Category: economy

Nigeria’s inhabitants, financial system and historical past: fact-checking Buhari’s independence day speech

As Nigeria marked 60 years of independence on 1 October,  president Muhammadu Buhari gave a speech that often appeared to the previous. 

The president made quite a lot of claims in his handle, starting from the inhabitants and financial system to navy rule and gasoline value will increase. We took a better have a look at eight.   


At independence, Nigeria had a inhabitants of 45 million



Nigeria’s inhabitants figures have traditionally been controversial, with useful resource allocation recognized as a key cause for this.

Gbolahan Oni is professor of demography and social statistics at Covenant College in southwestern Nigeria. He instructed Africa Test that solely United Nations and World Financial institution inhabitants estimates ought to be relied on when earlier years.

“These organisations have demographers who use scientific formulation to derive the inhabitants estimates, decreasing the impact of overcounting and undercounting that happen in our census,” Oni stated.  

Knowledge from the World Financial institution and the UN’s division of financial and social affairs exhibits Nigeria’s inhabitants was 45.1 million in 1960.

That estimate was particularly for 1 July 1960, three months earlier than independence day, the UN division instructed Africa Test. 


Nigeria’s city inhabitants at independence was roughly 7 million



For the share of Nigeria’s inhabitants labeled as city in 1960, Dr Thomas Spoorenberg directed us to the most recent estimate from the World Urbanization Prospects: The 2018 Revision

This was ready by the UN’s division of financial and social affairs. Spoorenberg is the inhabitants affairs officer within the division’s inhabitants estimates and projection part. 

The report estimates Nigeria’s 1960 city inhabitants at 6.96 million

International locations outline city in several methods, the UN’s inhabitants division says. Most – “almost two thirds” – use an administrative definition “however virtually all of them add a component reminiscent of inhabitants dimension, density, financial occupation or city capabilities” to characterise city areas.

Denmark and Iceland, for instance, outline city locals as solely 200 inhabitants or extra, whereas the Netherlands and Nigeria have a threshold of 20,000.


‘Right now, we grapple with a number of challenges with a inhabitants exceeding 200 million.’



Buhari stated that whereas Nigeria’s landmass, which he gave as 910,768 sq. kilometres, remained the identical,  the inhabitants had grown to greater than 200 million individuals. 

Nigeria’s final inhabitants census was in 2006, when the Nationwide Inhabitants Fee recorded 140.4 million individuals. Even that rely confronted controversy.    

Since then the inhabitants has been primarily based on estimates, most just lately 199 million in 2017, a determine from the Nationwide Bureau of Statistics. Nationwide media have reported {that a} new census is within the offing.

The inhabitants fee at present estimates Nigeria’s inhabitants at 206.3 million, it was confirmed to Africa Test. 

As of 1 July 2020, the UN estimated that Nigeria was residence to greater than 206 million individuals. Its inhabitants division shared a graph of how the inhabitants has modified with time.

How does the UN make its estimate?

Nigeria’s most up-to-date official inhabitants estimate is from 2016, utilizing 2006 census figures as a place to begin. However whereas the UN has “used and regarded” these official estimates as much as 2016, Spoorenberg instructed us, particulars concerning the mortality, fertility and migration assumptions made weren’t obtainable. 

Nigeria’s official nationwide inhabitants determine for 2016 is larger than the UN’s inhabitants estimate by about 7.7 million, Spoorenberg stated.   

The UN inhabitants unit stated it had used a number of information sources, together with the 2006 and former inhabitants censuses, to tell its estimates about Nigeria. These return to 1950. 

The latest data used is the 2016/17 A number of Indicator Cluster Survey, Spoorenberg stated. This survey was not a part of official estimates as a result of the latter are inhabitants projections primarily based on the 2006 census. 

The UN “reappraises each different yr” the inhabitants estimates for all nations to take into consideration any new data. “A sure diploma of uncertainty surrounds the scale and construction of the inhabitants of Nigeria however given the demographic inertia a inhabitants can not change in a single day,” stated Spoorenberg.

“By mobilising fertility and mortality estimates from the newest surveys, demographers can supply pretty correct inhabitants estimates for Nigeria.”


52% of Nigeria’s present inhabitants lives in city areas



The UN’s division of financial and social affairs estimates Nigeria’s 2020 city inhabitants at 107.11 million

One other 99.04 million dwell in rural areas, for a complete inhabitants estimate of 206.15 million

Based mostly on these figures, 51.96% of Nigeria’s inhabitants lives in city areas. 

Leo Sanni, statistical data officer on the Nationwide Bureau of Statistics, confirmed that in Nigeria an space is taken into account to be city if it has a inhabitants of above 20,000. It additionally requires social infrastructure reminiscent of electrical energy, water provide and paved roads. 

The info additionally exhibits the nation’s urbanisation price has risen steadily from 15.4% in 1960 to 52% in 2020.


‘For a cumulative 29 of our 60 years of existence as a nation, we have now been below navy rule.’



Nigeria’s first expertise of navy rule began in 1966 with a coup, and lasted 13 years. In 1979, the nation’s fourth navy chief handed over energy to an elected authorities.

A second coup in 1983 introduced on 16 extra years of military rule, together with Buhari’s regime from 1983 to 1985. Navy rule led to 1999. So the president is right on this rating. 

However how do these two types of rule broadly evaluate?

There isn’t a lot to decide on between them, Silvanus Ebohon, professor of political science on the College of Benin in southern Nigeria, instructed Africa Test.

A member of the Independence Band performs on the Eagles Sq. in Abuja, Nigeria throughout the nation’s sixtieth Independence Day celebration on 1 October 2020. (Photograph: AFP/KOLA SULAIMON)

“One can argue that there was higher freedom of speech and affiliation below civil rule, however by way of improvement, there isn’t any actual distinction,” he stated.

Corruption was a standard theme throughout each civilian and navy rule, Ebohon stated, describing the nation’s political system as “dysfunctional”.

Professor Kamilu Fage teaches political science at Bayero College within the northern Nigerian metropolis of Kano. He was additionally of the view that politicians haven’t achieved any higher than the navy.

“Democracy is best than navy rule for the weather of accountability and free speech,” he instructed Africa Test. 

In his view, the Nigerian expertise was that the navy had achieved higher than civilians by way of governance, safety and selling nationwide unity.

Fage added that corruption had reduce throughout each navy and civilian rule.  


There was a 60% drop in authorities income



To justify elevated petrol costs, Buhari stated decrease earnings from each inside and exterior sources had triggered a pointy drop in authorities income. 

It’s not clear what timeframe he used, or if this was because of the pandemic, decrease oil costs, or each. We’ve got contacted the presidency for extra data.

He additionally didn’t specify whether or not he was referring to the whole income going into the federal account, or simply the income retained by the federal authorities after sharing with state and native governments. (For extra on this, learn our ‘Is Nigeria ‘formally broke’? fact-check printed in August 2020.

Paperwork from the funds workplace present that in revising the 2020 funds, the gross oil and fuel income goal was pared again from N7.67 trillion to N3.03 trillion

However as of Could, N1.99 trillion had been banked within the first 5 months of 2020, as an alternative of the projected oil and fuel income of N1.26 trillion. This can be a 57.4% surplus. 

After official deductions, Nigeria’s internet oil and fuel earnings from January to Could have been N1.45 trillion – N575.66 billion or 66.1% greater than what it anticipated to earn throughout that interval. 

For non-oil income reminiscent of taxes, the nation was projected to earn N4.81 trillion in 2020 after deductions, of which N2 trillion should have are available in by Could. However it solely earned N1.25 trillion within the first 5 months, a 37.4% shortfall.

These figures don’t help the declare of a 60% drop in income relative to the revised funds, at the least within the first 5 months of 2020. Nor do the 2021 funds proposals.

In 2019, internet oil income was quick by 62.8% and internet non-oil income by 11.9%, however the shortfall can’t be attributed to Covid-19. With out realizing for certain the interval or components thought-about by the president, we are able to solely price this declare as unproven.


There was a 40% drop in oil costs



Oil, Nigeria’s predominant export, accounts for 90% of overseas alternate and greater than half of presidency income.

The president’s speech was not clear on when the oil value dropped by 40%. The value has fallen at totally different charges in several durations.  

For instance, from January to April 2020 month-to-month common costs dropped 73%, in response to July 2020 information from the Nigerian Nationwide Petroleum Company. When each day costs are thought-about for a similar interval, a fall of as much as 90% was recorded. 

And within the yr to the president’s speech, from 1 October 2019, costs fell 36.5%. We’ve got requested the presidency for clarification. 

Adjustments in oil costs do have a direct impression on overseas alternate, Ndem Ndiyo, an economics professor on the College of Calabar in southern Nigeria, instructed Africa Test.  

“The frequent fluctuations in oil value has continued to impression Nigeria’s financial system as a result of we have now continued to rely largely on oil,” Ndiyo stated. “When oil costs drop it impacts authorities revenues that are used to service the financial system. Nonetheless, GDP doesn’t fluctuate as ceaselessly as oil costs.”


‘It is unnecessary for oil to be cheaper in Nigeria than in Saudi Arabia.’



Nigeria’s latest will increase in pump costs have been unpopular. In his speech, Buhari in contrast the brand new costs to these in different oil producing nations reminiscent of Chad, Niger and Ghana. 

“Additional afield, Egypt prices N211 per litre. Saudi Arabia prices N168 per litre. It is unnecessary for oil to be cheaper in Nigeria than in Saudi Arabia,” he stated. The president gave the value in Nigeria as N168., an internet site that tracks the costs of petrol in additional than 160 nations, offers totally different figures. In addition they fluctuate considerably however, broadly, Nigeria’s costs are decrease than the nations he talked about. (Be aware: The positioning doesn’t observe Niger.)

We’ve requested the presidency for extra readability on the comparability and can replace this report with their response.

However consultants instructed Africa Test that it was not a straight comparability. “Costs of commodities reminiscent of petrol shouldn’t be in contrast in isolation,” stated Olusegun Ajibola, a professor of financial economics at Caleb College in Lagos

The right way to do a comparability

“So that you can arrive at an affordable conclusion you could additionally evaluate different costs, reminiscent of the price of labour together with salaries, rates of interest, hire and the inflation price,” he instructed us.

“The true worth of a foreign money shouldn’t be its alternate price however what it will possibly purchase. One pound may not be price a lot within the streets of London however its naira equal can feed a complete household in a day in some elements of Nigeria. 

“My wage as a professor transformed to the US greenback shouldn’t be sufficient to pay a driver in New York. However I’m dwelling on it right here. So buying energy parity have to be thought-about in comparisons like this.”

One other economics professor, Christopher Ekong of the College of Uyo in southern Nigeria, agreed that buying energy parity calculations ought to be utilized when evaluating Nigerian costs with these in Egypt and Saudi Arabia. 

However the comparability with neighbouring nations is extra difficult. 

“Petrol is costlier in neighbouring nations as a result of a lot of the petrol imported on the market in Nigeria is smuggled to its neighbours and offered at a better value,” Ekong stated.

Additional studying:

© Copyright Africa Test 2020. Learn our republishing tips. It’s possible you’ll reproduce this piece or content material from it for the aim of reporting and/or discussing information and present occasions. That is topic to: Crediting Africa Test within the byline, maintaining all hyperlinks to the sources used and including this sentence on the finish of your publication: “This report was written by Africa Test, a non-partisan fact-checking organisation. View the unique piece on their web site”, with a hyperlink again to this web page.

Supply hyperlink

Read More

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. 


‘Our government is broke.’



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.


During the first quarter, revenues stood at N950 billion.



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.


Debt servicing obligations stood at N943.12 billion.



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.


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



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:

© 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.

Source link

Read More

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.)


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



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. 


‘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.’



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.      


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



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.


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



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.


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



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.”


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



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. 


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



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


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. 


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



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.

Source link

Read More

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.


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



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.


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



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. 


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



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. 


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



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.


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



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.  


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



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.)

© 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.

Source link

Read More