now more than its import and for Nigeria to survive its economic challenges it must diversify its economy. Nigeria is a country to 180 million people with about 53% falling within the working age group, the country is a powerhouse. The country needs constant power to drive industrialization, we must make this the focus of this administration, for if the government does not put the population to use through productivity chaos could set in.

Oil Multinationals in the US are now pumping millions into research and development to better the processes and procedures of fracking to bring down the prices, the challenges ahead now is if crude from fracking is delivered at $50 to the International market tomorrow, we would be forced to reduce price to below $50…..what happens when Fracking delivers crude at $30 per barrel?….we must move away from crude if the economy has to survive.

Nigeria is a country of 180 million people with over 53%, over 90 million within the working age group, diversifying into massive manufacturing is the best way forward for Nigeria, and the country can supply the whole of Africa using its strategic location.

Government must have a strategic data management centre to that translate data to economic indices for government use to either support existing policies or change policies when data shows a different thing happening in the market.

Author: Roman Oseghale

Roman Oseghale holds Masters degree in Architecture and a graduate of Executive MBA from the Telfer School of Management and Leadership, University of Ottawa, Canada, he is a Consultant and Business Intelligence Analyst and the CEO of IntelServe Inc. a Canadian Business Consulting Company. He is a passionate analyst and writer on Leadership and Economics, He is a strong advocate of Investing in Human Capital Development to drive Economic Growth and Sustainability.

77 thoughts on “The Dollar, Recession, Obasanjo, Jonathan, and Buhari……….The Unknown Truth behind the Economy.

  1. Good analysis. However, it is preposterous to tie our fate to and measure our performance based on (1)oil dollar inflow which is exogenous
    (2)and presume that FDI’s are significantly correlated with external reserve, which is the rallying point in your analysis.

    Having said, Nigeria has one thing others lack, a huge market, desired and courted. Thus, any analysis that ties our fate on oil is suboptimal, biased, and non progressive.

    What we seek is that leader who, beyond oil, can still rally FDI’s.

    It will be good for you to analyse based on the other factors rating agencies consider.

    This government has no excuse for they still have the market.


    • Why shouldn’t our fate be tied to oil when 90% of our revenue comes from it?


      • 90% of our foreign revenues is from oil, not total revenues. Since we have the market, it behoves on the government to increase local revenues.


    • Moses, why not add to the analysis by explaining those other factors rating agencies consider?

      It is not the analysis that tied our fate to oil, our visionless, myopic and corrupt leaders did that over time. The analysis merely exposed what happened over time.

      The analysis also didn’t hinge around a correlation between fdi and external reserves as you erroneously inferred. The analysis merely pointed out, using facts, that when your books are ‘good’, fdi will flow in. Looking for significance of correlation between the two may be required if inferences are to be drawn but not in this kind of descriptive analysis. The logic of the analysis is crystal clear.


    • Even with the size of our local market: oil still accounts for the bulk of our US$ earnings as a Nation!

      The reality is FDI’s won’t flow in until our balance sheet looks good: the crux of the piece. And as at right now, oil is still the fastest way for our balance sheet to look good.

      The long term is making sure infrastructure (power, rail, etc etc) is built up to support the large population so that the potential of the market can be achieved independent of oil! I think the conclusion of the piece alluded to that!


  2. You hit the nail on the head. We don’t look at data to draw conclusion in this country


  3. Great write up, unfortunately will take someone with a mind willing to learn to appreciate your research and the point you are putting across. The bad thing is that Nigeria today has so many anti-buharis who see it as wrong to see anything +ve in this government.
    However in your first paragraph, you wrongly stated an exchange gain as profit, maybe u should review that statement! Profit is income less expenses and not from revaluation of currency!


    • Gains from currency appreciation are recorded as profit….why?….because it increases your Total Assets at the end of the day.


    • How do BDC’s record their profits? And what is INCOME? I mean no prejudice but to believe that profit is simply income less expenses is too elementary.


    • that’s the point. where u have anti-GEJ, you have anti-PMB. PMB started it and his admirers and bystanders alike taking the gong.
      this blogger however can not analyse the economy on FDI, crude oil price and foreign reserves and think he’s an economist


  4. Excellent analysis. Unfortunately may not be fully appreciated or understood by the majority of Nigerians where the narrow understanding of the economy is the $ vs N exchange rate!
    The greatest opportunity is for the Buhari government to find ways of putting the great human capital to work on the industrial front. A huge chunk of the recurrent are civil service salaries without any major impact on the economy.
    Brilliant report. Thanks.

    Liked by 1 person

  5. Well said sir, may god give you the strength to keep the good work


  6. Your analysis is a bit narrow

    You have left out Foreign Portfolio Investments FPI from total inflow. Total inflows are FDI and FPI

    Secondly the Federal Government does not own or control the fx reserves..the fx reserves are owned 75% by the CBN….it CBN spent almost $30b under Sanusi Lamido Sanusi and GEJ to defend the Naira.

    GEJ increased wage to N18,000, built new universities, airport terminals, funded TETFUND….

    Overall as at 2015, Nigeria was listes in MINT, JP Morgan Bond Index even CNN Money rated Nigeria as potential top 3 fastest growing economy in 2016.



  7. Thank you for your detailed analysis. Is it possible the international community saw what was coming before the Nigerian elections and decided to pull funds out of the country? You presented the evidence to this effect: On February 23, 2015, before the presidential elections the Vanguard Newspapers reported “Capital flight: Economy hard hit by USD$22.1 billion outflow in 5 weeks” How is uncertainty perceived by the investment community?
    If capital inflow is based only on the balance sheet foreign investment will not favour the US.
    I’m tempted to say you picked your facts to blame Goodluck Jonathan. If not you will realize that US demand for Nigerian oil collapsed suddenly, the data indicated this is not a market effect. No other American oil supplier suffered the same fate in such a short time.
    Recently Saudi Arabia was forced to borrow money and host of other countries that depend on oil are suffering. This is a global effect not just a Nigerian thing. We are quick at pointing fingers at our past presidents without balancing it with our structural problems.
    If we don’t want to blame Buhari tomorrow we should pass laws to reduce the size of our government, abolish security vote, remove all susidies:(petrol, religious trips and foreign exchange subsidies), reduce security spending (1trillion out of 7trillion budget is too much), tie our savings to a percentage of revenue (our governors will not be able to go to court to share excess revenue) and privatize NNPC, most of our corruptions flow from this agency. We could learn from the current situation and take aggressive legislative steps to strengthen our political structure. At the minimum this administration should provide certainty and stability to Nigerians and the international communities. I’m hopeful investment will return if we act.


    • Solomon Evro…..You cannot compare what happens in the US to that of Nigeria…..there are over 20 factors that are considered and graded before FDI’s finally come into your country….all of them don’t have to be perfect…

      But the 3 preliminary factors are among the most crucial, once those are in place then they move on to grade the next factors.

      The balance sheet is just one of the factors…

      1. Majority of US liabilities are converted to Fixed Assets.

      2. The US dollars is very strong….that means investors are sure of not losing the value their funds and investments to depreciation of the currency.

      3. The US has both State and Regional Stability……

      No one set out to pick data to blame the past administration….we must understand the points of the research….it is how we got to where we are so we do not make the same mistakes again.

      REMEMBER!….there 3 stages of situation change.

      1. Anticipatory Stage…where you anticipate things are going to happen.

      2. Reactive Stage….when they start happening and affecting revenue.

      3. Crisis Stage…..when things have completely gone bad and you have to do whatever possible to salvage the situation.

      The Jonathan administration lived through both the anticipatory and reactive stages without heeding to the warning of the future crisis…..Buhari only came in during the crisis stage….so who do you blame?…..the man who saw it all coming and did nothing or the man who came in when all went bad?

      Saudi Arabia had a deficit of almost $100 billion….but during the oil boom Saudi saved and that’s why they have been able to weather the storm and also the country invested in infrastructure…..most of its liabilities are invested in fixed assets.

      You have made some good valid points on what we need to do with the economy to build a better Nigeria…..but we must understand the roots of our problems so we don’t make the same mistake again.

      Thanks for your contribution!


    • No no. Blaming Jonathan is not the point. It’s simply pointing out what Jonathan did very wrong. The international community could very well have planned that conspiracy theory leading to pulling out investment dollars as you suggested. But that was not responsible for the billions of dollars pulled out of the common patrimony and shared to private pockets by the very government meant to protect same.


  8. So Jonathan is to blame for all of our problems and that is why thr buhari administration is taking us down this slippery slope. You are trying to use figures to lie to nigerians.


  9. This is a great analysis backed up by facts. It’s very educating and unbiased.

    If I have any advice for the president, it’s for him to be careful with his utterances especially in regards to the Niger Delta restive youths. He knows that Nigeria, at least for now, cannot afford to survive without the crude oil from there, he thus must learn and be ready to offer the “bread and stick” approach; not just the “stick option”.


  10. Hi Roman,

    Good job. Please can you share the link to the Vanguard article where it was claimed we recorded $21.5bn in capital outflows in just five weeks.

    It sounds unbelievable to me, especially if it was repatriated through the official window.

    And in your opinion, which segment of the economy was responsible for such outflows?



  11. I just discovered that the dates do not add up to five weeks. I mean, you mentioned July, August, October etc.

    I’d love to see the article sir.



  12. Thanks everyone for the contributions,great work from the writer,appreciate.


  13. Your article comes across as well researched, indeed; but your bias towards Buhari and against Jonathan is more apparent. First you make it sound like all of Nigeria’s financial problems begin and end with Jonathan. Secondly, you failed to highlight Buhari’s missteps, giving the impression he is doing everything right. Life is not that absolute. For someone to be this sound, yet this disingenuous reveals the real cause of Nigeria’s travails.


  14. Roman you said it all, numbers don’t lie, its sad that majority of Nigerians both literate and illiterate don’t look out for hard facts rather they hear and select narratives that suits their sentiments.
    I hope most people would read through your document and make informed decisions. Likewise, Nigerians would begin to support Buhari led Government in its effort to rebuild the economy.


  15. I have heard that someone left a negative comment and it was not published. I cant believe that! Anyway good write up! More grease!


  16. Thanks for your very incisive analysis.its an eye opener to the things that really went wrong.I hope other intellectuals will toe the line and profer solutions instead of attacking PMB.God bless Nigeria.


    • I agree with you. The focus should be on proffering solution and not attacking or unconditionally supporting PMB. We are in democracy where a government should be commended when doing well and criticized when things are not going well.


  17. good analysis people like you should run our country please can write an article about the current rising of Naira can the cbn continue to support the naira after the decision by the acting president yemi osibanjo.


  18. Hmm! Read this with mouth open! GEJ administration was put us in this conundrum we in. Same thing happened in the UK when labour left the Conservative had to pick the ruins, it wasn’t easy but look at what they have achieved. If this could happen in Nigeria then there is hope for us, but for now how can there be hope if half of the APC are PDP defectors


  19. Some segments of Nigerians even the so-called educated ones always don’t look at researched based facts but condition their mind based on their mindset. The researcher is not really apportioning blames but gave the historical perspectives of how we got to where we are so as to appreciate where we are going and learn from it, he mdy not be 100% perfect but certain facts have emerged. It is crystal clear that Nigeria may never attain her greatness if we continue in this divisive and biased mindset.


  20. The author did a lot of work in presenting and analyzing these data, but the political bias is too apparent and consequently rubbished whatever conclusions he intended to draw. To broadly assert that Nigeria’s economy was rosy during Obasanjo’s regime and that it started falling apart during Jonathan’s regime and is now on the path to rehabilitation /stability (whatever) during Buhari’s regime is most disingenuous and quite unfair on the sensibilities of majority of Nigerians suffering economic hardship today. Anyone can manipulate and analyze data to reach any sort of conclusion. The fact that you will go to this length to reach such a biased conclusion is rather unfortunate, and as Jay wrote above, it is reflective of how and why we are in our current state as a nation.


    • But he just pointed out to us how we got to where we are today, are people suggesting that he changes the numbers of how the economy went during the Jonathan administration.. He just said it the way it went with all the facts and Sanusi Lamido and Okonjo Iweala warned of the consequences before Buhari’s Government started.. It’s really unfortunate that the GEJ Govt did not heed to all the warnings by the heads its financial team.


  21. This analysis is acknowledged to be biased and the only people that can appreciate the analysis are people who actually understand economics. However this write up shows the focus of the piece all too well and seems loyalist in view. And patronizing, as it seems to overlook that the current ruling class and their agents created the siege atmosphere which increased the damage even before coming into power and also omitted the fact that the present administration has spent almost as much time as Yaradua but with very different results even with the open support accorded it by the US “king makers”. I think the such beautiful talent should be put to better use without sentiment . 🙂


    • Unfortunately, you’re accusing facts of being biased but you haven’t presented any counter facts! It is clear whose view is biased.


      • Self fish and People of low esteem will not appreciate all these fact and figures, even with Many Nigerians living in a very deplorable abject poverty. Leadership and inability to see through this kind of fact is our major problem some people have sold their heart for a measure of pottage, some have sold their heart to devil,but the few patriotic Nigerians know the good and the bad of the past and the present Nigeria president, and this write up is one of the numerous fact out there.


    • When Yar’adua came to power, the economy was going in an upward trend and the writer said Yar’adua continued to pursue the policies of Obasanjo but it’s different for Buhari who came in after all the warnings given to the GEJ administration.. It is funny and lame to now blame “Buhari’s agents of destabilizing ” the economy before they came to power.. I mean did they make all the withdrawals from the ECA months and weeks before the presidential election?


  22. what of the foreign reserve and I hope they will left for him ‘ Buhari ‘ we did not see it in the write up.


  23. Thank you so very much for the fact and figure it is simple a lay man can understand this before recession can set in there most be signs and majorly the past administration refused to save for raining days and also lack the ability to diversify the economy from oil to agriculture mind you country can’t survive not producing anything as it said in the macatilist theory. The only thing I can blame buhari for is his policy on rice ban he ought to have made a policy to reduce the amount of rice that is being imported inorder to give our domestic rice a chance


  24. It’s a pity that whenever buhari’s govt is in recession, someone as to pay for his mistake or misfortune, @ first Shagari then GEJ. Does it mean buhari has to fail and blame others for his failures.


  25. This is a very good work. Like you rightly stated, manufacturing and I think agriculture can take Nigeria out of the woods.
    People in charge of policy formulation and implementation should have good look of this article.
    Good work!!


  26. Good right up this article is designed to educate and enlighten the average Nigerian, this pure economic analysis and I am surprised that already some are making it a political issue, the condition of Nigeria presently is where have all been heading for more than 30 years by failing to diversify, secondly the author failed to point out our incurable appetite for foreign goods which have adverse effect on domestic company which in turn have negative effect on employment. We all have part to play in reviving the economy this is a wake up call, we have the brain, the skills, and we are very resourceful, unfortunately all these are been used to fight each other daily on social media.


  27. This is a biased analysis. Between 2008 to 2010, there was a worldwide economic recession which adversely affected every major industrial society, including the United States and most European economies. There was a sharp drop in Crude oil prices, and there was internal instabilities caused by Boko Haram. I would like to see these same data and taken together with other factors to see a more balanced analysis


  28. Pingback: The Dollar, Recession, Obasanjo, Jonathan, and Buhari……….The Unknown Truth behind the Economy. | abiodun omonijo's Blog

  29. Nigerians do not like the truth, that is why they remain stagnant. Even when they see this article they will not read… But this is the truth…


  30. What a great write-up! Nigeria is blessed already and may God continue to bless us. It’s time to appreciate what we have. These our leaders have tried their best but their best may be the second or third best of others. God help us fix Nigeria and Nigeria economy. All we need do is to pray to God for the success of this current administration. Every Nation is sweating. Let’s learn to appreciate ours. God help us. Cheers!


  31. Am impressed by your detailed & savvy analysis..


  32. I sincerely hope people who matter in government van read this especially Udo Udoma. If this analysis can be read deeply it may help this government to strategise properly. Weldone


  33. Good analysis but biased from the beginning of the article with the aim of condemning the last administration, assuring us of a good future.
    What happened to the Toyota and Nissan that came into the country in the last administration?

    Liked by 1 person

  34. This write up should be tagged “ABC of Nigeria’s Economy” and I wish to state that the desired change of our beloved Naira Vs USD should begin with us.
    Ask yourself if your life (lifestyle such as feeding, clothing, holiday etc) helps the N to gain or USD?
    Let us be the change we desired and hope that the new achievments of the FG becomes sustainable.
    We pray for restoration of good health for PMB and sustainability of recent economic progess achieved by Osinbajo and the total economic team of the nation.
    In conclusion, the role of positive body language in addition to various good intentions of our leaders goes a long way to positively affects our economy, Nigeria is a peculiar nation (at least to create positive impression to the citizenry).
    Many thanks to Roman, the author of this great work

    Liked by 1 person

  35. Great work biased or not…but sincerely having spend alot of time putting this piece together I am abit disappointed you didn’t evaluate the effect of boko haram on the Gej administration don’t forget UN building was bomb in Abuja and how we handle the chibok issue as a country and how Mr buhari party handle it as an opposition . Apart from your 3 main point you presume investor look out for could any of sad issues witness by Gej administration could have cause fdi flights..but even at that..the change of government to Mr buhari should have boast investors confidence but up till now…every home is feeling major hardship and the last time we witness it was during last buhari administration.. Is something wrong. Or Mr Bahari has some very Hard stand that are not fdi friendly. Just saying


  36. The fact is that instead of PMB to hit the ground running,he hit the ground and sat down….this man took 6mths to form a cabinet for goodness sake , look at the mind boggling revelations coming out on the forex subsidy,PMB’s utterances on corruption in international fora,very poor handling of the niger delta debacle,and countless infringement on the constitution that has polarized the polity creating instability etc…yes GEJ was clueless and reckless on several fronts but truth be told PMB is an aberration and this is putting it mildly…this govt may turn out to be the worst in the history of Nigeria yet


    • Dear sir,

      This article is clearly matching data with timelines, can you please do the same, I would like you lay the skin of your analysis, over the bones of the data and timeline.


  37. The first and most impotant thing to do is to make sure there is efficient and effective power supply. There can never be any drive that will last without it. The cost of running a company is Nigeria is thrice the cost of running it in india and shipping its finished goods down here. We should priotise first. Power aids industrialization and this brings about the revolution and it goes down to techonogical advancement which is the key to economic growth


  38. Good work Roman.

    I was curious about the effect of lag period. How come the investors could pull out their investments so quickly? The correlation betwee foreign reserve and FDI were too direct. In economics, it takes time for a policy to take effect.
    What we had was FPI(Foreign Portfolio Investment) not FDI.
    The investors were only interested in high interest rate. Hope this adminstration is wise enough to identify genuine investors.

    Ladi O.


    • Hi,

      Let’s not forget investors perform review of both market and industry analysis of whatever country they operate in…..the warning signs was the depleting foreign reserve which they know will ultimately lead to the devaluation of the Naira….if the Naira cannot be defended you will lose……I do agree with you that in economics it takes time for policy to take effect…remember we did not start seeing the positive effects of OBJs policies until about 2005.

      The same way, companies are following the trends of things….the Foreign Reserve started its depletion since 2010….

      And finally the FPI’s were majorly fuelled by high returns as you have rightly said, and can even be fuelled by corruption for quick returns….FDI’s are more rigorous because most are supposed to come into the economy as lifetime investments hence investors weigh a lot of factors before committing to the move.


  39. This is a fantastic article that describes why we are here- good job! However, you didn’t tell us how Agriculture can be used to bail us out.
    One more time, good work did.


  40. First of all, I must give kudos to you for your research. But I have to say, with all due respect, what you’ve published here is too shallow and only inclined to totally discredit the immediate past government.

    Also, you displayed some data but not giving enough details on the socio-economic, ethnographic-religious and political activities that influenced these data.

    Any government will definitely appear stupid when you judge it based of so-called facts and data without an in-depth consideration of the precedence that lead to such data outcomes.

    I think you omitted too many information that may have exposed this publication as not being anywhere near the ‘truth’ it claims.

    Maybe that’s why you found yourself asking questions about the then finance minister (at the end of your video) which I expected you to also answer yourself but didn’t.


  41. Good analysis but the writer fails to consider the greatest factor responsible for the economic woes of a developing country which is political control and interference by Western powers. The Jonathan administration’s attempt to diversify and indigenase the Nigeria economic to achieve great economic growth and self sufficiency was met with great resistance and sabotage by the US and the West. This was further aggravated by the collaboration and sabotage of Northern and Western Nigeria leaders. The propaganda and outright blackmail leading to the fueling and sponsorship of “White Flag” operations was the greatest factors that led the Jonathan government to take drastic economic steps that led to depletion of the Foreign reserves. In essence, the economic woes the nation faces today are far removed from economic policies by any past or present government rather they were caused by international politicking against Nigeria. I have never seen any country that went through the kind of sabotage and international Western conspiracy collaborated by the present ruling class that ever survived and prospered. The likes of North Korea, Lybia,Zimbabwe, Iran,Iraq under Saddam, Russia,etc suffered the same fate. Is it not surprising that the same Western Economic institutions which theories you have propended to be the cause of our economic woes have employed all the Economic Experts in the Jonathan administration? This is to show you that beyond all your economic rhetorics, there are international political forces that determines the prosperity of any developing country. The way forward is to implement a nationalistic and true Federalism in our country which the Jonathan administration was fostering and pushing for. This will make the centre become very weak such that Western powers would have deal with each region or state as an individual. It will be extremely difficult for them to exact direct authority and control over the Nigerian entity. This will also encourage competition amongst the West and Eastern global blocks with no direct influence over the centre. It will also the best in every region and states such that the best hands will on deck and this madness of struggle for power at the centre that would make a people sell out their country inorder to gain political power at all cost like we saw in the last dispensation.


  42. No doubt a well researched piece and great also. Unfortunately our kind of education as Nigerians only allow us to see things through the prism of ethnicity, personality etc.
    Thanks for the analysis…


  43. Thank you for the analysis, data and facts. Clearly, things were better under Obasanjo and clearly, not under GEJ.

    Can we also say that Obasanjo was unable to ensure sustainability of his achievements because the necessary fundamentals (that produce economic fundamentals) were not in place? Could it be that his accomplishments were not deep but surface achievements, considering that the true fundamentals of a thriving society (which produces a thriving economy) were not addressed, perhaps because they were too complex to be addressed under one administration?

    You mention one – over dependence on oil. There are others including creating an enabling environment for Nigerians to thrive and do business. That does not exist right now. Power for example was not addressed, neither was transportation infrastructure, which will make life so much easier for Nigerians. There are many others. If Nigeria works for Nigerians, it will most likely work for foreign investors.

    There is also the fact that public “service” is closer to “looting” (legal and illegal) than service, partly evidenced by the fact that we have lawmakers who are legally the highest paid in the world. Looting, as you mentioned may be partly responsible for the depletion in foreign reserves. As long as public service remains an opportunity for enrichment rather than a responsibility to serve sacrificially, an Obasanjo may continue to give way to a GEJ in my opinion.

    It may be easier to present a good front to foreign investors who in my opinion do not care as much about the wellbeing of Nigeria and Nigerians as their Return on Investment, than to do the hardwork of nation building, which would require a major reorientation/re-education in parallel with ongoing investments in necessary basic infrastructure and public sector reform. This reorientation will result in focus on handwork, creativity, true entrepreneurship, pride in Nigeria, the willingness to sacrifice for the good of all rather than embezzle what belongs to all, shift in our value system so that we value and reward true creators and not just those who are wealthy, etc. Until these fundamentals are addressed, it seems we will always come back to the same problems.

    This may be the true task before this administration (deeper than increasing FDI and those economic indices, which like GDP may be disconnected from reality) and we Nigerians will need to be ready to not see some results for years but there needs to be ongoing information sharing and transparency on the part of the government.

    Caveat: this is not an economic expert’s response just a (layman if you want) response that considers that economic performance is due to factors other than economic.

    Again, thank you for the analysis. I especially love the Saul Bellow quote. Very apt.


  44. Thank you for your well-researched analysis. It’s a pity that some people always look at things through ethno-religious or political eyes.
    However, I believe the solution to Nigeria’s economic problem lies in encouraging and catalysing agricultural and mineral resources development. Opportunities abound in both sectors for FDI inflows and also foreign earnings.
    I also think an economic think-tank should be set up outside of government comprising economic intellectuals like you to advise the Govt on economic policy matters.


  45. Everything is about party, politics and how to take advantage of the weak. There is no structure in place to insure continuety in governance and more so, discouraging any kind of investment in and out too. Giving more attractions to terror, and even turned civil service to what is known as evil service today unfortunately. I think Nigerians need a rethink on how to play around with politics, religion and ethnicity .


  46. May God help us out in this corruption-riddled country. Our leaders are our problem! We the governed too played a part in the retrogression of this nation. Once again may God help us out.
    With love from ~


  47. I wish you can update this analysis to today’s reality ie Oct 15th, 2021. It will help the country a lot.


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