Nigeria Is In Turmoil. Can A New President Fix It?

contested elections in years. Nigeria's citizens vote for a new president on February twenty fifth, and it's hard to envy the candidate who will ultimately succeed the current president, Muhammadu Buhari, who's led Nigeria since twenty fifteen. The country hill handover is in turmoil. Nigeria's public debt is piling up, inflation is high, there are shortages of gasoline and electricity, and even paper currency. Nigeria is Africa's largest economy by far.

Its output is twice the size of its fourteen West African neighbors combine, and by twenty fifty it's set to become the third most populous nation on Earth, after China and India, with an expected four hundred and fifty million people. If the government can't turn things around, it will have consequences not just for Nigeria and the region, but the

rest of the world too. I asked my Bloomberg colleagues Neil Munchi and Lagos, Nigeria and Ruth Olarunbi in Abuja, the capital, to talk about the candidates vying to take all this on and the monumental tasks the winner will face. Neil, Nigeria is heading into a presidential election at a time of great upheaval in the country. Can you describe what life is like in Nigeria for the average citizen right now?

It's incredibly difficult. I think some Nigerians would describe it as you know, the most difficult situation the country has been in decades. The number of out of school children is more than any other country in the world. Right twenty million kids didn't go to school. Last year, the Naira hit an all time low. Half of adults were

unemployed or underemployed. Thousands of young Nigerians are trying to leave the country to go to the UK or Canada or the US because of the lack of job opportunities and sort of the lifeblood of the economy, which has been for decades. Crude oil is letting the country down in a big way. Production has fallen dramatically. The country is not bringing in as much revenue as it needs to. Nigeria produces a lot of oil, but the revenue from

that oil is shockingly small. Why is that most of the revenue over the last couple of years has been eaten up by fuel subsidies. So Nigeria produces a lot of fuel but doesn't refine almost any at all because they don't have refineries, so they wind up just exporting everything. Yeah, so there are refineries, but basically they don't function, and they export the crude and then end up buying back expensive refined products like petroleum and diesel and that kind

of thing. And then the government subsidizes it so that at the pump gasoline is one of the cheapest. It's one of the cheapest pump prices in the world, and so the government ends up spending ten billion dollars a year subsidizing fuel, heating up most of its revenues. If you add the fact that even production is low because of thefts hit thefts, and so that is also a contributing factor. To why Nigeria doesn't make a lot of

money from revenue. How is the oil stolen? We have the sophisticated at once who still this oil to pots, it's through the black markets to exports to another country and make a lot of money for themselves. Then there are the elements also who do this as well that the government says that is trying to clap down oil.

So one thing I just want to add to what Ruth was saying that you know, last year, officials set that a fifth of the country's oil production was stolen from the pipelines, right, so this is like hundreds of thousands of barrels a day being taken out of Nigeria's official production. It's a massive amount of oil being stolen

all the time essentially. But at the same time as this kind of criminality in the Delta has sort of ramped up and robbed the country of these revenues, this issue of banditry, what's sort of colloquially known in Nigeria's bandits, has come up and these are basically roving gangs of ak forty seven wielding motorcycle riding men. This issue was sort of isolated to the northwest of the country five six years ago, but has slowly as the economy has deteriorated,

spread across the country. The kinds of kidnappings we're talking about are not just kind of going into villages and kidnapping individuals, but you know, setting up fake roadblocks on highways and kidnapping entire bus loads of people going to schools with hundreds of children and kidnapping them into the bush for ransom. This is something that affects people up and down the economic sort of chain, as in politicians, prominent politicians, relatives have been kidnapped, soldiers down to sort

of ordinary Nigerians commuting kind of thing. And while it was once isolated to the far northwest, it's now the kind of thing that happens all over the country because the government has never been able to get a handle on it, and no one has prosecuted for these crimes. So these kind of gangs have sprung up all over and everything that you're describing has also had a terrible effect and Nigeria's entire economy, its ability to service its debt,

to borrow money. What is the state of Nigeria's economy overall right now? It's not great I was going to say it's in shambles, but I will just say that it's not great. Like I mentioned earlier, we have increasing influation that is not subsiding despite Central Bank's effort to tim it. We have borrowing that is running high. The IMF said, I think to us last year that IMF said that Nigeria might spend one hundred of its endings to service its borrowing. Then if your borrowing is increasing,

your interest also increases. And if you don't have any money left to you know, to develop the country a bit, everything collapses if you're if you're out of money, and then we see investors confidence in the economy even going down. You see people who have I was talking to an invest agility and where people they're not able to repatriated funds out of Nigeria because of this currency issue. Corencis city that is the last city. So that is also

a big problem. That's that's Nigeria is facing. Yes, So I mean, Ruth, you mentioned this currency shortage thing that's happening right now, and this you know right now across the country there are hours long lines at ATMs and at bank branches to pull out notes right niro notes because the Central Bank implemented this sort of plan just over the last six seven weeks to replace the hight denomination bills, and the rollout was so chaotic that this

incredibly cash intensive economy is sort of like ground to a halt. If you run sort of a dan foam minibus in Legos, you are now in a position where you can't accept old no, but there aren't enough new notes for customers to pay you with, so those customers are stranded. It's sort of it's cascading through the economy and at the same time, and this is sort of the in a way, the kind of multidimensional dysfunction that's

happening right now. There's fuel shortage, so people are sleeping in their cars overnight at gas stations around the country because they don't have enough fuel to sell. The Nigerian economy is a really difficult spot right now for small businesses actually who rely on generators to foil the power their businesses. Because there's fall shortage that cast shortages, many

of them are closing. And then if you want to buy from the black markets, you buy at maybe four times the rates of the the official rates, which eats into their profits. And then when you don't people have the money to buy anything in the falls place, and you can't withdraw more than five thousand i from from from any end points, you know, everything just becomes soul hard and sole difficult, even for everybody, including they included the middle class, which is increasingly shrinking now, so did

the poorest of the people in the country. Neil and Ruth, you've very vividly described what Nigeria and as people are facing as they head into a presidential election. All of the candidates are promising to fix many of these problems. The current President Bouhari promised when he was elected to his first term to fix a lot of these problems too, and it didn't quite work out. How much of Nigeria's current situation really can be put at President Bouhi's feed.

You know, Buhari took office just before the twenty fifteen twenty sixteen oil price crash, right, so he was dealt a pretty bad hend. But many economists argue that the policies that he implemented and stuck to kind of exacerbated Nigeria's problems so that it was barely recovering from that recession when COVID hit and it sunk into another recession.

And the things that the candidates are promising to do are some of these kind of simple, politically sensitive sometimes reforms that the IMF and the World Bank have been sort of in a way begging Buhari to do for years, and that is unify the multiple exchange rates, dropped some of the import restrictions that he put in place, and cut this costly fuel subsidy. They're all promising to do

that in one way or another. But at the same time, you know, in recent weeks, Moodies downgraded the country and their reason was that despite the promises from these main candidates that they're going to implement these reforms, there are sort of political, structural, institutional constraints that make the ratings agency not believe that it's going to happen as quickly as it needs to. Our conversation continues after the break. President Barhari has now served two terms, so he's term

limited by the constitution. He can't run again. Can you describe who are the candidates now trying to take his place? Yeah, So, Bola Tanoubu is the ex governor of Lego State, who is the ruling party candidate from the All Progressives Congress and they run the election infrastructure, and he is I

think most observers probably think he's the front runner. His major sort of opponent is a Tico Abubakar who's an ex vice president and a perpetual candidate who is running on the People's Democratic Party which is the main opposition party, who also has a very good shot. And Peter Obi, an ex governor, is running under the Labor Party, which is a very small party, has very little in the way of infrastructure or resources, which makes it incredibly hard

to win an election in Nigeria. Ruth, how does the election process work in Nigeria? So the winning candidates has to stick here twenty five percent of votes in at least twenty six states and also in addition to that has to get the majority of the votes and it also has to have the majority of the votes in total, so that it makes predicting who we win a bits complicated. Peter Obi has been getting a lot of attention in the media. Can you tell us about him? So Obi?

He stands for conservatism in public spending. He wants to wants to limit borrowing as well. Last year, Nigeria spent about almost ten billion dollars on subsidiary payments and Obi feels this is a this is a waste of money. Everything it stands for actually speaks to majority of the Nigerians who also think that the government has been wasteful in terms of spending and that the government is not focusing or providing necessary things that the people of the

country needs to move forward. So ob same progressive in terms of providing those things and conservative in terms of government spending. So that makes them very popular with the youth, with the middle class, with the high earners, and also with the people because it seemed to be also is a businessman, so it seemed to be market friendly and people associates with that and the fact that it's an outsider makes them interesting to back. As far as young

people go. They wants somebody that's his fresh with fresh ideas, somebody that can take the economy. Ruvam Pete out puts it on the right spots. So I was slightly different take on it in that Obie is younger, but not young right, he's sixty two. He is running on a third party ticket, but that's because he lost the ticket for one of the major parties, right, he was the VP candidate last time around. He was a banker and

a governor for many years. Right. I think his rise in popularity, which is, as Rive said, really driven by young people in the country. And you know, six months ago last year, he could have been dismissed as sort of a social media phenomenon in a way, And what we've seen over the last few months is that it's much more real than that. That there is kind of

a real ground swell of support for him. And I think many observers would say that the reason he's got this support is the frustration that many young Nigerians have with the major parties and their candidates, who are two older men who have been in politics forever essentially, who've been you know, leaders of both of their parties for this entire time. Atiku Abubakar from the People's Democratic Party has run in every election since democracy returned after being

the Vice president. Tanoubu Bulletinobu was the governor of Lego State and has been a national leader of his party. Both of them come with a lot of baggage, and Obi, while not being a sort of true outsider, does represent this kind of third way and has been endowed with a lot of meaning by these young people as a way to sort of change away from the old guard

of politics. Can he win? He's not gonna win. I think he is going to do better than any third party candidate has ever done, which is something, you know what I mean? It is, It is something. But the institutional kind of constraints are so great. It's sort of you need a party infrastructure in every state, in every ward, you know, getting people out to vote, and in Nigeria it is still a fact that vote buying happens everywhere.

Right again, people are very poor in Nigeria and ultimately the decision that the president makes down the line is not really going to change their lives that much. But two thousand nif five thousand naira on voting day really will. And that kind of thing takes money that the Labor Party doesn't have and the major parties do, and so you think ultimately the ruling party candidate will prevail. I'm a little torn. I don't know, Ruth, what do you think. I'm kind of torn. I had thought for a long

time it'd beat Tanubu in a walk off. Now I think with this currency shortage, the fuel shortage. People are set up with the APC and a teak who could

somehow sneak it out. Yeah, I agree with that, but if you also again to go back to what you said about vote buying at the election, that can't give more because at the last election I witness candidate supporters can given people say five thousand ira and somebody comes back and says how much are you giving and they will tell him, oh, I was given five thousand ira and say okay, I'll give you ten thousand iraq. So

it's really hard to call. Who's going to win this election is a matter of who is mother spirit, who has the most money. I just wanted to say, like Ruth, as a young Nigerian, how do you feel about this? You know the trajectory of the country's u the sort of what comes next. As the jock Nigerian who has a kid in Nigeria, it's carry for me. The indices are not painting a good picture. And then you know you have try. We have strike issues because the government

is not paying staff salary, lecturer salary on time. So the last time they went on strike was for about eight months. Students were out of school for eight months and the worlds went on. You know the lagging behind. You have this matter of inflation that it's eaten into your purchasing power. You have electricity issue. I was telling a friend the other day that I saw a forty year old article that was talking about fixing electricity in Nigeria.

That was a few months before I was born. And I am writing about I'm talking about electricity issue in Nigeria. I'm talking about not having water, not having these issues. But I will give the three contenders credits too, because it is in their best interests that the economy improves. Ruth and Neil, thanks so much for talking with me today. Thanks absolutely, It's my pleasure when we come back. How Nigeria's next president can begin to turn the country around.

Which problems should Nigeria's next president try to tackle first? I asked Chedda Wanza. He's lead partner and head of research at SBM Intelligence, that's a geopolitical consultancy in Nigeria. Chedda, one way that Nigeria has tried to boost its economy is both to get aid from the World Bank and other institutions and also to attract international investment. And yeah, that's been very difficult. Can you describe those efforts and

why they haven't been very successful? Your average investor is in to make a profit, and very unfortunately when an investor chooses to take a long term view, Nigeria generally, except with very few sectors, has not been very good

in terms of return for investment. And a lot of this is because politics get in the way of everything, and because of that, it prevents certain kinds of investors from coming to put down money in an economy where they know that getting on the wrong side of someone in power could mean that they lose their investments, and you have so many different competing, competing interests. I tend not to like the narrative when they say, oh, Nigeria

is a country of two hundred and fifty tribes. And the reason that I don't like that is because a tribe is a very small group there. So I'm from the Evil speaking part of Nigeria. So my historical nation would be the Ebo nation. They're probably thirty two forty million Ego people, only maybe about five million, six million people from Kroatia. And you called Kroatia a nation, but you call the Ebo people a tribe. It doesn't work

that way. Nigeria, like most African countries, is a country of very many nations who have competing interests, and these interests we need to learn how to compromise. So, unfortunately, because of our history of military dictatorship, we learned how to try to push things true by force. We've been a democracy for twenty four years now, so we are still in the price of learning how to nego ships and recompromises. And again it's a message process. Another big

problem that Nigeria faces is enormous debt. Nigeria pays a lot of money justice service, it's debt. How can Nigeria overcome that? What is the way to grow the economy in a way that can turn that around? The government needs to get off its backside and do the work of bringing in the large formal economy into the taxation bracket. When you look at Nigeria's GDP figures, you'll see that the oil industry contributes about eight point nine percent, somewhere

between eight and nine percent of Nigeria's GDP. However, when you look at government's revenues, the oil industry contributes somewhere depend depends on which point in time you're looking at somewhere between eighty five and ninety four percents to government revenues. That's an anomally. You have a lot of other parts of the economy that contributes more to the economy than the oil industry. Report. The government is so laser focused

on oil that it leaves every other thing. So what that means is that we are taking on a lot of depths. A lot of incidents have happened outside Nigeria's control. That essentially means that the country is not generating as

much from the oil industry anymore. Yet we are still taking on debt because at the end of the government ask commitments, there's there's a large civil serfit that needs to be paid, There's there are the security services they need to be paid, and those are just the basic things. So they're taking on they're thinking on loans and basically

kicking the count down your route. Those in charge of Nigeria's government have made promises to make things better, some of them along the lines you're describing, and yet things have arguably only gotten worse. When you look ahead, what do you see for the future of the country. Are you optimistic that Nigeria can make things better. I think that there's a lot of pain that we need to go through in order to set us our rights. Consider Nigeria to be like a huge old tanker that needs

to turn around to tourne it. You need somebody very strong to turne the will, So think of an old tanker on the Swisscanal. There will be a lot of pain then making that tone. But and that tone is successfully done, then any long time Nidress prospects are very good. So the key thing is how do we manage dot pirodo pen jade Wanza. Thanks so much for talking with me today, Thank you for having me, Thanks for listening to us here at The Big Take. It's a daily

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