Nigeria’s GDP/CPI, the Vexatious Recession and the Role of Successive Governments
In light of the current recession and entire brouhaha over the state of our economy, it may be pertinent to take a look at the behaviours of governments and consumers over the decades which may have impacted negatively or otherwise on the economy, and lessons we can take home from all of these. After all, to be forewarned, they say, is to be forearmed.
GDP per capita is a measure of a country’s Gross Domestic Product (GDP) divided by the number of the population of the country. GDP itself means the monetary value of all those finished goods and services that a country produces or offers. There are detailed ways of computing these figures whose details I won’t go into here.
Consumer Price Index, ordinarily, is a measure of the price changes of regular consumer goods and services purchased by an average household in the open market. As the prices of goods and services go up or down, they are captured by these statistical indices.
My analysis here is based on figures provided by the successive Nigerian governments to the World Bank over the years.
The blue line graph is the Consumer Price Index. It shows the continuous upwards trend that started edging up from 1988. It steeply increased by 1992 and had been doing so since then up to 158.9 by last year from about 0.1 in 1965. In 1995(30 years between), the CPI had grown to 17.0. But from 1995 to-date (20 years in-between), the CPI grew from 17.0 to 158.9.
Basically, this graph expresses the hardship the common man faces as the economy gets worse by the day and the cost of getting things done or buying things increases.
The second graph (the one on red) shows the changes in the GDP per capita during the same period. It was at -17.56 by 1967, the worst ever. This was around the civil war. It was down to the minus again in 1981 during Shagari’s tenure at -15.46 and -13.07 in 1987 during IBB’s administration. For some reason it went up as high as 30.34 in 2004 during former president Olusegun Obasanjo’s tenure. Whatever happened here to spike it up that way can be researched. That trend actually started in 1999 at -2.01 and peaked in 2004 but dipped steeply back to 0.79 in 2005. It is misreported that recession started with President Muhammadu Buhari after taking over in May, 2015, but in actual sense, that is incorrect. According to the graph, the current downturn started back in 2014 with the CPI at 3.52. As at the time Buhari took over, it was at -0.01. This is from the data the government itself provided for the records. And this is the insight in the data that not many have taken the time to decipher.
GDP per capita has been a reliable index to measure the standard of living of people in a given country. It takes the value of all the incomes of individuals or the goods produced at their face values and divide that raw figure by the total population of the country. If the country creates a lot of jobs, it drives up the GDP. If there is increased industrialization or agricultural produce, the GDP goes up. If there is a population increase without an associated increase in production or productivity, the GDP goes down.
From these graphs, we know for a fact that the Nigerian leadership over the years had not been consciously doing what they needed to do to keep the productivity level and the population at the same level of growth. That’s why the GDP per capita is fluctuating while the CPI is on a steep increase.
Again, to come down to the recent economic trends, President Buhari has been heavily blamed for the hardship in Nigeria today. From these graphs however, it will be unfair to place the blame entirely on him. No single administration in Nigeria has ever given attention to doing what really needs to be done to bring down these numbers and cause an increase in the ‘good’ indicators.
Nigerian leadership seems never to have been looking at the indicators over time. That perception is gleaned from the nature of the movement of the GDP per capita (red-colored) graph. The fact that it has been turbulently tossing up and down at will means this section of the economy has never been directly under the control of the leadership. And no, it is not the advanced countries that have recorded some of the best GDP per capita. Luxembourg, Switzerland, Qatar and Norway are the first four in the world. Even Singapore is number seven. The only African country within the first fifty countries in the world is Seychelles which actually stands at Number Fifty. Neither South Africa nor Nigeria is mentioned anywhere near that.
Basically, any serious administration can take these numbers up within no later than one year after being sworn in. You don’t need economic gurus to do that. Any administration that wants to take down the CPI can do that within one year. It requires no board meetings to achieve.
In conclusion, it must be noted here that from all the charts available out there, African countries are the worst hit.
Our country, mineral-rich, human resources-rich and the world’s most populous back nation, ought to lead the rest of the pack of beleaguered African countries out of their perennial economic conundrum, not drowning herself. Nigeria, Africa’s Giant must wake up and take its place in the scheme of things and quickly too!