53 Years After, Nigeria Celebrates An Economy Crippled By The Generals

To think that Nigeria is 53 years and is burdened with economic problems more than it had when the country had independence calls for sober reflection. Though Nigeria’s crude oil production was a mere 6,374,000 per annum in 1960, the level of productivity was enough to sustain its naira at an enviable rate of N0.658 to the United States dollars.
Then, the country with humble hard working members fused together by the then colonial masters – the British exported goods and services worth N339.4 million. Crude export then was just worth a mere N8.8 million, a mere 2.3 percent of total exports, and contributing only 0.3 percent to total Gross Domestic Product (GDP), that overall productivity of the country.
Then, there were less unemployed and fewer thieves, because everybody, parts that were fused together as Nigerians had their various vocations.
 
Even when the oil curse, which eventually attracted the military, began relevant in the scheme of economic activities, the exchange rate was still the envy of Europe and the Americas between the 1970s and early 1980s. In 1980, the naira exchanged for about the lowest in the history of the country at N0.55 to the dollar.
This is in spite of the fact that in 1980, crude oil export was already accounting for 96 percent of total exports and 81.1 percent of total federally generated revenue.
This according to analysts indicates that, not only the increase in the export of crude oil is responsible for the poor state of the naira, but the general decline in productivity.
Mike Osu, an analyst in Lagos said, people and indeed the regions later abandoned their earlier vocations and became completely dependent of revenue from crude oil.
John Odun, an economist in Lagos traced the downturn in the Nigerian economy to the entrant of retired General Ibrahim Babangida.
According to Odun, the naira which remained relatively stable at N0.894 to the dollar in 1985 was suddenly devalued to N2.02 in 1986, about 125.95 percent depreciation in one year. And that was the beginning of the free fall of the naira.
Analysts argue that this became the case because Nigeria was turned into an import-dependent nation. They recall that the situation was so bad that the issue of essential commodities became a big issue and those given license to import these commodities became tin gods. 
This, they further said became possible because sudden millionaires were made out of what was known as the IBB boys.
“It was no longer profitable to work hard, and so exports that would have brought in foreign currency to take care of necessary imports were no longer available. The result was that demand for dollars became higher than supply, thus putting the naira in a very weak position”, Okey Udense, an analyst with one of the new generation banks said.
From N2.02 to the dollar in 1986, the value of the naira sank deeper to N5.90 in 1987 and N22.33 in 1994.
There was false stability of the naira during the days of General Abacha because the military government decided to put a lid on the exchange rate. The result was that government has one rate at which it imports its goods, while the parallel market rate where the private sector patronizes soared well above the official rate, setting the stage for speculators to make cheap profit at the expense of the economy.
 
Exchange rate history
This table shows the historical value of one U.S. Dollar to the Nigerian naira.
Year     N/$
1972 –  0.658
1973 –  0.658
1974  – 0.63
1975  – 0.616
1976  – 0.62
1977  – 0.647
1978  – 0.606
1979 0.596
1980  – 0.550 (0.900 PM)
1981  – 0.61
1982  – 0.673
1983  – 0.724
1984  – 0.765
1985  – 0.894 (1.70 PM)
1986  – 2.02 (3.90 PM)
1987  – 4.02 (5.90 PM)
1988  – 4.54 (6.70 PM)
1989  – 7.39 (10.70 PM)
1990  – 7.39 (10.70 PM)
1991  – 8.04 (9.30 PM)
1992  – 9.91
1993  – 17.30 (21.90 PM)
1994  – 22.33 (56.80 PM)
1995  – 21.89 (71.70 PM)
1996  – 21.89 (84.58 PM)
1997  – 21.89 (84.58 PM)
1998  – 21.89 (84.70 PM)
1999  – 21.89 (88-90 PM)
2000  – 85.98 (105.00 PM)
2001  – 99-106 (104-122 PM)
2002  – 109-113 (122-140 PM)
2003  – 114-127 (135-137 PM)
2004  – 127-130 (137-144 PM)
2005  – 132-136
2006  – 128.50-131.80
2007  – 120-125
2008  – 115.50-120
2009  – 145-171
Note: PM IS Parallel Market
 
Foreign Exchange Dutch Auctions
Auction No
9/25/2013 held on 73
Total Amount Offered
US$ 400,000,000.00
Total Amount Demanded
US$ 0.00
Total Amount Sold
US$ 300,154,695.86
Highest Successfull Bid Rate
US$ 155.79
Lowest Bid Rate
155.75
No. of Successful
14
No. of Unsuccessful
0
Marginal Bid
US$ 155.75
Number of Banks
14
Link
download details of this auction
Auction No
9/23/2013 held on 72
Total Amount Offered
US$ 300,000,000.00
Total Amount Demanded
US$ 0.00
Total Amount Sold
US$ 300,000,000.00
Highest Successfull Bid Rate
US$ 155.79
Lowest Bid Rate
155.76
No. of Successful
17
No. of Unsuccessful
0
Marginal Bid
US$ 155.76
Number of Banks
17
 
As real production that is supposed bring about increased employment and grow GDP slows, contribution of oil and gas continue to grow.
Thus, later on, the non-oil sector recorded 7.89 percent growth in real terms in the first quarter of 2013 compared with 8.14 percent in the corresponding period of 2012. The growth in the non-oil sector however declined in the first quarter of 2013 when compared with the corresponding quarter of 2012. The relative decline in growth can be seen in such activities as agriculture, telecommunications and wholesale and retail trade.
On the other hand, Manufacturing, Hotels and Restaurants, as well as Building and Construction have become the bright spots for the economy during the reference period.
 
The oil sector recorded an average daily production of 2.29 million barrels per day in the first quarter of 2013 based on data obtained from the Nigerian National Petroleum Corporation (NNPC) as against 2.35 million barrels per day in the corresponding quarter in 2012.
These figures, with their associated gas components, resulted in a growth rate, in real term of -0.54 percent in oil GDP in the first quarter of 2013 compared with the –2.32 percent for the corresponding period in 2012.
The oil and gas sector that have been the key driver of the Nigerian economy is now being threatened by increased oil theft by some very ‘powerful forces.

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