Deconstructing Nigeria’s depreciating Naira, decreasing growth and worsening life expectancy

On Monday last week, the Monetary Committee (MPC) meeting was on-going, while the National Bureau of Statistics (NBS) released quarter (Q3) Gross Domestic Product (GDP) estimates. It revealed figures that consolidate Nigeria’s position as a country in recession. Just as President Mohammadu Buhari-led economic team continue to tinker with how to dig the nation out of the hole of economic recession, CHIMA NWOKOJI in this article, examines the implications of a decreasing growth rate and depreciating local currency at a time when the number of years a person is expected to live in Nigeria is also declining.

AT a time when critical thinking on how policy-makers, the private sector, civil society organisations, the academia, development partners and other stakeholders should support efforts to dig the Nigeria out of the hole of economic recession, discouraging numbers continue to emerge from appropriate authorities like the World Bank, World Health Organsation, International Labour Organisation, the National Bureau of Statistics (NBS), The Central Bank of Nigeria, Nigeria Stock Exchange among others.

For instance, recent data from the National Bureau of Statistics (NBS) indicates that, Nigeria’s GDP growth decelerated by 0.36 per cent and 2.1 per cent in the first and second quarters of 2016, respectively. The country’s real GDP declined 2.24 per cent Y-o-Y in Q3:2016 from -2.06 per cent Y-o-Y in Q2:2016 largely as a result of suppressed activity in Oil, Services and Manufacturing sectors.

More also, the rate of price inflation for the months of September and October 2016 were 17.9 per cent and 18.3 per cent, respectively, while official statistics also indicate that the country’s unemployment rate increased to 12.1 per cent and 13.3 per cent during the first and second quarters of 2016.

The All Share Index (ASI) of the Nigeria Stock Exchange (NSE) closed in the red for the sixth consecutive week as the broader index depreciated on four of five trading days. The ASI dipped 0.8 per cent week on week (W-o-W), year to date (YTD) loss worsened to 11.6 per cent while market capitalisation depreciated N70.3 billion W-o-W to settle at N8.7trillion.

On the side of the Naira, it weakened at the inter-bank market to about N315.60 to the dollar and N470 on Thursday at the un-official market, from N465 on Wednesday, as fresh dollar scarcity hit the official and parallel foreign exchange markets. This prompted the Nigeria Labour Congress (NLC) on Friday to call on the President Muhammadu Buhari-led Federal Government to device a means to stop the continued depreciation of the nation’s currency against major currencies, which has led to high inflation.

Rising from its meeting, a communiqué signed by the NLC President, Comrade Ayuba Wabba, and General Secretary, Dr Peter Ozo-Eson expressed concern at the free-fall of the Naira and the abortive efforts by the Central Bank to arrest this fall.

“NEC noted the harm and pain the massive devaluation and the attendant inflation have wrought on tens of millions of families across the country. NEC noted that this situation may escalate into a state of national panic except a solution to the economic malaise is found soon. NEC accordingly resolved to urge the government to take all measures necessary to arrest the recession and turn the economy around,” it read in part.

The labour union is also worried about a recent report by the National Bureau of Statistics, which shows that unemployment rate grew from 12.1 per cent in the first quarter of 2016 to 13.3 per cent in the second quarter, while about 1.5 million Nigerians have lost their jobs in the past one year.

“Accordingly, out of a total youth labour force of 38.2 million (representing 48.7 per cent of total labour force of 78.48 million), a total of 15.2 million of them were either unemployed or underemployed in Q1 2016, representing a youth unemployment rate of 42.2 per cent,” the report added.

Apart from the NLC, other analysts have expressed serious fear that the situation is affecting standard of living of citizens and might have direct effect on the already falling number of years an average Nigerian is expected to live in Nigeria, described by demographers as life expectancy ratio.

Despite worldwide increase by five years in life expectancy with Africa seeing the biggest improvement, Nigeria is among the seven countries with the lowest scores with average of 54.5 years for both men and women.


Implications for 2017

Atedo Peterside, Founder and Chairman of Stanbic IBTC Bank Plc, captured the implication of the present economic situation when he attended a recent economic outlook session with top economists and top CEOs.  The session looked at Nigeria’s economic direction for 2017.

His submissions are hereby summarized, ‘2017 will be tougher than 2016. The economy will not recover until 2018, even 2019. Inflation will continue to be high (hovering around 20 per cent)and Naira to dollar will remain in the N450s. With money scarce, many more businesses will fold up, leading to job losses and more poverty. With inflation and high exchange rate the banks will not be able to give loans and when they do the interest rate will be too high to afford. With high inflation those with paid salaries are now actually earning less, that is if they will be lucky to keep their jobs.

“Nigeria’s economic recession may be long and deep because business confidence is low and investors are holding back,” he emphasised.

His presentation shows that all sectors of the economy (not just oil) are either falling or already in recession (below zero). Signs are all over: British Airways just converted it’s Nigerian office into an agency; almost all foreign airlines now fuel in Ghana; many people now smuggle crops and raw materials out to earn dollars; 75 per cent of vacant houses in Ikoyi and Victoria Island don’t have buyers; Shoprite that opened in Ajah in August is still 70 per cent empty as dollars to bring in goods is scarce and customer count is poor, five other big supermarkets in Lagos have closed shop among others. In proffering solution, other experts suggest that cash is going to be King and whoever has it or has access to it should preserve it going into 2017. They advise people to spend less than they earn; SAVE for the rainy day; cut down on avoidable merriment; expect the worst Christmas in 20 years; look for dollar or pounds-earning businesses “if you can.”

Meanwhile, Nigeria Employers’ Consultative Association, an umbrella body for all employers in the private sector of the country, has said more job losses are imminent in the country.

The Director-General of the association, Mr Segun Oshinowo, said since the economy had yet to rebound, it was expected for more people to lose their jobs.

He said, “It should be expected that more job losses will come. For example, we just received a letter from one of the multinational companies in the country, which is a member of NECA. The company’s management said its production capacity had gone down, and as a result of that, it is sacking many of its workers.

“I was also talking to the managing director of one of the biggest pharmaceutical companies in the country recently. The man lamented that it had been difficult to get foreign exchange to run the company. He said more workers would soon be sacked.

“Many more companies will follow suit because the economic condition is still bad. They will find ways of cutting cost, and one of the ways is to sack workers, so more job losses are expected.”

Life expectancy, depreciating Naira and decreasing growth

The May 2016 life expectancy data published by the World Health Organisation (WHO), has shown that Nigeria, again, has one of the lowest life expectancy ratio in Africa and in the world; with 55 years for females and 54 years for males, standing at the 177th position, just above eight other countries of the world. On the average, the life expectancy ratio is 54.5 for the country.

In a chat with Nigerian Tribune, an Economist and former banker, Mr Damian Ohuakanwa said since life expectancy for a particular person or population group depends on such variables as lifestyle, access to healthcare, diet, economical status and the relevant mortality and ill health data, the state of the Naira, inflation, health care system and overall reduced standard of living in Nigeria are evident that average living age is declining in the oil rich country.

According to him, families are particularly groaning under the high price of food items which have increased by 100 per cent from last year.  Since disposable incomes are not increasing, it means a large number of people cannot afford three square meals a day, not to talk of balanced and nutritious diet.  “We never had it this bad in this country. My family can no longer afford three square meals in a day. We have all along been getting food items on credit. But the foodstuffs sellers are now tired of us, our neighbours and friends are also tired of us begging them for food,” he lamented.

NOIPolls Limited, Nigeria’s leading opinion polls company corroborated the plight of the plight of the Nnanyerugos. In a new public opinion poll released on August 10, 2016, NOIPolls revealed that about two-thirds of Nigerians (66 per cent) have been lamenting the worsening state of their personal economic situation over the past three months. This they believe has been triggered by recent happenings in the macro and micro economic landscape, which have resulted into outcomes that have negatively impacted their personal economic wellbeing and living standard. Top on the list of some of such outcomes witnessed by Nigerians include, increase in prices of goods and services (43 per cent); Increase in petrol pump price (18 per cent); Increase in the cost of transportation (10 per cent); Devaluation and foreign exchange crisis (eight per cent); Poor electricity supply (seven per cent); Irregular payment of salaries (four per cent); Increase in electricity tariff (three per cent).

The opinion poll was conducted in the week commencing July 25, 2016. It involved telephone interviews of a random nationwide sample. 1,000 randomly selected phone-owning Nigerians aged 18 years and above, representing the six geopolitical zones in the country, were interviewed.

From the poll results, 97 per cent of the entire respondents acknowledge that these recent economic realities have had a negative effect of the general wellbeing of the average Nigerian. Consequently, this has led to the adoption of some coping strategies and measures by Nigerians to manage the impact of the current economic realities. Some of such strategies include: Cutting down on household expenses and luxury items; enduring the situation and seeking the face of God in prayers; adjusting family feeding patterns; creating alternative sources of income and engaging in subsistence agriculture, to mention a few.

Market survey conducted by Nigerian Tribune in some markets in Lagos metropolis reveal that the prices of some foodstuffs are now three times higher than what they used to be in 2015. Staple foods such as rice, beans, cassava flakes are now slipping out of the hands of average Nigerians.

Although, the prices of the food items in some of the markets differ, the difference is just minimal. For instance, the price of rice, beans, cassava flakes, palm oil, groundnut oil, and pepper in Mile 12 market is different from the price in Mushin-Olosha, Oyingbo, Cele-Ijesha, Abule Egba, Iyana-Iba, Okomaiko among others.

Investigation revealed that presently, a 50kg bag of rice, is sold at the rate of nineteen thousand naira (N19,000) higher than eighteen thousand naira (N18,000) wage for civil servants, while the same bag of rice was sold for eight thousand, five hundred naira last year.

Also, a bag of beans is now thirty nine thousand naira (39,000) but in 2015, it was sold for twenty-one thousand five hundred naira (N21,500).

It was also learnt that, a bag of cassava flakes is sold at the rate of nine thousand, five hundred naira (N9,500), a basket of tomatoes cost N6500, a bag of Tatashe pepper is sold at N3500, and a bag of Rodo pepper at N4500. Also, 25 litres of Groundnut oil sells for N14,200, while palm oil of the same litre goes for N15,000.

The question most analysts are asking is varied, “If many families can no longer afford three square meals in a day, what is the guarantee that they will think of nutrition in the little that they managed to eat. What is the likelihood that these families can afford basic medical services? How then will people live long under the present economic situation?

“In reality, Nigeria’s economy is currently facing a classic case of stagflation. This situation largely occurs when a country’s Gross Domestic Product (GDP) is falling or stagnant, while unemployment and inflation are rising, all simultaneously,” Mr Godwin Emefiele, Governor of the Central Bank of Nigeria seems to have provided a picture of the situation in a recent speech.

In the Northern part of the country, the situation is worst. Latest survey results released by NOIPolls Limited have revealed that the vast majority of Internally Dis[placed Persons (IDPs) in the North-East lack access to food, potable water and healthcare. Analysis shows that almost nine in 10 IDPs (85 per cent) do not have access to quality food and regular meals, about eight in 10 IDPs (78 per cent) do not have access to potable water, while almost seven in 10 IDPs (69 per cent) lack access to quality healthcare. These results represent a general overview of what is happening in both official and unofficial camps, across Borno, Yobe and Adamawa states.

The World Health Statistics 2016 published by the World Health Organisation (WHO) and first reported in DailMail Uk revealed that life expectancy worldwide has increased by about five years in the last 15 years.

Experts describe life expectancy as the number of years a person is expected to live based on the statistical average. The life expectancy for a particular person or population group depends on several variables such as their lifestyle, access to healthcare, diet, economical status and the relevant mortality and ill health data. However, as life expectancy is calculated based on averages, a person may live for many years more or less than expected.

The other countries in decreasing order are: Lesotho at 53.7 years; Cote D’Ivoire at 53.3 years; Chad 53.1 years; Central African Republic 52.5 years; Angola at 52.4 years; and Sierra Leone at 50.1 years.

Stakeholders are worried that authorities in Nigeria care less about the worth of life of an average citizen. They say “you do not need complex economic analysis to know what, for example, an American life is worth. You easily decipher this value by observing the care and attention the American government places in ensuring a certain quality of life for her citizens and their reaction when a citizen is in harm’s way or when there is an unplanned event that threatens the delivery of that quality of life.”


Depreciating Naira and Educati

Similarly, Investigation, Nigerian Tribune stumbled into some letters written by a few United Kingdom, Nitherlands and US-based universities to some Nigerian students studying abroad and a few other aspiring students. The letters confirmed that even, foreign universities are sympathetic to Nigerians over the deteriorating economic situation.

A Netherlands based University, through its United Kingdom affiliate, the University of Roehampton Online, wrote one of such letters to an aspiring Nigerian student. Titled “Pay for your Masters at 300Naira/USD,” and signed by the Enrolment Manager, Avantika  Deora the letter received on Sunday, September 18, 2016 at 9:35 AM read in full:

“Hello, we are aware of the current economic challenges in Nigeria and how that can affect your ability to start a Master’s programme at this time.  We at the University of Roehampton hear and feel your pain due to the ‘high’ Naira (NGN) to US Dollar (USD) exchange rate. We understand that you are very motivated to start your studies but this rate is crippling your efforts.

“Our aim is that you no longer have to worry about the Naira depreciating, and can plan for your future and finances.  We have a special offer designed to provide you certainty of your programme Total Cost while the NGN to USD exchange remains uncertain. Your entire programme total tuition will be guaranteed based on a maximum of ?300 to $1.”

Stakeholders are also worried that where a business man who saves N100,000 every month, now loses N18,300 out of that money to inflation, leaving him with N81,700 the motivation to save will not be there and where there is no savings, there will be no investments.



Managing Director of Financial Derivatives, Bismark Rewane, as part of the solutions, charged the Federal Government, to as a matter of urgency, ensure that the country produces what it consumes and stop salivating over foreign goods that keep depleting the nation’s foreign reserves.

Rewane said the Federal Government has a duty to start addressing the core issues in the economy frontally, adding that no country has ever created a great economy by depending on the industrial outputs of other nations.

Members of the organised labour equally condemned the country’s near-total dependency on imported manufactured goods, ranging from the simplest household consumer items to the most complex industrial inputs, stating that such makes the economy more vulnerable to both internal and external shocks. Nigeria imports at least 70 per cent of its refined fuel, despite pumping 1.6 million barrels of crude oil a day in June 2016 according to the International Energy Agency (IEA). This lack of a strong production base has resulted in imported inflation.

The Nigeria Labour Congress (NLC) President, Ayuba Wabba, said that the recession leaves Nigeria with no alternative than to make good this plan by coming up with comprehensive, inward-looking policies to boost production and thus mop up the excess labour force in the market.

The Federal Government, he added, must also focus its policy on massive spending as a way out. “As the purchasing power of the citizenry is low at the moment (due mainly to months of unpaid workers’ salaries), government needs to enhance individual liquidity by spending wisely on agriculture, infrastructure and stimulating the manufacturing sector. More efforts must be made to pay the backlog of workers’ wages. We must increase the consumption of locally-made goods and services. We must export more to drive the economy.