Category: development

Kenya’s ex-prime minister Odinga mangles his numbers on authorities income share in Nigeria

Claims

Three claims about how income is shared between Nigeria’s three ranges of presidency.

Supply: Kenya’s former prime minister Raila Odinga (August 2020)

checked

Verdict

One appropriate, two incorrect

  • Since 2004 Nigeria’s income sharing system has given 52.68% to the federal authorities, 26.72% to states and 20.60% to native governments. 
  • Odinga was appropriate about native governments’ share, however vast of the mark for the opposite two authorities ranges.
  • And consultants query his declare that Nigeria’s system “works completely effectively”.  

After months of an typically fractious stalemate, in September 2020 Kenya’s senate hammered out a deal on how income could be shared  between the nation’s two ranges of presidency.

In August, on the top of the impasse, former prime minister Odinga returned to a well-known speaking level to argue for establishing a 3rd tier of presidency.

Constructing on this in an interview with Citizen TV, Odinga, who can be an African Union envoy, stated Kenya may resolve the recurring battle over tips on how to share income if it regarded to Nigeria for classes.

Nigeria, he stated, had a neighborhood, state and federal system of presidency. “When it comes to income share, 20% of the income goes to the native, 35% goes to the state and 45% goes to the federal governments … and it really works completely effectively,” Odinga stated

We checked if he was on the mark about how income is shared in Africa’s largest economic system.

Declare

In Nigeria … when it comes to income share, 20% goes to the native authorities.

Verdict

appropriate

We requested Dennis Onyango, Odinga’s spokesperson, for the supply of the previous chief’s claims. We are going to replace this report along with his response.

In keeping with its structure, Nigeria has a federal capital authority, 36 states and 768 native authorities authorities. There are additionally six space councils.   

The Income Mobilisation, Allocation and Fiscal Fee proposes a system for a way income is to be shared between the three ranges. That is then accredited by the nationwide meeting.

The income system was first utilized in 1982 when the Nigeria Income Allocation Act got here into impact. The legislation stipulated that 56% of funds would go to the federal authorities, 24% to states and 20% to native governments.

The present system will be traced to a March 2004 round from the finance ministry. It has remained at these ranges since.

“The income allocation system remains to be 52.68%, 26.72% and 20.6%,” Prof Sherifdeen Tella, professor of economics at Olabisi Onabanjo College informed Africa Examine.

Earlier than the income is cut up an quantity “not lower than 13%” is deducted and shared among the many oil producing states based mostly on their manufacturing ranges.

In accordance with information from Nigeria’s extractive industries transparency initiative, a authorities company supervised by the president’s workplace, native governments get 20.6% of nationwide income. 

We due to this fact fee Odinga as appropriate on this declare.

Latest native authorities allocations at 20%

The latest full 12 months information from the funds workplace exhibits that in 2019, native governments acquired N1.04 trillion of the N5.05 trillion accessible for sharing among the many three ranges of presidency.  

And within the first quarter of 2020, native governments acquired N441.44 billion of the N2.14 trillion accessible. 

Each these quantities work out to about 20% for native governments. (Word: Worth-added tax is additionally shared among the many three ranges of presidency, utilizing a distinct system. Native governments get 35% of VAT income, state governments 50% and the federal authorities 15%.)

Declare

35% of income goes to states.

Verdict

incorrect

Knowledge from Nigeria’s extractive industries transparency initiative exhibits that 26.72% is reserved for the state governments, not the 35% Odinga claimed. 

We due to this fact fee this declare as incorrect. 

In 2019, of the N5.05 trillion accessible for sharing, states acquired N1.35 trillion. Within the first quarter of 2020, states acquired N572.59 billion of the N2.14 trillion accessible.  

Each these allocations work out to 26.72%, in line with the system.

Declare

45% of income goes to the federal governments.

Verdict

incorrect

Odinga’s declare of 45% will not be correct. Official information exhibits the federal authorities will get greater than half of the entire income. 

In 2019, information from the funds workplace exhibits the federal authorities acquired N2.66 trillion of the N5.05 trillion accessible for sharing. Within the first quarter of 2020 it acquired N1.13 trillion out of N2.14 trillion.  

These quantities tally with the 52.68% set out within the sharing system. 

Does Nigeria’s income sharing mannequin work ‘completely effectively’?

Raila Odinga’s assertion that the Nigerian income sharing system “works completely” is contested. 

Gazie Okpara, a professor of selling at Abia State College in southeast Nigeria whose pursuits embody social coverage, stated the system was imperfect as a result of how the funds have been spent was not clear. 

“Every degree of presidency ought to at all times give an account of how funds have been spent,” he stated, an audit that ought to be offered for within the structure.

Prof Sherifdeen Tella, a professor of economics at Olabisi Onabanjo College in southwestern Nigeria, informed Africa Examine that in his view, allocations to state and native governments, and particularly the previous, ought to be elevated. “What’s allotted to those two tiers of presidency will not be ample.” 

Matthew Akintayo is a professor on the College of Ibadan, additionally in southwestern Nigeria. One in every of his focus areas is the economics of training. He informed Africa Examine that the sharing system ought to be restructured.

“A bulk or huge fraction of sources ought to be allotted to the state and native authorities as a result of each arms of presidency are nearer to the grassroots,” he stated. He added that state governors ought to be given extra leeway to handle their sources. 

John Kinuthia, a senior programme officer on the Worldwide Finances Partnership, informed Africa Examine that Odinga also needs to have thought of the character of devolved features when drawing comparisons. 

It was troublesome to match Kenyan counties with Nigerian states, partly as a result of they’d totally different features, Kinuthia stated. He gave the instance of training.

“In Nigeria there are features like training which are devolved, which is why you see an even bigger proportion of sources on the subnational degree in comparison with Kenya. In Kenya, training remains to be on the nationwide degree.”

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Is Nigeria ‘officially broke’? Why prominent economist’s warning needs a larger view

“Our government is broke. And it’s official.” This was the alarming opening of Dr Obadiah Mailafia’s regular “Scenarios” column in Nigeria’s Vanguard newspaper for 22 June 2020. 

Titled “When government goes for broke”, the column was republished in other dailies and made a fascinating read as the former Central Bank of Nigeria deputy governor added his voice to a growing debate on debt in Africa’s largest economy.  

Mailafia is an economist who ran for president in 2019, coming fourth. He gave debt and revenue figures for the first three months of 2020 as evidence for his claim.

We fact-checked these numbers, as well as two key claims in the article. 

Claim

‘Our government is broke.’

Verdict

misleading

Mailafia said the country’s finance minister had “revealed” that in the first quarter of 2020 –  January to March – 99% of the Nigerian government’s revenue went to repaying debt.

(Note: In May 2020 Nigeria’s cabinet approved a reduced budget tabled by finance minister Zainab Ahmed.)

But is this enough to say the government is broke? Mailafia told Africa Check he meant that the Nigerian government was “getting close to being broke”. 

“That is why I said ‘goes for broke’ in the headline. One cannot say a country is completely broke. The government can sell land, print money or borrow, which is what our government is doing now.” 

Mailafia said his claim was based on figures from Nigeria’s budget office, which helps plan the country’s finances. (Note: The revised figures can be found here.)

The cheque is in the mail

A straight comparison of debt to income is not enough to declare a country bankrupt, experts told Africa Check.

“You cannot make such a conclusion using revenue and debt servicing figures for one quarter,” said Olusegun Ajibola, professor of monetary economics at Caleb University in Lagos. 

“Government revenue accrues over time and so revenue recorded for the first quarter of 2020 may be from the last quarter” of 2019, he said.  

His gist was that a government’s revenue in a particular quarter is not always from transactions in that quarter – it could be payment of a bill issued months before. For example, oil sold this month might be paid for months later.

Ajibola said this was the same for debt repayment. “The debt paid in the first quarter may have fallen due in the previous quarter. You must also consider the debt components being serviced, whether principal or interest.

“Before one can consider a government to be broke, you must consider data from two, three or more quarters.”

Foreign reserves and remittances also count

To get a bigger picture, assets such as foreign reserves should also be considered, Ajibola said. The reserves include foreign currency and treasury bonds. As of 4 August, they were valued at US$35.8 billion.

Foreign remittances also count, the economist said. The most recent data, for January and February, shows that Nigerians living abroad sent $3.1 billion home. In 2019 it was $19.2 billion. These amounts add up to trillions of naira.  (Note: The exchange rate in June, when Mailafia made his claim, was N360 to the dollar).

Matthew Odedokun, economics professor at Kwara State University, Ilorin in north-central Nigeria, agreed that foreign reserves were important in assessing a country’s ability to repay debt.  

The debt burden in relation to the gross domestic product and export earnings should also be considered, Odedokun said. (Note: GDP is the size of a country’s economy and market value of all goods and services produced in a country in a given period, usually a year.)

We therefore rate Mailafia’s claim as misleading.

Nigeria’s economy ‘in a difficult situation’

That being said, there is little doubt that the country’s economy is in a tough phase at the moment, Shehu Aliyu, professor of financial economics at northern Nigeria’s Bayero University, Kano, told Africa Check.

Traffic gridlock in Lagos, Nigeria. (Photo: AFP PIUS UTOMI EKPEI)

“Nigeria has been affected mainly because of the impact of Covid-19 on the global oil market. But that is picking up gradually, so the current difficult economic situation will not last long.”

Oil and gas account for 10% of Nigeria’s GDP, but half of government revenue and 90% of export earnings. In 2019, the government took in only half of the revenue it predicted it would earn from oil and gas. 

The government has also described its finances as being “critically constrained”.

Beyond Covid-19’s impact on oil, Nigeria’s economic woes have been caused by other internal factors, said Sarah Anyanwu, an economics professor at the University of Abuja.

Unhealthy dependence on oil and gas

“The impact of Covid-19 is global so the Nigerian government can’t be blamed for that,” Anyanwu said. “But factors like corruption, insecurity and reliance on oil for foreign exchange need to be addressed.”

Anyanwu added that the threat of violence in some parts of the country was reducing farmers’ productivity. Agriculture is an important part of the economy. In a rare interview in July, president Muhammadu Buhari described insecurity in the country’s north as “very, very disturbing”.

Caleb University’s Ajibola agreed that Nigeria needed to diversify its economy to reduce its dependence on oil.

Claim

During the first quarter, revenues stood at N950 billion.

Verdict

incorrect

We traced this figure to the budget office’s projections for 2020 to 2022, published in April 2020.

Nigeria’s constitution says revenue must be shared among its three levels of government:  federal, state and local. 

The government earned N2.2 trillion in the first quarter of 2020. This was N1.38 trillion in oil revenue and N825.37 billion from non-oil taxes, such as income, value added tax and custom revenues. 

This was before deductions, mainly a 13% deduction from oil revenue for states that produce crude.

After deductions, N1.385 trillion from the main pool of the federation account was shared among the three levels of government. This was according to the sharing formula of 52.68% for the federal government, 26.72% for states and 20.60% for local governments. The federal government got N729.89 billion, states N370.08 billion and local governments N285.32 billion.

Additionally, N296.78 billion from the VAT pool account was shared using a different formula: 15% for the federal government, 50% for states and 35% for local governments.

This means in the first quarter of 2020 the centre got N774.41 billion, states N518.47 billion and local governments N389.19 billion. When independent revenue such as funds generated by its agencies and enterprises are added, the federal government’s revenue in the quarter came to N950.56 billion.

This is the figure Mailafia referred to. But Nigeria’s entire revenue that quarter was in fact N2.2 trillion. If he had said federal revenues stood at N950 billion, he would have been on surer footing. We therefore rate the claim as incorrect.

Claim

Debt servicing obligations stood at N943.12 billion.

Verdict

correct

Mailafia described this amount as “staggering”. The figure he used in the article checks out with budget office data. 

This shows that at the end of March 2020, the federal government had spent N2.37 trillion. Of this, N943.12 billion – the figure quoted by Mailafia – went to repaying debt.

Other costs included N820.1 billion for salaries and pensions, and N139.70 billion for capital projects such as building roads, railways and houses.

As of May 2020, federal government spending had risen to N3.98 trillion – N1.58 trillion of it for debt repayments.

Claim

99% of revenue is being committed to debt servicing alone.

Verdict

correct

Mailafia was also close with the share of central government revenue used for repaying federal debt in the first quarter of 2020. 

The N943.12 billion spent on servicing debt was 99.2% of the N950.56 billion retained by the federal government. 

Mailafia told Africa Check his point was that “it is a bad situation when your debt servicing obligation is almost equal to your revenue”.

Nigeria’s government has said it will borrow to finance about half of its revised 2020 budget of N10.52 trillion. Of the total approved budget, N1.96 trillion will go to capital projects in 2020 while recurrent expenditure will account for the balance of N7.59 trillion.

The Nigerian government has recently said that while its debt to revenue ratio is high, the country’s debt to GDP ratio is within the limit of 25% as stipulated by its national debt management framework of 2018 to 2022. 

Additional reading:

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Fact-checking Buhari’s Democracy Day claims about his economic achievements

In his Democracy Day address on 12 June 2020, president Muhammadu Buhari sought to highlight his achievements since his previous speech.

“In my 2019 address, I promised to frontally address the nation’s daunting challenges, especially insecurity, economy and corruption,” said Buhari. “I, therefore, find it necessary to give an account of my stewardship on this day.” 

We looked at seven claims he made in his speech. (Note: We have contacted the presidency for evidence in support of these claims and will update our report with their response.)

Claim

‘We have witnessed 11 quarters of consecutive GDP growth since exiting recession.’

Verdict

correct

In 2016, the continent’s largest economy battled an economic recession. The country’s gross domestic product, or GDP, shrunk over five quarters, from the first quarter of 2016 to the first of 2017. (Note: All figures are for real GDP, which is inflation-adjusted.)

A recession is when a country posts a negative growth rate over two consecutive quarters, Baba Madu, head of the national accounts division at Nigeria’s National Bureau of Statistics, told Africa Check.

Following the negative growth, the first sign of recovery was 0.72% GDP growth in the second quarter of 2017. Growth has since been positive, with the most recent official data showing growth of 1.87% between January and March 2020.

This brings the number of quarters with consecutive GDP growth to 12, or 11 “since exiting” recession. 

Claim

‘The GDP grew from 1.91% in 2018 to 2.27% in 2019 but declined to 1.87% in the first quarter of 2020 as a result of the decline in global economic activities due to the Covid-19 pandemic.’

Verdict

misleading

These numbers are accurate based on data from the national bureau of statistics. But the president’s figures for 2018 and 2019 are the average of four quarters, which he then compared to a single quarter of 2020. 

Is it correct that this year’s dip was only because of the pandemic? We asked experts.

It is not accurate to attribute the drop entirely to Covid-19, Christopher Ekong, professor of economics at the University of Uyo in southern Nigeria, told Africa Check.

“You can say Covid-19 aggravated it, but the main reason for the drop in GDP growth rate is the drop in oil prices. Our economy is still largely dependent on oil.” There had also been a drop in demand for Nigeria’s oil. Both falls started in the second half of last year. 

Another factor hurting the economy before the pandemic was the fall in regional trade following the closure of the country’s borders, Ekong said. In August 2019 Nigeria closed its land borders with Benin, Niger, Chad and Cameroon in an attempt to curb smuggling. 

Security crisis in northern Nigeria also contributed

According to development economist Prof Tukur Garba, insecurity in northern Nigeria had also affected agriculture, a major contributor to the economy.

“Covid-19 lockdown is a factor, but the security crisis going on in northern Nigeria is a major reason for the drop in GDP growth rate,” Garba, a lecturer at the Usmanu Danfodiyo University in Sokoto, northwestern Nigeria, told Africa Check.

Attacks by armed groups including Boko Haram has meant that many farmers in northern food-producing states were displaced. “This means reduced farming activities, low productivity and high food prices,” Garba said.      

Claim

‘Every single economy in the world has suffered a decline.’

Verdict

exaggerated

Nigeria’s economic growth declined on a year-on-year basis from 2.55% in the fourth quarter of 2019, to 1.87% in the first three months of 2020. This underpinned Buhari’s claim that the pandemic had seen a decline in growth for “every single economy” in the world, and that Nigeria’s had been “relatively moderate”.  

Did no economy escape a knock? Not exactly. We identified at least two countries that did not decline, according to data from the Organisation for Economic Co-operation and Development, or OECD. 

At least 18 of the 37 OECD countries had positive growth rates in the first quarter of 2020, but only two – Chile and Russia – grew when compared to the last quarter of 2019, the measure considered by Buhari.  

Chile’s GDP growth rate was -2.4% in the fourth quarter of 2019, and 0.5% in the first quarter of 2020. Russia posted 1.5% year-on-year GDP growth rate in the fourth quarter of 2019, and 1.8% in the first three months of 2020. 

OECD data does show consistent declines for its member countries, tying in with gloomy forecasts for global economic growth by the International Monetary Fund. Even Chile’s central bank has said it is headed for a sharp decline over 2020.

But at the time Buhari made his claim, data shows he was off the mark for at least two countries.

Claim

‘The external reserves grew from $33.42 billion on 29 April 2020 to about $36 billion in May 2020 …”

Verdict

correct

External reserves are also known as foreign exchange reserves, according to Nigeria’s central bank. These include foreign currency and treasury bonds and are particularly useful should the country’s currency rapidly lose value.

Buhari said this rise was between 29 April and “May”, but did not give a specific date for May.

Central bank data shows the country’s gross external reserves were at US$33.42 billion on 29 April. They increased to $33.89 billion on 4 May and to $36.59 billion on 29 May. 

One month too short for analysis

It would appear the president was broadly accurate on this score. But there is a caveat – you cannot use data from one month to determine the state of Nigeria’s external reserves, economics lecturer Prof Sheriffdeen Tella told Africa Check. He teaches at the Olabisi Onabanjo University in Ago-Iwoye, southwestern Nigeria.

“To get a good picture, you look at a minimum of six months or one year. This is because payment for oil sold is often in the future. So a rise in external reserves this month may be due to proceeds of oil sold months back. Focusing on one month may serve a political purpose,” said Tella.

 Longer term data shows the country’s reserves dipped consistently from August 2019 to May 2020, when they started to recover.

External reserves are important as they determine a country’s creditworthiness, ability to import and to stabilise its exchange rate, Tella said.

Claim

‘[This amount in reserves] is enough to finance seven months of import commitments.’

Verdict

unproven

Buhari said the $36 billion in external reserves as of May 2020 could finance seven months worth of imports. 

But this assumed that imports for each month would be of the same approximate value, Prof Sheriffdeen Tella of Olabisi Onabanjo University said.

“Imports vary significantly from month to month. So you can’t really say a certain amount can finance future imports.”

Claim

‘Our revenue from cocoa and sesame seed increased by $79.4 million and $153 million.’

Verdict

unproven

Referring to his administration’s efforts at growing non-oil exports, Buhari highlighted increases in two of Nigeria’s biggest agricultural exports: cocoa and sesame seeds. 

The most recent data from the national bureau of statistics shows Nigeria exported N49.1 billion ($160.54 million) worth of sesame seeds in the year to March 2020. (Note: This was at the official rate of $1 dollar to N306. The rate changed to $1 to N360 on 20 March.)

In the year to March 2019, the country had exported sesame seeds worth N39.6 billion ($129.5 million). This works out to a $31 million increase, against the claim of $153 million by the president. 

Over the same period, exports of Nigeria’s various types of cocoa beans were valued at N55.98 billion ($182.94 million) in 2020, against N32.57 billion ($106.4 million) in 2019. The total value of cocoa exports therefore increased by $76.54 million, or about $3 million less than Buhari’s claim.

There has certainly been an increase in the value of the two exports in the past year, but the figures provided by the president do not tally with those published by the statistics agency. In the absence of clarification from his office, we rate this claim as unproven. 

Claim

‘Nigeria has risen by 25 places on the World Bank’s ease of doing business ranking, from 146th to 131st.’

Verdict

incorrect

Buhari’s administration has been keen to highlight the country’s improved ranking on the World Bank’s ease of doing business index. 

Every year, the bank publishes a report ranking how friendly countries make their economies to investors. The most recent, Doing Business 2020, was published in October 2019. It ranks the economies of 190 of the 193 countries listed as member states of the United Nations. 

Without specifying a time frame, Buhari said Nigeria has moved up 25 spots on the ranking, from 146th to 131st. This is the country’s current ranking.

We went back 10 years on the index. The president’s term in office started in 2015. 

Nigeria’s ranking on ease of doing business index
Year Ranking /Number of countries ranked Score
2015 170/189 47.33
2016 169/189 44.69
2017 169/190 44.63
2018 145/190 52.03
2019 146/190 52.89
2020 131/190 56.9

Source: Doingbusiness.org

While Nigeria’s 2020 ranking is a 15-spot jump on the previous year, it is the same ranking it had in 2013, when 185 countries were rated.

The president seemed to be referring to changes in the past year. However, the country moved up 15 places, not 25 as he claimed. We could not find a 25-spot move. We therefore rate the claim incorrect. 

Claim

‘[Nigeria] is now rated as one of the top ten reforming countries.’

Verdict

correct

Staying with the World Bank’s ease of doing business ranking, Buhari said Nigeria is now rated among the top 10 reforming countries.

Of the 10 economies which improved the most across three or more areas measured in 2018/19, Doing Business 2020 ranks Nigeria in 10th place. It said the country had improved the ease of starting a business, dealing with construction permits, registering property, getting electricity, cross-border trading and enforcing contracts. 

Nigeria first made the top reformer’s list in 2018.

Debate about value of ranking continues

In March 2020, Africa Check asked experts about the index when researching a similar claim about Mauritius. 

Nousrath Bhugeloo is head of international growth at Ocorian, an international financial services firm, based in Mauritius. She said that the ranking is “a signal that a country gives to the outside world about it’s attractiveness for investment”.

“It is key for the financial services sector. It really shows how ready the country is to attract investors or entrepreneurs to come and do business in the country.  It means that the government has more or less the right policies to attract investors,” Bhugeloo said. She has previously written about the investment climate on the continent.

The index has however caused soul-searching within the World Bank. It continues to face criticism over whether it provides real value. 

One of its critics is Prof Gerard McCormack, who teaches at the University of Leeds in the United Kingdom. In 2018 he wrote a paper titled Why “Doing Business” with the World Bank May Be Bad for You.

He argued that “the (Doing Business) project has a universalist, quasi-imperialist vision in that it puts legal rules and legal systems at the fulcrum of the development equation but a variety of non-legal factors clearly impact on a country’s economic performance”.

McCormack told Africa Check his views have not changed. “The changes in the rankings largely reflect law on the books – certainly in relation to getting credit and resolving insolvency. They do not necessarily reflect what actually happens in practice and there may be large divergence in some cases between formal law and what takes place on the ground.” 

“What the rankings measure are assumptions that a certain formal state of affairs will necessarily bring about economic growth. There is no guarantee that this will be the case”. The debate continues.

Additional reading:

Buhari’s 2018 Democracy Day speech: 7 main claims under scrutiny

© Copyright Africa Check 2020. Read our republishing guidelines. You may reproduce this piece or content from it for the purpose of reporting and/or discussing news and current events. This is subject to: Crediting Africa Check in the byline, keeping all hyperlinks to the sources used and adding this sentence at the end of your publication: “This report was written by Africa Check, a non-partisan fact-checking organisation. View the original piece on their website”, with a link back to this page.




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Covid-19 pandemic: Fact-checking former Nigeria VP Abubakar’s claims about the economy

Former Nigeria vice president Atiku Abubakar recently criticised the current administration’s plan to borrow nearly US$6.9 billion, saying the country should instead seek debt relief and push for higher oil prices. 

Nigeria is looking for $6.9 billion from three multilateral lenders. Finance minister Zainab Ahmed has said this is to cushion the country from “existential threats” due to the Covid-19 pandemic and falling prices of oil, its top foreign exchange earner.

Writing in the daily Vanguard newspaper in April 2020, Abubakar, who has vied for the presidency four times, made a number of statements to support his position. We fact-checked six.

Claim

Before the novel coronavirus pandemic hit the globe, Nigeria spent 42% of its earnings on debt servicing.

Verdict

mostly-correct

We asked the former vice president to provide evidence for his claims and for clarifications where necessary. We will update this report when he responds.

The first cases of the novel coronavirus outside mainland China were reported in January 2020, according to the World Health Organization.

Nigeria spent N2.1 trillion (about US$6.9 billion at the current official exchange rate) to service its debt in 2019, according to the country’s debt management office. Of this, N1.69 trillion ($5.5 billion) was for domestic debt, and N408 billion ($1.3 billion) for foreign debt. 

Nigeria’s revenue in 2019 was N4.77 trillion, according to the country’s central bank. This came from sources such as oil and gas, value added tax, corporate tax and custom duty.

Taken as a proportion of this revenue, about 44% was spent servicing debt. We therefore rate Abubakar’s figure of 42% as mostly correct.

Economist warns debt servicing level ‘unsound’

Economics professor Philip Olomola told Africa Check that while there are “valid reasons” for the debt owed by the government, using nearly half of the country’s earnings to repay it was unsound in the long run.

“In the face of dwindling revenue, governments take loans for projects and to keep the country running. However, debt servicing taking over 40% of the country’s earnings is not sustainable,” Olomola, who teaches at the Obafemi Awolowo University, Ife, said.

Claim

The United Nations Economic Commission for Africa is projecting that Africa’s growth will drop to 1.8%, and perhaps lower.

Verdict

correct

The UN’s Economic Commission for Africa focuses on the economic and social development of the continent.

Abubakar said it was inevitable that Africa would take an economic hit from the pandemic, and said the agency had already revised growth projections for the region.

A spokesperson for the commission, Privat Akochaye, directed Africa Check to a French-language report published in April 2020. This showed that the agency had pared back its growth forecast for the region for 2020, from 3.2% to between 1.8% and 2% in a best-case scenario. But this could shrink to 0.1% or, in a worst-case scenario, to as low as -2.6%.

The commission therefore did revise its projections, though these forecasts tend to often change as more information becomes available. 

Claim

The price of oil was lower when president Obasanjo and Abubakar assumed office on 29 May 1999 than it is today …

Verdict

mostly-correct

The former VP’s point was that a crash in the price of oil should not automatically “trigger a crisis”.

Abubakar took office as president Olusegun Obasanjo’s deputy on 29 May 1999, serving two terms until 2007.

In May 1999, the price of Nigeria’s main crude oil export, Bonny Light, was US$16.94 per barrel, according to historical data from the Organization of the Petroleum Exporting Countries.

On 8 April 2020, the day Abubakar’s article was published, Bonny Light crude sold at $25.89 per barrel. Strictly interpreted, Abubaka was accurate that the price of oil was lower in 1999.

Be cautious when comparing oil prices, says economist

But comparing the prices of oil in 1999 and in 2020 should be done with caution, economics professor Philip Olomola told Africa Check.

“There is a need to consider economic fundamentals such as the changes in the demand for the commodity,” he said. 

“The US for instance was buying more crude oil from Nigeria in 1999 than it is buying today. It’s not just about the price. Even if it rises to $100 per barrel, if there are no buyers, it would make no difference,” he said. 

Claim

… yet they paid off Nigeria’s entire foreign debt.

Verdict

incorrect

Returning to a familiar 2019 presidential campaign talking point, Abubakar compared debt levels during his time as VP with those of the current administration of president Muhammadu Buhari.

When he exited office in 2007, Nigeria’s foreign debt had been “paid off”, Abubakar said. Is this accurate?

A highlight of the Obasanjo administration was a debt cancellation deal it negotiated with the “Paris Club”, an informal group of 22 creditor countries.

In 2005 the creditors wrote off $18 billion of the roughly $30 billion Nigeria had owed them at the end of 2004. This was 84% of the country’s foreign debt as at December 2004.

Nigeria still had to pay $12.4 billion, according to the public announcement by the group, which was made in April 2006.

Nigeria also paid its debt to private banks known as the “London Club” in a similar deal. The country’s debt office showed this was done in 2007. But this statement of accounts showed Nigeria’s foreign debt was $3.54 billion at the end of 2006 and $3.65 billion at the end of 2007. 

The data shows the Obasanjo government did not settle Nigeria’s foreign debt as the VP claimed. They handed over to a new government in May 2007. That year, Nigeria still spent more than $1 billion to service foreign debts.

Claim

Nigeria has devoted N37 billion to renovating the national assembly complex, which was built from the scratch for less than 20% of that amount.

Verdict

unproven

Abubakar also faulted the recent approval of a reported N37 billion to renovate the national assembly, which he said was “built from scratch” for less than a fifth of this.

Nigeria’s plan to spend this amount, approved in December 2019, is the subject of public debate

The contract to initially build the national assembly was awarded in February 1996, with construction lasting two and a half years. The company that built it has given the value of the contract as N7 billion.

But the value of Nigeria’s currency has depreciated significantly over the years, economics professor Philip Olomola told Africa Check.

When comparing the two figures, one “should consider factors such as changes in exchange rate and in the cost of construction equipment and material”, the economist said. 

Difficult to do a direct comparison

In 1996 the exchange rate was N21.9 to the US dollar. This means about $320 million was devoted to the construction of the complex.

In December 2019, when the renovation budget was approved, the official exchange rate was N306 to the dollar, or $121 million. 

Olomola said the purchasing power of N7 billion in 1996 is likely to be more valuable than that of N37 billion today. 

Building costs higher in 2020 than 1996, says quantity surveying expert

The cost of building equipment and material has also generally increased over the years, King Nyenke, a professor of quantity surveying at the Rivers State University, told Africa Check.

Nyenke said that if he were provided with the same bill of quantity as in 1996, the cost of building it now “would be higher” than N7 billion.

Because of the changes in these fundamentals, it is difficult to know for certain if the repair bill for the national assembly would be less than 20% what it cost to construct it. 

So we rate this claim as unproven.  

Claim

N13 billion was devoted to the State House clinic in the last five years.

Verdict

incorrect

The hospital at the president’s official residence is often reported as being ill-equipped and barely functional despite being allocated a large budget every year. 

“It is virtually useless as we face the most significant public health challenge of our national life,” Abubakar wrote, claiming that N13 billion was allocated to the hospital in the five years to 2020. A similar claim was published by the Daily Trust newspaper on 6 April.

Budget documents of 2016 to 2020 differ

The budget allocation to the facility in the 2016 budget – the first of Buhari’s administration – was N2.83 billion. It dropped to N331.7 million in the 2017 budget before rising to N1.03 billion in the 2018 budget. 

In 2019 N799 million was budgeted for the hospital, and N723 million for 2020. The total is about N5.7 billion – less than half Abubakar’s claim. (Note: The amounts released are sometimes less than what’s budgeted, but a lack of historical data on budget implementation makes it difficult to know the exact amount that reached the hospital over the period.)

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Is youth unemployment in Nigeria ‘almost getting to 70%’?

As calendars flipped over to 2020, Nigerian president Muhammadu Buhari outlined his agenda for the country in a “letter from the president”.

Responding to the letter, Dr Obadiah Mailafia, a former deputy governor of the country’s central bank, said it lacked direction, including on how to tackle youth unemployment.

“Most” young people in Nigeria are wandering the streets without jobs, Mailafia reportedly said. “Youth unemployment is almost getting to 70%,” he said. 

Is unemployment as high as Mailafia claimed?

‘I didn’t say it’s up to 70% … it’s rising towards 70%’

Mailafia, who was the presidential candidate for the African Democratic Congress in Nigeria’s 2019 elections, told Africa Check that though he had said “unemployment”, he meant both unemployment and underemployment. 

 “I leave you to judge if a university graduate who is riding an ‘Okada’ [commercial motorcycle], for instance, can be said to be employed. As far as I’m concerned, that person is not employed because he is not working based on his level of education.”

“Remember, I didn’t say it’s up to 70%, I said it is rising towards 70%,” he said.

Latest employment estimates from 2018

The most recent national data on Nigeria’s employment is a labour report published by the National Bureau of Statistics in December 2018. We were directed to this report by Dr Baba Madu, the head of the national accounts division at the bureau.

The report covered October 2017 to September 2018. The next set of employment statistics are being prepared and will be published “soon”, Madu said.

Who qualifies as unemployed or underemployed?

The National Bureau of Statistics defines an unemployed person as one who does not have work or only works for less than 20 hours a week. For you to count as being unemployed, you must have previously been in the labour force. This means you are between 15 and 64 years of age, are willing and able to work and have actively looked for work in the “reference period” or the week preceding the survey.

(Note: In 2014, Nigeria changed how it calculates unemployment, from those working fewer than 40 hours  a week – the threshold for “full-time” – to those working less than 20 hours a week. Those working between 20 and 39 hours a week are considered underemployed.) 

The unemployment rate is given as the “proportion of those in the labour force … who were actively looking for work but could not find work for at least 20 hours a week during the reference period”.

Underemployment is defined as working for an average of at least 20 hours a week, but fewer than full-time (40) hours. 

Someone who is employed full-time but in “an activity that underutilised your skills, time and educational qualifications”, is also classified as being underemployed.

What does the latest official data say?

The 2018 report found that the number of unemployed rose from 15.9 million in the third quarter of 2017, to 20.9 million in the third quarter of 2018. Those who were underemployed increased from 18 million to 18.2 million in this period.

This made the most recent unemployment rate 23.1%, a rise from 18.8% in the third quarter of 2017. When both employment and underemployment were considered, the rate had risen from 40% to  43.3%

Mailafia’s claim inaccurate

How many young people are unemployed? Nigeria’s data agency defines “youth” as those aged between 15 and 35. For the period when the most recent data is available, the youth unemployment rate rose from 25.5% in the third quarter of 2017 to 29.7%. This is less than Mailafia’s claim of 70%. 

If we are generous and include the most recent underemployment rate of 25.7%, the number is 55.4%, which is still significantly lower than Mailafia’s estimate. We therefore rate the claim incorrect.

Nigeria’s unemployment ‘worrisome’ say economists

But the number of young people who are out of work in Nigeria is still a concern. Prof Philip Alege, who teaches economics at Covenant University in Ota, southwestern Nigeria, told Africa Check: “Nigeria’s youth unemployment and underemployment figures are worrisome, and they are worsening.”

Alege said there were a number of reasons why so many young people were out of work. These included the education system not teaching the right skills, and advances in technology leading to the loss of certain types of jobs.

“The fourth industrial revolution is here and it’s affecting how we live and work. But Nigeria is not ready. The school curriculum has also not been reviewed to equip students with the skills they need to work in this age.” 

“Because of this, young people educated in Nigeria would increasingly have difficulty finding jobs. Attempts made at creating jobs are not enough,” he said.

Prof Temidayo Akinbobola, who teaches economics at Obafemi Awolowo University in Ile-Ife, in the southwest of the country, said government regulations and taxes made the country seem unfriendly to investors. 

“Though it is not proper to approximate 55.4% to 70%, having more than half of a country’s youth population unemployed or underemployed is a bad indicator. If things don’t change drastically, unemployment and underemployment figures would be headed for 70%,” Akinbobola said.

Conclusion: Youth unemployment in Nigeria worrying, but not near 70%

While criticising a letter from the president, a former deputy governor of Nigeria’s central bank highlighted what he said were dire unemployment figures for young people in the country. 

Almost seven in ten young people were unemployed, Dr Obadiah Mailafia told a national publication. He told Africa Check he included the underemployed in this statistic. 

The most recent official data on youth unemployment in Nigeria shows that 29.7% of youth were unemployed, and a further 25.7% underemployed. This comes to 55.4%, well short of Mailafia’s figure. 

Experts we spoke to said the official figure was still worrying , and could rise. 

Additional reading:

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