During 2003 to 2014 , oil traded at 150 dollars per barrel, where did oil money go to ? How come this boon wasn't reflected in the life of citizens ?

Cc grandstar , blue3k

urahara:
During 2003 to 2014 , oil traded at 150 dollars per barrel, where did oil money go to ? How come this boon wasn't reflected in the life of citizens ?

Cc grandstar , blue3k

Even if Oil trades at one thousand Dollars a barrel tomorrow, it won't still help Nigerians. It will only help a few politicians to buy 50 more houses in New York than the 5 they are currently working to buy now.

You know why? Because for any country to move ahead, you must have a system that works. You must also be productive. Japan is the third richest country in the world but they dont have a drop of Oil. Japan also has a stable democracy and a system that works for all. There is no Nigerian who does not use a Japanese product, be it the car you drive to the TV you watch to the iron you use to straighten your dress.

Nigeria neither has a system that works, is not productive and its democracy is a sham.

What this means is that that a few greedy politicians at the top will always mismanage whatever comes comes in while the general population suffer

It will never change unless either of three things happen

Oil dries up and there is no longer anything to steal. Thats when it will be possible for people who are willing to suffer for the Nigerian people will start emerging

Nigeria is restructured so that the component parts become financially and politically autonomous which will bring governance and accountability much closer to home

Nigeria breaks up and people stop waiting for "free Oil money" and look inwards at how they can become like Japan that has no Oil

urahara:
During 2003 to 2014 , oil traded at 150 dollars per barrel, where did oil money go to ? How come this boon wasn't reflected in the life of citizens ?

Cc grandstar , blue3k

Oil did not trade at such juicy prices throughout the boom. During OBJ's term, i don't think it exceeded $65 a barrel. Briefly during Yaradua's administration in 2008, it touched $147 only to come crashing down to $35 the following year. It was the funds in the Excess Crude Account that bailed the country out.

Oil's glory days started between 2010 and 2011 when the price of oil hit $100 and was at that figure till 2014. The excess money went in the following ways.

1. Salaries

In 2010, Jonathan recklessly approved an increase in worker's salaries from N5,500 to N18,000 simply to win the votes of the workers. This largely wiped out benefits of the price increase.

State governments complained bitterly about the hike. The spiralling wages led to an increase in recurrent expenditure and a crowding out in funds available for capital projects. It was an unpardonable tragedy from Jonathan.

2. Fantastical Corruption

Nigerian politicians are some of the most unaccountable in the world. Infrastructure projects are carried out at outrageous costs. Worse, the quality maybe substandard. At times, may not even be carried out after disbursement of funds.

Free drugs meant for patients disappear without a trace. Money meant for structural repairs are either embezzled or held up until fat cats are settled. The list is endless

Government's presence is best sensed by the citizenry through capital projects and when these are largely absent or crumbling, they feel abandoned.

3. Overvalued Exchange Rate

Despite the high fuel price, the Naira was overvalued because of the wage increase and the fuel subsidy which brought pressure on the Naira.

Sanusi was urged to allow the Naira depreciate from 150 or so but he refused. He maintained the exchange rate at great cost to the country, spending over $20b defending it. I'm sure if he had allowed the Naira depreciate to about 180, I'm sure there would have been at least $80b in the foreign reserves by 2014.

Also, a weakened Naira would increase the revenues accruing to all tiers of government, giving them a surplus to invest in infrastructure.

4. Naira substitution policy

This policy keeps inflation high and keeps the level of investment and productivity low by discouraging borrowing.

High oil prices makes the Naira substitution policy very painful. Imagine the country earns $3b a month from oil in 2010, that is 1 trillion a month tpo be disbursed. Now, imagine if fuel price is $100 and the monthly disbursement is $6, that is 2 trillion. That increase is simply excess money. That excess money has to be mopped up by the CBN which means high interest rates.

Henry Boyo has urged that this money be disbursed using Dollar certificates which can be exchanged for Naira at the commercial banks. This will put an immediate end to the excess money and even lead to the opposite. The CBN will be forced to relax its present tight monetary policy that discourages lending and investment.

The list is endless.

Most importantly however, Soludo's recent advise needs to be taken seriously. The foundation of the country is faulty. It is designed to encourage rent seeking, just living off oil money. It needs to change. It needs constitutional and structural changes.

Even at $100 a barrel, government revenue is still rather small and I doubt more than 10% of GDP altogether. It isn't something to write home about.

The oil sector accounts for about 10% of the country's economy. It isn't that big. Where it bares its teeth is in government revenue where it accounts for 75% of government revenue and perhaps that share of exports if not more. It is here it causes a lot of mayhem. This has to change.

Britain's expected budget revenue was 810 billion pounds and expected deficit, 32b. This is a country of 66m people, a third of Nigeria's and producing 1,420,000 barrels of oil a day. I doubt oil revenue accounts for more than 3% of the budget's income.

Until oil revenue's share of the country's budget can be reduced to less than 25%, there would always be flak whenever the price of oil collapses.

@ urahara - you said it all, EXCEPT

Even if oil money runs out because the world goes to renewable energy, the civil servants and politicians in charge will steal money from other sources: taxes, solid minerals, fines etc.

You are therefore very right to say the SYSTEMS need to be changed and Nigeria Restructured (as a Confederacy) or Split (into 2- Southern Nigeria + Arewa or 4 - Oduduwa + Arewa + MB nation + Lower Niger Nation ie SE & SS together)

urahara:
During 2003 to 2014 , oil traded at 150 dollars per barrel, where did oil money go to ? How come this boon wasn't reflected in the life of citizens ?

Cc grandstar , blue3k

Firstly the average oil price 2003 to 2015 is around 60 or 70 dollars at best

70% was user for subsidy and salary
15% was stolen
15% was used to provide the small infrastructure we see

mrvitalis:

Firstly the average oil price 2003 to 2015 is around 60 or 70 dollars at best

70% was user for subsidy and salary
15% was stolen
15% was used to provide the small infrastructure we see

Your oil stats are probably correct. In retrospect, the money is small.

grandstar:


Your oil stats are probably correct. In retrospect, the money is small.

Too small

Iraqis' are also asking the same question

grandstar:


Oil did not trade at such juicy prices throughout the boom. During OBJ's term, i don't think it exceeded $65 a barrel. Briefly during Yaradua's administration in 2008, it touched $147 only to come crashing down to $35 the following year. It was the funds in the Excess Crude Account that bailed the country out.

Oil's glory days started between 2010 and 2011 when the price of oil hit $100 and was at that figure till 2014. The excess money went in the following ways.

1. Salaries

In 2010, Jonathan recklessly approved an increase in worker's salaries from N5,500 to N18,000 simply to win the votes of the workers. This largely wiped out benefits of the price increase.

State governments complained bitterly about the hike. The spiralling wages led to an increase in recurrent expenditure and a crowding out in funds available for capital projects. It was an unpardonable tragedy from Jonathan.

2. Fantastical Corruption

Nigerian politicians are some of the most unaccountable in the world. Infrastructure projects are carried out at outrageous costs. Worse, the quality maybe substandard. At times, may not even be carried out after disbursement of funds.

Free drugs meant for patients disappear without a trace. Money meant for structural repairs are either embezzled or held up until fat cats are settled. The list is endless

Government's presence is best sensed by the citizenry through capital projects and when these are largely absent or crumbling, they feel abandoned.

3. Overvalued Exchange Rate

Despite the high fuel price, the Naira was overvalued because of the wage increase and the fuel subsidy which brought pressure on the Naira.

Sanusi was urged to allow the Naira depreciate from 150 or so but he refused. He maintained the exchange rate at great cost to the country, spending over $20b defending it. I'm sure if he had allowed the Naira depreciate to about 180, I'm sure there would have been at least $80b in the foreign reserves by 2014.

Also, a weakened Naira would increase the revenues accruing to all tiers of government, giving them a surplus to invest in infrastructure.

4. Naira substitution policy

This policy keeps inflation high and keeps the level of investment and productivity low by discouraging borrowing.

High oil prices makes the Naira substitution policy very painful. Imagine the country earns $3b a month from oil in 2010, that is 1 trillion a month tpo be disbursed. Now, imagine if fuel price is $100 and the monthly disbursement is $6, that is 2 trillion. That increase is simply excess money. That excess money has to be mopped up by the CBN which means high interest rates.

Henry Boyo has urged that this money be disbursed using Dollar certificates which can be exchanged for Naira at the commercial banks. This will put an immediate end to the excess money and even lead to the opposite. The CBN will be forced to relax its present tight monetary policy that discourages lending and investment.

The list is endless.

Most importantly however, Soludo's recent advise needs to be taken seriously. The foundation of the country is faulty. It is designed to encourage rent seeking, just living off oil money. It needs to change. It needs constitutional and structural changes.

Even at $100 a barrel, government revenue is still rather small and I doubt more than 10% of GDP altogether. It isn't something to write home about.

The oil sector accounts for about 10% of the country's economy. It isn't that big. Where it bares its teeth is in government revenue where it accounts for 75% of government revenue and perhaps that share of exports if not more. It is here it causes a lot of mayhem. This has to change.

Britain's expected budget revenue was 810 billion pounds and expected deficit, 32b. This is a country of 66m people, a third of Nigeria's and producing 1,420,000 barrels of oil a day. I doubt oil revenue accounts for more than 3% of the budget's income.

Until oil revenue's share of the country's budget can be reduced to less than 25%, there would always be flak whenever the price of oil collapses.

Grandstar during the oil boom of the 1970s , the naira was as strong as the dollar , why didn't the 1 naira become equivalent to 1 dollar during the time of Jonathan when oil traded at 150 dollars per barrel.

grandstar:



Britain's expected budget revenue was 810 billion pounds and expected deficit, 32b. This is a country of 66m people, a third of Nigeria's and producing 1,420,000 barrels of oil a day. I doubt oil revenue accounts for more than 3% of the budget's income.

Until oil revenue's share of the country's budget can be reduced to less than 25%, there would always be flak whenever the price of oil collapses.

Jesus Christ is lord , so Britain produces so much oil.


And as much as this oil is , it's just 3 percent.


Somebody shoot me.

urahara:



Grandstar during the oil boom of the 1970s , the naira was as strong as the dollar , why didn't the 1 naira become equivalent to 1 dollar during the time of Jonathan when oil traded at 150 dollars per barrel.

Not possible. It will take a lifetime for a triple digit currency to be at par with a single digit currency without re-denomination.

What matters is the competitiveness of your currency and low inflation. Also, reduce its volatility by having a majority of your exports not in the primary form.

urahara:


Jesus Christ is lord , so Britain produces so much oil.

And as much as this oil is , it's just 3 percent.

Somebody shoot me.

I know right?! makes me wonder just how much their revenue per annum is.

oh,and.....

Grandstar during the oil boom of the 70s , we had ghanians coming to Nigeria for jobs. They said back then unemployment was very low .

Why didn't something similar happen during the time of Jonathan ?

urahara:
Grandstar during the oil boom of the 70s , we had ghanians coming to Nigeria for jobs. They said back then unemployment was very low .

Why didn't something similar happen during the time of Jonathan ?

it actually did during the time of yar'adua and jonathan.i could remember back then in my school in abuja most of my teachers were ghanians.