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- Buhari was correct that Nigeria saw 11 quarters of consecutive GDP growth since the second quarter of 2017, but it was harder to disentangle his comments on the country’s growth in 2020, in light of the Covid-19 pandemic.
- The president’s claims that all economies across the world had suffered in the first three months of 2020 were not backed by available data.
- Experts disagree on the value of the World Bank’s ease of doing business index, and while it is true Nigeria is currently ranked 131st, there is no evidence the country has risen “25 places”.
“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.)
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.
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.
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.
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.
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.”
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.
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|
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.
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.
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