Munich Personal RePEc Archive Nigerian economy: business, governance and investment in period of crisis Ibrahim Abdullahi, Shafiu 23 October 2018 Online at https://mpra.ub.uni-muenchen.de/91074/ MPRA Paper No. 91074, posted 31 Dec 2018 10:41 UTC 1 NIGERIAN ECONOMY BUSINESS, GOVERNANCE AND INVESTMENT IN PERIOD OF CRISIS SHAFIU IBRAHIM ABDULLAHI 2 Copyright © 2018 ECONOMIC ISSUES, P.O. BOX 14608 KANO-NIGERIA Text copyright © 2018 Shafiu Ibrahim Abdullahi All rights reserved. No part of this material may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means for a commercial purpose, without the prior permission of the author. 3 Contents I. Preface II. Introduction III. Inflation, growth and macro-management 1- Nigeria economic conundrum 2- Economic growth and human development 3- Inflation and public debt IV. Money, banking and finance 1- Central Banking 2- Commercial banking 3- Banking reform 4- Conventional and Islamic banks 5- Microfinance V. Capital market and foreign investment 1- Nigerian stock exchange 2- Capital market supervision 3- Effect of government policy on capital market 4- Foreign investments VI. Trade and Business management 1- Retail Business 2- Brand Building 3- Business Conglomerates 4- Entrepreneurship 5- Real Estate Business VII. Corruption, insecurity and climate change 1- Corruption and development 2- Regional development 3- Effect of insecurity on development 4- Climate change and development VIII. Women in government and business 1- Role of Women in Development 2- Women and corruption 3- Women and Entrepreneurship IX. Economics education, media and technology 1- Economics of education 2- Financial journalism 3- Advertising in Nigeria 4- Technology Startups 4 X. Islamic banking and finance 1- Nature of Islamic Banking 2- Islamic banking: a brief history 3- What next for Islamic finance? 4- Islamic stock index 5- Islamic businesses 6- Contributors to development of Islamic economics, banking and finance 7- Islamic economics and finance in Nigerian universities 8- Media and Islamic banking XI. Nigeria and the rest of the world 1- World Trade 2- Economy and Trade in Africa 3- Economic blocs 4- Trade politics XII. Bibliography 5 About the author Shafiu Ibrahim Abdullahi works as university lecturer in Nigeria. He has previously worked in media and banking industries in Nigeria. He has published papers in Journals such as International Journal of Ethics and Systems (Emerald), Journal of Islamic Marketing (Emerald), Middle East Journal of Management (Inderscience), International Journal of Islamic Marketing and Branding, (Inderscience), and Journal of Advanced Studies in Finance, among others. His works also appeared in Newspapers and as book chapters. He has also reviewed for Journal of Islamic Marketing, International Journal of Islamic Marketing and Branding, and International Journal of Islamic and Middle Eastern Finance and Management. Email: [email protected] 6 Preface This book has its origin in my writings in newspapers and my (rested) online blog ‘Economic Issues’. The popularity of my online writings made me to rethink about converting these wide and diverse contributions into a book for the benefit of larger audience, research and documentation. My previous writings have covered wide areas from inflation, unemployment, poverty, retail business, media to Islamic finance. The content of this book has more richness and depth than what was content in the original individual pieces from which the book was formed. About 35% of the book contents new researches added to the book in order to enrich the book and make it up to date with the very recent happenings in Nigeria and around the world. The book brings together my political, economic and financial writings and researches of roughly the last one decade. I was inspired by classical economics works such as collected works of Paul Samuelson, though this book contents works that target both academic and nonacademic audience. The manner in which the book was written and compiled made it easy for comprehension of people not familiar with technical economic jargons and happenings in Nigeria. As a matter of fact, the book is not a technical economic textbook, it is a diary of economic and business events that happened in Nigeria in the pass one decade. The book is suitable for international investors, businessmen, researchers, journalists and policy makers who want to know more about Nigerian economy. But, the broadness and relevance of these issues also made it suitable for students and teachers looking for up-to-date book on Nigerian economy. Beside the journalistic contents, the book was (in some places) supplemented by normal text book introductions and definition of central ideas discussed in the book. The randomness in the ideas discussed by the book is because of the fact that the individual chapters were written over a period of time according to event taking place in Nigeria between 2008-2018. Hence, the book in itself serves as important historical diary of the events in Nigerian economic life during the last decade. The events in this book have been updated from the period they were first published on my blog and as opinion pieces in newspapers, in order to reflect current developments and economic position of Nigeria. Nigerian economy has not been discussed thoroughly in mediums such as books that layman can understand devoid of technical jargons of academic economics. Nigerian academics are preoccupied with writing technical journal papers that will get them professorship. On the other hand, Nigerian journalists who cover finance and economics in most cases lack the economic background to write work of this nature. The available books in the market were written over thirty years ago, providing the need for new books that take care of 7 recent events in the Nigerian economy. Boko Haram insurgency that dominated most of the news coverage on Nigeria during the period has monumentally affected the economic and financial events reported in this book. Thus, this book is more less an account of economic events during Boko Haram uprising in Nigeria. Shafiu Ibrahim Abdullahi [email protected] Kano-Nigeria October, 2018 8 INTRODUCTION Let begins with some macroeconomic statistics; recently, Nigerian economy was ranked number one in Africa with real GDP of about $568.5 billion in 2014, $481.1 billion in 2015, $405 billion in 2016 and $376.3 billion in 2017. Its GDP in term of purchasing power parity (PPP) was ranked 25th in the world with $1.119 trillion in 2017. But, the figure is lower than the $1.137 trillion obtained in 2016. It was ranked as lower middle income nation with per capita GDP in term of PPP of $5,900 in 2017. Nigeria’s major export commodity is crude oil accounting for about 95% of its total export. Nigeria total import in 2017 stood at $35.24 billion while inflation stood at 16.5%, and unemployment at 13.4%. Government economic measures, depreciation in the value of Naira and decline in oil revenue have combined to force Nigerians into cutting down on consumption of imported goods and services. The official exchange rate of Naira to Dollar in 2017 stood at 323.5 Naira, this shows lack of improvement in the value of Naira against the US Dollars. In 2001, Nigeria GDP was estimated at $40.9 billion, but a decade and half later it jumped to $376.3 by 2017. In order to demonstrate more clearly Nigeria socioeconomic position in Africa, I have compared its macroeconomic figures with South Africa’s. Comparing Nigeria with its nearest African rival, South Africa’s GDP in 2001 was $113.3 billion and in 2017 it was $349.3 billion. Looking at these figures one might wonder on the manner Nigerian economy, that was about one third the size of South Africa’s in 2001, came to become the biggest economy on the continent less than fifteen years later. Reason number one being, during the period Nigerian economy has grown at higher rate than South Africa’s. Two, in 2014 Nigeria had rebased her economy annual GDP (using newer estimation procedure) from the previously used base year of 1990; that instantly made her economy to become number one in Africa. In 2004, inflation rate in Nigeria hovered around 17-18% while South Africa had inflation rate of about 0.2%. In 2017, Nigeria has inflation rate of 16.5% and South Africa has 5.3%. These figures show that South Africa is still doing better than Nigeria in managing inflation. Recently, both Nigeria and South Africa have found themselves in recession. Nigeria officially entered recession in 2016 while South Africa in 2018. Despite both countries finding themselves in recession recently, people living below poverty level in Nigeria comprises about 65% of the population, while in South Africa it is 17% that live below poverty limit. In 2004, Nigerian foreign reserve stood at $7 billion, by 2018 it has jumped to $47 billion, though there was a lot of fluctuations along the way. South Africa reserve in 2018 is $49 billion. While in 2001, Nigeria export of goods stood at $1.8 billion and South Africa’s $$30.6 billion. But, in 2017 Nigeria’s export stood at $40.81 billion and South Africa’s $78.2 billion, showing higher 9 percentage increased in Nigeria than South Africa. In term of population, in 2017 Nigerian population stood at 190.63 million and South Africa’s 56.52 million. Thus, Nigeria has more than three times the population of South Africa. Nigerian economy will double that of South Africa in the near future, taking these indicators into consideration. But, its GDP per capita will still be lower than South Africa’s due to the huge size of Nigerian population, expected to become the third most populous country in the world around 2050.