Investment in human capital remains the only veritable tool towards addressing poverty in Nigeria, says Roman Oseghale, Chief Executive Officer of IntelServe Incorporated. He joins CNBC Africa to assess Nigeria’s economic model for reducing poverty in the country.
___The 2018 Budget, Between President Buhari and The National Assembly…A Critical Look at Data
“As long as Poverty, Injustice and Gross Inequality persist in our world, none of us can truly rest”……Nelson Mandela
In 1981 with a population of 75.7m people and 47% living below the poverty line, Nigeria had 35.6m people living in Poverty. By year 2000, a year after the Country had returned to democracy rule and with a population of 122.3m people, percentage living in Poverty had increased to 65% bringing the total headcount of people living below the poverty line to 79.5m people.
But something happened in the early 2000’s, The Federal Government in trying to cub the growing rate of Poverty, introduced The Poverty Alleviation Program (PAP) and by 2004 with a population of 135.4m people, Poverty as a percentage of population had reduced to 54.4% and headcount reduced to 73.7m people. This means that between 1981 and 2004 a period of 23 years, Nigeria added 38.1m people to poverty, an increase of 107%.
In 1981 Nigeria’s GDP was $61.1bn and in 2004 GDP was $87.85bn, between 1981 and 2004 the GDP never went above $87.85 bn, in fact it reached its all-time lows between 1981 and 2004 with $20.7bn in 1986, and $21.35bn in 1993. So between 1981 and 2004 (23 years), Nigeria’s GDP only appreciated by $26.75 bn, an increase of 43.8%.
But in 2004, The Poverty Alleviation failed because the root cause of increasing poverty was not addressed which is investments in Human Capital Development and Infrastructural Investment to help the people create and generate wealth, rather government gave money to the people which was not sustainable.
Between 2004 and 2010 (6 years), Nigeria’s GDP exploded from $87.85bn in 2004 to $369.1bn in 2010, an increase of $281.25 bn and percentage increase of 320.2%, but the interesting thing was that poverty as a percentage of population also increased to 70%, and with a population of 158.6m people in 2010, the headcount living below the poverty line increased to 111m, an increase of 33.3m people in just 6 years.
While Nigeria rebased its economy in 2013 with GDP at $510bn and reaching an all-time high of $569bn in 2014, Poverty as a percentage of population still stood at 70%. As at 2018 and a population of 198 m people, percentage living in Poverty in Nigeria still stands at 70% which means that about 138.6 m people are living in poverty in Nigeria. This means that between 2004 and 2018, a period of 14 years, 64.9m people were added to poverty, increase of 88.1% in 14 years. And between 2004 with a GDP of $87.85bn and 2018 with a GDP of $406bn, Nigeria’s GDP has increased by $318.15 bn, a percentage increase of 362.2%.
PRESIDENT BUHARI AND NASS
While the President had submitted a budget to boost infrastructure, and use the investment as a fiscal policy to help grow the economy, it is imperative to note that Nigeria has been operating an Expense Budget and not Investment Budgets since the Mid-80’s (Majorly recurrent expenditure) which has made it almost impossible for its citizens to grow wealth since investment in Human Capital Development and Infrastructural Developments are what helps the country create and generate wealth.
Since coming into office, the President has continued to Increase Capital Expenditure as a percentage of the Budget, from 23.8% in 2014 and 15% in 2015, Capital Expenditure has stood at 30% of the Budget since 2016. But the 2018 budget which has taken 7 months to approve by NASS, the legislative arm of government has cut N347bn in the allocations to 4,700 projects from the original budget summited to them and introduced 6,403 projects of their own which amounts to N578 bn, as usual funds are allocated as constituency allowance for projects but they are never executed, as in some cases to be seen to have done something, the projects are so over bloated that even an idiot knows they have been ripped off.
The President had stated that some of the Strategic National/Regional infrastructure which the NASS had cut funding from which was supposed to help the country included the Mambilla Power plant, Second Niger Bridge/Ancillary roads, The East-West Road, Bonny-Bodo Road, Lagos-Ibadan Expressway, and Itakpe-Ajaokuta Rail Project. Others include Abuja arterial roads and Mass Transit Rail Projects, the Rehabilitation of the United Nations building, Interventions in the Health Sector which included Tertiary Health Institutions, Provision of Security Infrastructure in the 104 Unity Schools, Federal Government National Housing programme. Take off grant for the Maritime University, Enugu Airport, Export Expansion Grant and Special Economic Zones/Industrial parks.
While NASS is cutting down on funding of critical projects that will grow the economy and reduce Poverty, they are increasing their budget to put money in their own pockets. NASS through Statutory Transfer has increased its budget by N14.5bn from N125bn to N139.5bn. These are major reasons Poverty will never reduce in Nigeria because funds meant to grow the economy are directed to end up in people’s pockets.
COMPARING NIGERIA TO OTHER COUNTRIES…….
“Poverty is the absence of all human rights. The frustrations, hostility and anger generated by abject poverty cannot sustain peace in any society”……Muhammad Yunus
Nigeria is the only Emerging Economy in the world where GDP is increasing and Poverty is also increasing, between 1981 and 2016, other countries that have recorded economic growth have succesfully reduced Poverty. China while recording economic growth has lifted 789.5 million people out of Poverty, Indonesia has lifted out 78.7 million people, Thailand has lifted out 29.4 million people, Bangladesh has lifted out 24.4 million people, Malaysia has lifted out 2.93 million people, and India has lifted out 137.2 million people, but Nigeria added 90.4 million people to poverty between 1981 and 2016 alone and a total of 94.7 million from 1981 to 2018.
While the President wants to invest in Infrastructure to help Nigerians and the Nation build Wealth and get out of the Poverty Trap, the National Assembly world rather Nigerian’s continue to live in Poverty while they divert funds into their own pockets.
Nigeria, Education Expenditure, and the Poverty Trap.
Between 1981 and 2016, Nigeria’s GDP grew from $61.1bn to $405bn reaching an all-time high of $569bn in 2014. Yet from 1981 to 2016 Nigeria added 90.4 million people to Poverty which has continued to increase to date.
On the 25th of May, 2018, I had a session on Channels TV on why we have had increasing “Economic Growth” over the years and why Poverty in also growing creating what is called the Poverty Trap for citizens of the country.
Economic growth should lead to Economic Development and further lead to Human Development, while Nigeria has had Economic growth over the years, it has not led to both Economic Development and Human Development.
Main while other countries that have recorded Economic Growth have succeeded in reducing poverty over the same period. China has lifted 789.5 million people out of Poverty, Indonesia has lifted out 78.7 million people out of Poverty, Thailand has lifted 29.4 million people out of Poverty, Bangladesh has lifted 24.3 million people out of Poverty, Malaysia has lifted 2.93 million people out of Poverty, and India has lifted 137.2 million people out of Poverty.
Find out how government’s lack of investment in Education (Human Capital Development) and how school fees has plunged the average family in Nigeria into what is called the Poverty Trap and Economic Stagnation for the country.
Watch the complete session and understand why Poverty will continue to increase in Nigeria despite increasing economic growth.
How Deforestation Through Illegal Logging is Fuelling The Cattle Herdsmen and Communal Conflicts.
Nigeria: IntelServe CEO Traces Nigeria’s Socioeconomic Challenges to Poor Funding in Human Capital Development.
Roman Oseghale, Head Consultant and CEO of IntelServe Inc. a Canadian Business Analytical Services Company spoke at the Oct. 2nd, 2017 edition of The Platform under the topic “Education Funding and it’s Socioeconomic Impact” where he reiterated the importance of Human Capital Development using data to back up his research. He stated that no nation among over 100 countries that has been surveyed in the research relegated education and prospered, everything Nigeria is facing today is as a result of poor education funding, he stated that the blue print for national development was Human Capital Development and that the answer was right in front of everyone but no one is looking in the right direction.
His research and presentation at The Platform revealed how the socioeconomic activities of the country is falling apart because of governments inadequate investment in Human Capital Development (Education and Skills) in the youths of the country. In 2017 with a projected GDP of USD$408.3 bn, a population of 182 million, Nigeria’s education budget is USD$1.77 bn representing 7.4% of the budget and 0.43% of expected GDP at the end of the year compared to USD$3.038 bn in 1981 with a GDP of USD$61.1 bn with a population of 75.7 million which represented about 30% of the budget and 4.97% of the GDP.
Compared to other countries that were surveyed, Nigeria has only spent USD$52.79 bn from the federal level in 46 years despite being one of the most populated countries. Brazil has spent USD$1.6 tn, Chile has spent USD$131.2 bn, Mexico USD$939.8 bn, Canada USD$1.68 tn, United Kingdom USD$2.88 tn, Germany USD$3.74 tn, USA$ 18.01 tn, Egypt USD$161.3 bn, South Africa USD$372.6 bn, Thailand USD$234 bn, Indonesia USD$282.6 bn, and Malaysia USD$214.4 bn to mention a few.
He pointed out that investment in the knowledge economy was the main driver of economic growth, he made it known that because of lack of education investment, Nigeria has continued to slip down the Global Competitiveness Index, from 83rd position in 2005, to 127th position in 2010 and has remained at 127th since…he stated that countries that invest heavily in education were moving up the ranks, examples were Indonesia from 69 to 41, China from 48 to 28, Malaysia which stayed at 25, Singapore from 5 to 2, and Philippines from 73 to 57.
He stated that Nigeria was relatively stable in the 60’s, 70’s and early 80’s and had a balance in its socioeconomic activities because the country was investing in Human Capital Development which reached its peak of 4.97% of GDP approximately 5% of GDP as stipulated by the United Nations in 1981. He stated that the country may not understand the concept of education beyond an institution, a place where knowledge is obtained, certificate and degrees are given, and a tool that moves a child out of poverty, he argued that education was the weapon used in balancing all facets of the socioeconomic activities and as education funding continued to drop those facets of the society started falling apart creating a threat to both social and economic stability of the country.
He pointed out that education is an investment and not an expense, a tool used for economic growth and sustainability and that education is the weapon used to balance the socioeconomic activities of any country, if you destroy education you destroy everything. He stated that once public education is underfunded and destroyed, the country invariably destroys the socioeconomic activities and every facet of the socioeconomic factors starts to fall apart. He stated that education is the glue that holds the socioeconomic activities of a country together, whIle education is the lifeblood of the socioeconomic system, funding is the lifeblood of education.
The research showed that from 1982 education expenditure started dropping and dropped below USD$1 bn in 1986 and stayed below USD$1 bn, it wasn’t until 2006 that education expenditure climbed above USD$1 bn again in 20 years. He pointed out that education expenditure did not reach USD$3 bn again until 2011, the sane amount government spent in 1981…..it took government 30 years to spend the same amount they spent in 1981 on education. And all the while education expenditure was reducing, population was increasing.
Through his research he was able to point out how Nigeria was ahead of many Asian countries in per capita income in the 60’s, 70’s, and early 80’s because of Nigeria’s investment in Education, but as soon as Nigeria stopped investing in education and the Asian countries picked up, their per capita income grew and surpassed that of Nigeria. He stated that government has abandoned Human Capital Development and it was destroying all facet of the society.
He developed a model which he used in his presentation to show what happens when education is underfunded and how the socioeconomic activities of the country falls apart: Stating that underfunding education leads to fall in Per Capita Income, which leads to population explosion, increase in poverty, with poverty leading to crime, at the same time with poverty also leading to social unrest, and social unrest leading to state/regional instability which leads to economic loss for the country. On the other hand population explosion also leads to environmental degradation which leads to health issues and leads to economic loss for the country.
The research showed how Nigeria’s per capita income started falling after we stopped investing in education, Nigerians were poorer for 25 years without knowing it through fall in per capita income. In 1980 per capita income was USD$871 and from 1981 per capita income started dropping and did not go above USD$871 until 2006 when it reached USD$1,015, first time in 25 years. This is because as level of education and skills dropped, people’s earning power also dropped while spending on education is also recorded in the Adjusted Net savings of the country as investment assets and not expense.
He explained that as people’s earnings dropped population soared, this is because prosperity caused people to have smaller families, uneducated people saw many kids as their assets for old age, educated women used contraceptives, families often choose to educate the male child when in the midst of poverty, and also education delays marriage……women on average stop having kids at age 40, so a girl child given out in marriage at age 15 has a window period of 25 years to keep having kids unlike a girl child that pursues education and graduates at age 24, marries at 26, and starts having kids at age 28….as a working class mother, she only has between 10 to 12 years to have kids. Also working class mothers space out their kids so fertility rate is much more lower compared to a stay at home and uneducated mother.
He stated that Nigeria’s had one of the lowest annual growth rate in the 60’s and 70’s with 1.99% in 1960, Egypt, South Africa, Thailand, Indonesia, Malaysia Chile, Brazil, Mexico, Canada, to mention a few among the surveyed countries all had higher population growth, but the reverse is the case today, Nigeria’s Population growth as at 2014 was 2.66% with an average of 2.52% in 55 years and fertility rate of 5.6% is among the highest in the world, and as population increased poverty also increased.
He stated through his research that Poverty leads to increasing population, and increasing population leads to increasing poverty, as population increases, per capita income continues to fall…from 47% living below the poverty line in 1981, representing 35.6m of the total population, Nigeria’s population living below the poverty line increased to 70% in 2010 representing 114.7m of the population and reaching 120.4m in 2013. By 2014 Nigeria was ranked the 6th country in the world with the highest percentage of people living below the poverty line. He explained that all the agitations, kidnapping, instability in the country today is as a result of poverty which was caused by our lack of investment in Human Capital Development.
The research highlighted the worrisome part, extreme poverty has continued to drop in the world and by region, total living in extreme poverty as a percentage of population in the world dropped from 52.7% in 1981 to 10.7% in 2013. While the largest regions with extreme poverty has also continued to drop…Sub-Saharan Africa has dropped from 52.8% in 1981 to 41% in 2013, South Asia from 61.4% to 15.1%, East Asia/Pacific has dropped from 78% to 3.5% in the same period.
Nigeria share of extreme poverty as a percentage of people living in extreme poverty in Sub-Saharan Africa has continued to increase….from 17.6% in 1981 to 28.4% in 2011, and to 32.2% in 2013….while Nigeria is 18.8% the population of Sub-Saharan Africa, Nigeria share of extreme poverty is 32.2%…..which means that as at 2013, one in every three persons living in extreme poverty in Sub-Saharan Africa was a Nigerian while in 1981 it was one in every 5.6 persons….while extreme poverty is reducing in Sub-Saharan Africa, that of Nigeria is increasing. Nigeria share of extreme poverty increased by 83% between 1981 and 2013.
The research also showed that among all the largest world developing nations: China, India, Indonesia, Brazil, Pakistan, Nigeria, Bangladesh, Russia, Mexico, Philippines,…..NIGERIA IS THE ONLY COUNTRY WHERE GDP IS GROWING AND EXTREME POVERTY IS ALSO GROWING. China reduced extreme poverty from 84% of population in 1981 to 6% in 2017, Indonesia from 72% to 12% with all other countries reducing as well, but Nigeria moved from 47% to 70%.
He stated that as poverty increases, crime increases…..data showed that Nigeria’s prison population increased by 26% between 2011 to 2015 while population increased by 10% during the same period, with offence against properties and offence against persons being the highest. He further stated that as at today, Nigeria has under aged children in prisons because of petty stealing and street trading, stating that while the country has refused to invest in these kids, the country is incarcerating them.
He further explained that the social unrest in the country today, from the North East, South-South, South East, and South West is as a result of poverty and lack of Human Capital Development. He stated that no educated person who is prosperous will become a miscreant to the society.
“The War against Terror is Bound up in the War against Poverty”…..General Collin Powell
The research showed that as at 2013, Nigeria had 10.5m kids outside school which represented 20% of their age bracket, while many claim the number is now more. He warned that Nigeria had the second largest number of kids outside school in the world after Pakistan. While Nigeria is 2.5% of world population, it holds 4% of the total number of kids outside school in the world from the 263m kids as estimated by the United nations.
He stated that of all the countries survey where terrorist cells operates, the countries with terrorist cells had three things in common: Low education expenditure, high poverty rate, and high number of kids outside school. He further warned that we must start to consider the consequences to both state and regional stability as only 87 countries out of 196 countries of the world have populations greater than 10.5m. He pointed out that between 2014 and 2017, a total of 125 kids have been used as suicide bombers in Nigeria with 83 in 2017 alone…..increase of 96.7% in just one year. Group like Boko Haram is using financial incentives to lure kids due to poverty.
Boko Haram has killed over 20,000 since 2010, while over 2 million has been displaced, which has caused the economic loss and stagnation of the North East of the country, while the Gulf of Guinea is now rated the most dangerous waters in the world due to kidnapping and ransom. In 2016, 54 attacks were carried out costing over USD$ 700 in economic damage while about 1000 seafarers were subject to attack in 2015, all were blamed on poverty and lack of economic opportunities with the youths.
Nigeria is also slipping down on all worldwide indexes….from a rating of 118 amongst 163 countries in the Global Peace Index in 2008, Nigeria has slipped down the ladder to 149th position, while the country has also slipped down the United Nations Human Development Index from 142 in 2010 to 152 amongst the 188 countries rated. This also led to the economic loss for the country which saw FDI reduce from USD$8.84 bn in 2011 to USD$3.13 bn in 2015 (65%) at the height of the Boko Haram Insurgencies.
He urged the government to make every efforts to register kids that were not in school, and also those that are past high school age to be registered to train for one skill or the other to reduce crime, he warned that all global rating on Nigeria was not looking good and government must invest more in Education if the country is to survive global competition as the Global Competitiveness index is mainly driven by education, hence the country will become a dumping ground. With 182 million population, if the youths are not empowered to create wealth, they will become a threat to national security in the country and region as it is already happening.
Roman Oseghale, an Architect, Consultant, and a Business Analyst is the Head Consultant of IntelServe Inc. a Canadian company which is into Consulting and Business Analytical Services spoke at The Platform on May 1st, 2017 on developing sustainable economic growth for Nigeria. Mr. Oseghale argues that Africa which is one of the 6 continents is the richest in Mineral Resources but the poorest in per capita income, he noted that 1/3 (33.3%) of all earths mineral resources is buried in Africa, 2/3 (66.6%) of all global mined diamond comes from Africa, 1/10 (10%) of global oil reserve is in Africa, 75% of all cocoa beans is from Africa, and Africa is home to some of the rarest mineral resources.
Presenting a research that cost him about 600 hours of work, demonstrated how Investing in Human Capital Development has been the secret to how progressive nations have developed a Sustainable Economy and growth over the last 60 years. He stated that the Netherlands which does not grow cocoa processes 13% of all cocoa beans worldwide and Europe and Russia which equally don’t grow cocoa processes 38% of all cocoa beans, and the tens of products manufactured from cocoa are shipped back to Nigeria and Africa to be sold, and while the worldwide cocoa industry is estimated to be over USD$100 billion, Africa’s share is just 2% percent (USD$2 billion) despite producing 75% of the cocoa beans.
He stated through his research that developing a Sustainable Economic Growth ensures both economic and political stability in any country and is the gateway to creating wealth, building confidence in any economy and prevents the devastating and inefficient impact of corporate premature failure and death. Using analysis from both Business Survey and Business Intelligence and gathering both qualitative and quantitative data, Mr. Oseghale took the country back 57 years to 1960 and matched these data along timelines to know where Nigeria deviated from the progressive economic growth of the 60’s and 70’s. He also matched the data with those of 80 other countries across the 6 continents for the 57 years to be sure of his hypothesis.
He stated through his research the direct correlation between education expenditure and per capita income of countries and that all progressive countries were operating the Knowledge Economy, he stated that progressive countries develop individuals and as they earn more or create wealth, it ultimately increases the GDP of the country. He stated that Nigeria and most African countries were still operating the mineral resources economy and if the country was to make progress it must switch over to the knowledge economy and treat education as an investment rather than an expense stating that education is an economic tool for growth and sustainability.
He stated through his research that in the 60’s and 70’s, and early 80’s, Nigeria invested in education pushing to reach the United Nations stipulated mandate of 26% of budget or 5% of GDP on education Investment both on Federal and State levels, and reached an all-time high of 4.9% of GDP in 1981. He argued that for the UN to have stipulated that 26% be invested in Education and 15% in Health, a combined investment of 41% of the budget on investments which has to do with direct investments on human capital only proves one thing…..that Human Capital was the greatest assets and true wealth of a nation and not mineral resources as Nigeria and most African countries seem to think.
The highlight of his presentation was how the research showed how Nigeria was ahead of countries like Egypt and a lot of the Asian countries in Per Capita Income in the 70’s and early 80’s when Nigeria heavily invested in Education and treated it as an investment while those countries did not invest as much in education and treated education as an expense. But the reverse was to start happening from 1982, these other countries started investing heavily in education building a knowledge economy having realised that the knowledge economy was the future and the key to economic growth and sustainability while Nigeria kept reducing its education expenditure and reaching an all-time low of 0.77% of GDP in 1991 and it has remained at 0.8% annually ever since. While population was increasing, Nigeria’s education expenditure was reducing over the years and the country did not increase education expenditure in 30 years.
In 1981 at USD$3.038b representing 4.9% of GDP, Nigeria’s education investment remained below USD$1b for 20 years, between 1986 and 2006, and only climbed to USD$3.3b in 2011 after 30 years. His research also shows that no nation amongst the 80 countries used for the survey and research ever reduced education expenditure for more that 3 to 4 years in a row but Nigeria did not increase hers in 30 years. He noted that Nigeria was the only country that had the highest increase in population between 1981 and 2014 (134.5%) but only increased education expenditure by only 53.7%, while countries like Egypt increased in population by 101.5% and increased education expenditure by 1,709%, Thailand increased in population by 40.1% with increase in education expenditure by 2,625%, and Indonesia increased in population by 68.5% but increased education expenditure by 2,469% in 33 years from 1981 to 2014, and this is the reason these countries are ahead of Nigeria today.
The research also showed that the Federal Government has only invested USD$48.8 billion in education in 44 years (1970 – 2014) despite having a large and fastest growing population compared to countries like Brazil that has invested USD$1.5 trillion, Chile USD$120.5 with just 10% of Nigeria’s population, Mexico USD$882.6 billion, Canada USD$1.6 trillion, United States USD$17.2 trillion, United Kingdom USD$2.7 trillion, Germany USD$3.5 trillion, Egypt USD$148 billion, South Africa USD$354 billion, Thailand USD$218.9 billion, and Indonesia USD$222 billion. He stated that these countries and the others used in the survey treat education as an investment and economic tool of growth and sustainability, and that is why they have a progressive economy.
The research also highlighted the cost of our negligence, how Nigeria’s public education sector and infrastructure is now decaying and the country not able to meet up with the massive number of students seeking university admission yearly. He also stated that most of the kids are now seeking admission outside the country which is now costing the economy billions of dollars yearly, and while we may think the country is only paying school fees and upkeep, Nigeria is losing billions in Intangible assets annually as the country is losing its best brains.
He concluded that government must start treating education as an investment rather than expenditure and must immediately return the country back to the economic model of the 70’s when government invested in Human Capital Development and provided the citizens with the right skills noting that the knowledge economy was the future and no nation has ever recorded progress in economic growth and sustainability with the relegation of education.
He also stated that government should develop skills acquisition centres, stating that education does not just end with students graduating from the universities but they must be armed with the right skills to succeed and increase productivity, which ultimately benefits the country and that government should provide incentives of low interest loans for graduates of skills and acquisition centres who wish to go into manufacturing, he stated that this is the model the Asian countries have been practicing and that’s why they have been able to turn their countries to the manufacturing hub of the world.
________Why we must look at data before reaching a logical conclusion!!!…….
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________Why we must look at data before reaching a logical conclusion!!!…….
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:
- Stability (Political, Regional, and State)
- Return on Investments (ROI)
- 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……..in 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…..in 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…..it 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…..data 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…..so 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…..you 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.
- 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.
- Depletion of the foreign reserve ended up in private pockets and flooded the economy…USD$31 billion.
- The emptying of the Excess cruse account…..USD$40 billion
- 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?
- Stability (State and Regional).
- Increasing the Foreign Reserve to defend the Naira which will increase ROI for investors.
- 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.
——-How the Nigerian government abandoned one of the most lucrative youth industry over the years.
“Schools are really, really important. It gives you access to every kid in the country. It gives you a massive pool of people to see who might be talented at different sports. It allows kids to try sports. Kids can be inspired all they want, but if they can’t go out and try a sport, then it’s no good”.—— Alistair Brownlee
The recent comments from the Nigerian sports minister stating that the sports ministry didn’t pay the footballers because the Sports Ministry, and Nigerian Football Federation didn’t expect Falcon to win the just concluded Woman’s African Cup of Nations held in Cameroon…..while Nigerian’s may be angry with the minister, his words only confirms how the Nigerian government over the years have abandoned the sports industry and refused to tap into one of the nation’s greatest assets…..the youths!
The once lucrative industry which put Nigeria on the front pages of international newspapers has become a shadow of itself….. the truth is nobody expects anything tangible from what he or she has not invested in?……that was exactly the message the Minister was passing across…they didn’t invest in training the Falcons hence they did not expect good performance.
Nigerians love sports and the potentials of the industry is huge, yet government has not been able to map out a successful plan to exploit the industry’s capacity to generate revenue, in fact government does not see it as a revenue generating venture, hence government’s inability to encourage and tap into the huge industry that is wasting away which is composed of some the most athletic population in the world.
The minister’s words echoed governments attitude over the years towards the sports ministry and how the government perceives sports as a whole…..the huge untapped potentials from secondary schools, universities, states, and the federal level……..the potentials are seen as a burden on the government rather than investments. Nigeria is a country that has stopped investing in its youths….both in education and sports, yet these sectors yield a high Return on Investments for other countries.
Nigeria has about a 100 million people between the age of 7 and 30 years old….this is the active sport age bracket, but interestingly this also the educative age……it is assumed that at 24 years, a person should have finished his or her first degree. Government’s negligence in investing in the educational sector and its infrastructure where most of the athletes are discovered has also affected the school’s abilities to sustain and maintain sport facilities and capacity of secondary schools and universities……you only need to look at the private secondary schools and see how many can boast of the expanse of land that the public schools have which was the backbone of various sports in the past, yet the secondary schools are where kids pick up such sports, are discovered, and decide to either pursue it as a professional career or for leisure.
Diversifying the Economy Through Sports and its Economic Impact!…..
According to A.T Kearney, the worldwide consulting company, the global sports industry is worth about USD$620 billion……from infrastructure construction to sporting goods, licenced products and live sports events…….in fact the global sports industry is growing at a faster rate than GDP rates around the world….the size, makeup and revenue is a significant growth prospect for the future and cannot be ignored.
The North America sport market as at 2014 was worth USD$60.5 billion and it is expected to reach USD$73.5 billion by 2019 with media right deal projected to surpass revenue from gates fees. This is a significant and huge contribution to the nation’s economy creating over 500,000 jobs in the United States with an average salary of USD$39,000….the Football (NFL), Basketball (MBA), Baseball (MBL), and Hockey (NHL) are the biggest contributing more than USD$23 billion annually.
In the United Kingdom, with the constant growth of the industry, it now ranks among the top 15 mainstream activities in the economy supporting over 450,000 jobs and contributing over BPD20.3 billion to the economy annually. ……benefiting from sports tourism, and the hosting of tournaments which also injects cash into the economy….the Rugby 2015 World Cup attracted 466,000 to the UK with BPD869 million direct expenditure on travel and accommodation alone.
The Premier League and the involved clubs generates more than BPD6.2 billion in economic output, BPD3.4 billion of that amount was contributed to the overall UK GDP in 2013/2014 alone, the Premier League and its club employs 6,239 people, and 65,623 jobs in the Premier League and the Premier League Club’s supply chain, and 103,000 full time employee jobs supported in the UK. The UK government generates around BPD2.4 billion from tax receipts through the leagues and the full time employees of the sports industry supply chain. Even the global sports betting industry….both legal and illegal markets generates between USD$700 billion to USD$1 trillion annually…..it is a huge industry.
With a population of 180 million and 100 million of the population falling within the age brackets of 7 to 30 years, 7 years being the age when kids starts to do gymnastics and swimming, the economy has a huge population to pick out the best candidates for various sports……in fact Nigeria has more than it needs to find the best sport men and women to compete in the global arena. But the government has refused to tap the potentials of the industry because the government does not understand the economic impact and benefits of the sports industry and how it can be used to diversify the economy.
In fact countries like China have started a road map to creating a sports industry that will be worth USD$800 billion, accounting for 1% of its GDP by 2025….the industry currently accounts for only 0.6% of its GDP as at January 2015.
One of the major advantages of running a striving sports industry is the fact that athletes are discovered on regular basis and are ever ready for international games….this was the advantage Nigeria had in the past which won the country medals in the Olympics and other international events…..today athletes train themselves to even compete for the country and those that are fortunate enough switch nationalities to carry the flag of other countries that are ready to invest in them.
Psychological Impact of Sports to a Nations Stability!……….
Sports has been one of the major unifying factors in Nigeria……strategically the government should utilize such opportunities to create stability and keep the youths busy at the same time profiting from its economic benefits. From the grassroots level in Nigeria……sports creates opportunities in the society allowing people to come together in achieving a common goal…..at this level…..religion, ethnicity and other dividing factors are put aside and this promotes peace building in the society.
Countries like South Africa have been known to use sports as a means of promoting peace and reducing racial divide……..world organizations like the United Nations through their program….Sports for Peace and Development…. have been known to promote peace through the use of sports using it as an instrument that cuts across boundaries…..ignoring geographical borders and classes and at the same time bridging social integration and building economic development, example is the United Nations Program in El Salvador.
With the social unrest in Nigeria…..the government can promote peace and unity using sports and at the same time reaping the economic advantage of diversification.
Creating a Positive Image for Nigeria through Sports………….
“Global sports tournaments have a range of benefits that go far beyond the games themselves. They can transform the image of a country or a region. They bring people together and reveal new possibilities to a nation’s youth”.——Richard Attias
There are restless athletic youths in Nigeria…..the energies can be directed towards sports…. creating an industry that will export and import talents across all categories. The more international sports Nigeria participates in the more the country remains in the international headlines and the more positive image it projects for the country.
Countries like Jamaica and Brazil have built a positive image for themselves through track and field, and football…..these sports are the national identities of both countries, Bulgarians are known to be heavy weight lifters, Kenyans and Ethiopians are long distance runners, India is known for cricket, Canada’s national and international pride is ice hockey, and The United States is known for Basketball.
Conclusion and Recommendations!…..
“231 Colleges in the United States generated USD$9.2 billion in revenue from sports in 2014-15”——-NCAA
The President, the Minister and the entire nation should know that our youths are wasting away…..not only has Nigeria refused to develop a 100 million population industry, the country has refused to tap the potentials by creating a positive image for the country through the capacity of individuals from sports and also the fact that sports can keep the youth busy by using it to create stability for the country while government uses it to diversify the economy and generate revenue.
Federal and State Governments should privatize and sell off the Stadiums……the UK stadiums have utilization capacity of 95.9% with average attendance of 36,691. Not surprisingly too, in the US games such as the NFL averages 68,216 in attendance, MLB 30,163, MLS 21,692, NMA 17,849, NHL 17,548. Nigeria’s stadiums record less than 1% capacity utilization…..privatizing it will help drive business ideas in sports to generate revenue. They will include naming right for stadiums, TV and internet broadcasting, promotions, ticketing, memorabilia, sales of jerseys, endorsements, etc.
Federal and State governments should privatize sports of secondary schools and universities to companies who will buy the rights in collaborations with the schools and organize seasonal competitions amongst these schools which will include all sporting activities. High school sports in the United States generate billions of dollars annually…..in 2014-15, the NCAA reported that 231 colleges alone, not inclusive of high schools in the United States generated USD$9.2 billion in revenue.
Most of the secondary schools are no longer able to host the yearly inter-house sports which used to be the sensation every student looked forward to in the 70’s and 80’s……with the dwindling education budget most public schools can’t afford to host the event any longer, yet it was from those events that Nigeria discovered some of its best athletes…..the Principal and SMC cup played in the 80’s discovered majority of the U-17 team that won the 1985 and 1989 world cups….efforts should be concentrated on the public schools as these kids see sports as an escape root out of poverty. The version of the inter-house sports, Principal and SMC cup are what people pay to watch in the United States and they generate billions of dollars annually…..with proper organization, planning, and promotions, they can be achieved….but it has to be in private hands and run as a full business activity.
It will benefit the country at large if the Nigerian government can adopt this measures, the government would have been able to keep the youths busy, create a viable and profitable sports industry that will benefit both the private sector and schools, have ever ready athletes to represent the country in international tournaments and at the same time generating revenue for the government …..Nigerian Sports facilities and agile athletic youths are wasting away!
Playing the Clown to Divert Attention…………
From the book……48 Laws of Power: Law #21 “Play A Sucker to Catch A Sucker- Seem Dumber Than Your Mark”. Misdirection is one of the most valuable strategies for business, marketing, and even game. Play stupid!.
Truth be told…99% of the people never saw Trump as the so called “moron” and other names he was called before this election….Trump was seen as a brilliant businessman…. Though he has been a public figure most of his life, Trump never talk so stupidly in public like he did during the campaign….the name Trump was a Brand…and you don’t build a brand by being an “idiot” or a “moron”….or in other words…can a so called “moron” or an “idiot” build a USD$3.7 billion empire?….
Learning to divert people’s attention by looking stupid from your real intentions gives your victims an aura of confidence….confidence that makes them believe you can’t think smarter than you are acting.
Trump planned all the way to the end using another of the strategic law……while Hillary and her campaign team stopped and changed strategies to manage damage control……Trump didn’t care about the damage…in fact he escalated it….why?…..because that was the real strategy to blind the opposition…..he gave us all so much to talk about….his stupid acts, his immoral behaviors, the impossible things he said he will do.
While the media was constantly analyzing Hillary Clinton’s campaign strategies and mapping out the key States she will win….the media was analyzing Trumps stupidity, careless talk, and lack of experience!….he gave them a sense of superiority and this totally disarmed the suspension of his strategies.
Trump made Hillary Clinton and her campaign team feel smart…smarter than him….by doing this we all concentrated on his “Acts” rather than “Campaign Strategies” while he concentrated on Clinton’s campaign strategies. Looking back…….he was ridiculed and laughed at by Clinton and the Media after every debate, Clinton felt superior and boasted of experience!
Trump wore expensive saggy oversized suits….talked in a lousy manner….and we all concluded this can’t be the next US president!….but Trump reached out to the dissatisfied…those in the hinterlands, remote villages and rural America….those who felt left out…those who did not care how he talked or dressed…..those who had the geographical spread and coverage to give him electoral college votes rather than popular votes…..that was the strategy…..
When bloomberg.com released an article on Nov. 10th, 2016 titled “Trumps data saw a different America…and they were right”.
Trump concentrated his efforts in those places to secure his electoral votes…….his data team had seen it….Hillary Clinton, the media and the whole of America concentrated their efforts on Trumps Character…..the very thing he wanted everyone to see….he completely diverted everyone’s attention from where the decision makers were. While he played the character of a nuisance in the city….he held on to the ideologies of people in rural America.
Having traveled 38 hrs driving through the hinterlands, villages, and rural America in July….I noticed all the houses had Trumps banners and posters….The Democrats failed to notice this because they felt Trump was so stupid….
Till the end Hillary Clinton and the democrats believed victory was theirs…..Trump challenged the fairness of the elections….making everyone believe he knows he will lose…..Hillary and the Democrats prepared for a victory speech at the Mighty and grandiose Jafits Center using the American map colored in blue as the stage, decorated with the best hands, and witnessed by thousands…
Trump on the other hand chose a medium size hotel with hundreds in attendance……..no aura about the stage…..it exemplified one who was not sure of victory…..he never gave a hint about his strategies to the very end…..and to perfection!
The Chinese have a phrase…
“Masquerading as a Swine to kill the Tiger…..the hunter always has the last laugh…..masquerading as a swine works wonders on those who like the Tigers are arrogant and overconfident…….the easier they feel they can prey on you the easier you can turn the table on them”.
The man the media called “moron” and an “idiot” is today having the last laugh…..