A couple of years ago, Nigerian economy was growing at between 6-7%, GDP rate. This was probably due to the fact that crude oil/gas, the main export earner, attracting 90% of foreign exchange, FX income and which constitutes about 11-14% of her GDP, was trading at over $100 per barrel according to data from the Economist magazine.
The most probable reason is that the oil boom and Nigeria’s forex reserve which at one point was estimated at about $60 billion attracted international portfolio and equity investors who came in droves to buy Nigerian bonds/ treasury which had a mouth watering yield of about 12% – an impossibility in the industrialized world.
By their very nature, portfolio investors are exactly what their name indicate – mere portfolio/ briefcase carrying businessmen trading in papers and other intangible financial instruments as opposed to entrepreneur investors who bring in machines and other equipment used for factory production of goods and in the process create employment for Nigerians.
Obviously, for many years, Nigeria had very few entrepreneurs as foreign direct investors FDI in the real economy, but attracted hordes of portfolio/ equity funds managers who take flight with their investments at the slightest suspicion of instability like oil price volatility or conflicts in the polity arising from political differences leading to tension.
Nigeria also quickly booked a spot in the popular JP Morgan price index, owing to the excellent return on investments in bonds as opposed to manufacturing, the economy was thus adjudged to be growing at attractive GDP levels of 6-7% earlier mentioned.
Unfortunately, it was only on paper that the growth was being recorded as new factories were really not being set up as such, neither were more people being gainfully employed, which is really what governance, political leadership and progress in a society are about.
In that period , international trade was flourishing so well that trading in treasury bills/bonds and other financial instruments was the trend, and importation of goods rather than manufacturing; gaming the system via fake fuel subsidy invoices and crooked crude oil for refined products swaps schemes, as opposed to refining the 450,000 barrels of crude oil allocated for local refining, gained traction and thus became the new business paradigm, rather than the exception in Nigeria.
As the so called GDP growth was exclusive to the rich. Nigerian groaned in poverty owing to the socio-economic hardship foisted on them by fake economic growth that had no local dynamics or bearing because it was not people-centric and thus failed to make any positive impact on the lives of the ordinary folks.
As a result of the implementation of the aforementioned polices that were not oriented towards alleviating poverty through employment generation, factories closed down -185 textile mills in Kaduna State and environ (according to minister of state for industry, Aisha Abubakar) plus tyre and battery manufacturing plants that were located in Lagos, Sango Ota and surrounding areas. In fact ,some of them – especially tyre manufacturers like Michelin, migrated to neighboring countries like Ghana where fiscal policies and infrastructure are conducive.
GUARDIAN
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