Between HSBC and Nigerian Government - the bitter truth. 14-page report, it is time for some home truths starting from the main positions of the report:

For me what we have in the report are salient observations which the government must work harder on as they are the realities for Nigerians up to 90%:

1. We are still too reliant on oil exports.

The report rightly stated inter alia:
“Oil has had a big impact on Nigeria’s macro balances given that it accounts for 80% of total exports and 60% of government revenue. Buoyed by higher prices and an increase in production, oil exports have gathered pace” leading to trade and current account of almost 5% of GDP.
The bank rightly observed that volatility in oil market and any restiveness in Niger Delta means that this is a temporary reprieve that must be bolstered.

2. Diversifying to nonoil sector is now more urgent than before.

The bank again observed:
“The non-oil economy, which accounts for 90% of GDP, expanded by just 0.8% y-o-y at the start of 2018…Stripping out agriculture makes the picture even worse, with non-oil, non-agriculture growth stagnating at the start of 2018 and contracting by an average of 1.0% y-o-y since 2016.” This should be a warning and a challenge to the government.

The government has been harping on diversification since 2015 yet except for agriculture the growth in that direction is minimal. The challenge remains improving on agricultural value chain industry and exports. Some MOUs were signed to revive cotton industry/textile value chain during recent visit to China. More need to be done especially including Cocoa/chocolate industry which is still a goldmine for countries like Cote de Voire. We urgently need a cerebral and aggressive Solid Minerals Minister with an implementable master plan. Australia will be a great example in this sector.

The bank’s refrain is worth repeating: "For the economy to expand at a faster pace, a stronger recovery in non-oil growth needs to gain traction.. Nigeria's public finances need to be reformed to boost nonoil revenues, improve the efficiency of VAT or CIT collections, and address fuel subsidies.” Plain truth.

I posit that our service sectors especially health and education with good investments can be an engine of growth. We must invest aggressively in our people.

3. Fuel importation must end by the end of 2019!

It is scandalous to be spending 20% of our oil earnings on subsidy despite recent fuel price increase. Based on the bank’s projections from estimates by our own Petroleum Products Pricing Regulatory Agency (PPPRA) at USD250m in May alone, Nigeria will be spending 2,5 Billion dollars on petroleum subsidy by the end of 2018 which constitutes one-fifth of our oil earnings for the previous year. This is at best an indictment on NNPC and other modular refineries initiative of this government. Dangote refinery and others including government touted modular refineries must become a reality soon. Ladies and gentlemen, we need President Buhari to let go with the Oil Ministry possibly a new Minister of Petroleum and NNPC heads with a common vision will be a great tonic to our economy. NNPC including her refineries are still poorly run with opaque accounting system. Major reform needed.

4. Falling real wages, rising unemployment

The bank rightly observed that there is indeed a squeeze on purchasing power and consumer spending from high inflation. The bank noted the disinflation which has been occurring over the last 18 months but posits that elections spending may trigger another round of inflation. Again, the bottlenecks to real economic growth was repeated

“inadequate infrastructure, corruption, an inefficient government bureaucracy and policy instability. This mirrors the assessment of the IMF in its 2018 Article IV report, which argued that “a large infrastructure gap, high gender and income inequality, pervasive corruption, low financial inclusion, and the ongoing humanitarian crisis in the North East remain continuous concerns”.

The government for me should have responded to this part of the report with evidence of her strong focus on infrastructure in the present and previous budgets, the social investment initiatives including TraderMoni and of course bring the role of NASS led by the men who they stated have decamped to the opposition to weaken the governing party. The Senate President himself confessed to cutting off 30 billion Naira from the Lagos-Ibadan expressway project which of course is part of the infrastructure gap. The unprecedented and needless 6-month budget delay was also rightly captured by the report.

5. Some kudos to the government: “Indeed Nigeria was among the 10 countries implementing the most regulatory reforms to make it easier to do business in 2016/17 in terms of the World Bank's Doing Business assessment. “ More still needs to be done.

6. The political landmine in the report: citing the economic challenges, security issues including North East Boko Haram challenges, herdsmen clashes, political defections from APC and attendant waning popularity of President Buhari, the bank projected a closely contested election. In fact it stated: “This should be a political environment that favours a return to power for the PDP, yet the opposition remains weak and fragmented, and has yet to declare its presidential candidate.”

This must have riled the government spokespersons including the following part of the report:

"A second term for Mr Buhari however raises the risk of limited economic progress and further fiscal deterioration.... particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil" This is a conditional statement which the government should have responded to with constructive plans and reforms as stated by the outgone Minister of finance in het resignation letter.

7. Is PDP a viable alternative with her current weak and fragmented state as rightly observed by the bank's report?

Most observers will doubt that. PDP has failed to utilise the last 3 years to rebuild herself and should concentrate on that from now till 2023 elections. The opposition is clearly in disarray with the only discernible policy directive being to grab power.

8. The report like many other analyses failed to see the real disaster underlying Nigeria's sluggish growth, our elephant in the room - subnational economies at state levels.

Too much fixation at Federal level has allowed the states to remain largely poorly run and seats of putrefying corruption and impunity. The States and LG today shares 48% of Nigeria's revenue excluding their IGR which should easily raise that share to at least 65% of all revenue.

What are states doing to be centres of growth and drivers of economic rebirth? Lagos today earn revenue more than 30 states of Nigeria put together! Do we need to merge states and reduce cost of governance? Why Not? States finance and contribution to growth must improve for us to see the necessary massive growth we crave. Let's remember that several states in Nigeria have budgets and economies bigger than several African countries.


I still see a positive and better outlook for Nigeria's economy in the coming years. The challenge is the sluggish progress speed not the consistent negative deterioration of the previous years. We just need to re-energise our push for development in all sectors especially power, industrialisation and investment in our people.2000 MW generated electricity trapped and not being distributed for almost the last 2 years is not a good testament for the Power Ministry! We need more energy and a sense of urgency. We must include an aggressive civil service reform to birth efficiency and cut waste. Then with enthronement of values in leadership a new virile nation will be born.

Thanks for your patience, see the link to full report as the case may be

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