More Failures than Gains

Angry protesters
Angry protesters

|  By Pita Ochai  |

IT ENDED without good tidings for the Nigerian economy despite assurance from government that the country would start reaping the fruits of President Goodluck Jonathan’s economic reforms in 2012. From the first day of the year, it was obvious that Nigerians were in for difficult times ahead when President Jonathan presented a New Year special gift to Nigerians by increasing fuel pump price from N65 to N141 per litre, about 115.38 percent rise.


Nigerians took to the streets in various towns and cities across the country to demand an immediate reversal of the increase. The protest crippled the country’s economy for six days. Ngozi Okonjo-Iweala, the finance minister, estimated that the country lost about N300 billion in the six-day protest. But Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria, CBN, came out with his own estimate of N100 billion loss on each day of the protest.

The Nigerian Stock Market which has seen much decline in the last four years had a surprise bounce back in the year 2012. From all indications, the market will grow by more than 30 per cent at the end of 2012. By the end of trading on Monday, December 17, the market growth, as measured by the Nigerian Stock Exchange, NSE, the All-Share Index, ASI, was already more than 33 per cent. The down turn of the market had started in 2008. After a superlative growth of 74.7 per cent in 2007, the market dipped by 45.7 per cent in 2008, and by 33.7 per cent in 2009. It recovered by 18.9 per cent in 2010 before falling again by 16.3 per cent in 2011. When the year began, analysts from three leading investment banking firms, FSDH Securities Limited, Meristem Securities Limited, MSL, and FBN Capital Limited projected a growth of below 15 per cent for the year.

 In projecting the robust outlook for 2012, analysts at MSL said their bullish sentiments were driven by expected performance of the financial service (majorly banks) sector of the market among others. According to them, Nigeria’s stable foreign exchange market, expected a downward trend in yield on fixed income instruments and the anticipated positive macroeconomic performance also influenced their bullish tendency.

Femi Kuti, popular  Nigerian musician, charging the crowd at Gani Fawehinmi freedom park
Femi Kuti, popular Nigerian musician, charging the crowd at Gani Fawehinmi freedom park

The growth of the market on a quarterly basis has been gradual. The market opened the year with a decline of 0.37 per cent in the first quarter (Q1). This improved to a growth of 4.5 per cent in Q2 when companies released their 2011 audited results with many declaring dividends for shareholders. The performance was consolidated in Q3 with a huge leap of 20.4 per cent following impressive half year corporate results. This brought the aggregate growth for the nine months to 25.5 per cent.

In reviewing the performance of the economy in 2012, Amos Salami, a financial analyst, said that it would not be unfair to state that the economic situation in the country remained poor. To him, much was not done to relieve the pains and sufferings of the ordinary Nigerian in the year 2012. He is not happy with the macroeconomic indicators. For example, saving deposit rates have remained very low while lending rates remain outrageously high. The low deposit rates discourage savings in financial institutions, the high lending rates discourage investment and push Small and Medium Enterprises, SMEs, into huge debts.

Inflation rate had remained double digits throughout the year. Yemi Kale, statistician-general of the Federation, disclosed that Nigeria’s inflation rate rose to 12.3 per cent in November, as against 11.7 per cent recorded in October. He explained that the 0.6 percent monthly change in the composite Consumer Price Index, CPI, was the result of higher prices in both the food and core indices.


A devastating flood which ravaged the country in the months of August, September, and October, destroyed homes, farmlands, and this also raised the already inflationary rate in the economy. More than 64 thousand people were displaced by the flood in different states. According to an estimate from the ministry of agriculture and rural development, Anambra State lost 39 per cent of its cultivated land, making it the worst affected state. Kogi state was the next worse affected with 28.8 per cent of its cultivated land, while Bayelsa state lost 18.5 per cent; Taraba state, 14.2 per cent; Edo state, 11.1 per cent; and Adamawa state, 10.3 per cent, followed in that order. Others are Delta state, 8.9 per cent; Nasarawa state, 6.8 per cent; Niger state, 5.4 per cent; Benue state, 4.9 per cent; and Kebbi state, 1.5 per cent.

Yvonne Mhango, a research analyst at Renaissance Capital, said that the flood and insecurity in the country crippled economic activities in 2012. According to the Central Bank of Nigeria, CBN, projections, Nigeria’s growth rate 2012 is 6.3 per cent, down from 7.4 per cent in 2011. She stated that another reason for the poor performance of the economy is the sharp tightening of the nation’s monetary policy in the last quarter of 2011 which affected access to credit facilities. For her, this also partly accounts for the slow growth of the nation’s Gross Domestic Products, GDP. In the first half of 2012, the growth was 3.4 per cent year on year, but in the first half of 2011, the growth was 4.3 percent year on year.

— Jan. 7, 2013 @ 01:00 GMT

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