Thread by @wFalabede

Which party is responsible for the recession?
Let's put this to rest.

Who is responsible for the recession⁉️APC or PDP⁉️ Let see what the data and research tell us.

👇Thread👇

Let's start with the oil portion of federal revenue.

The oil portion of the federation account (GFA oil) shows a steep decline by the end of 2008 caused by the global recession. By the end of 2009, oil revenue started rising again which means the revenue decline was less than a year. Between 2010 and the third quarter of 2014,

the GFA oil revenue was consistently astronomically high due to the higher oil prices.

By the middle of 2014, GFA oil revenue started experiencing a decline that it has not fully recovered from. GFA oil revenue declined by 53% from about N1.7 trillion in September 2014 to less than N800 Billion in May of 2015.

Real GDP growth also experienced a decline around the same time that GFA oil revenue declined. GDP growth started growing at a reducing rate by the middle of 2014 and by 2015 Q2, real GDP growth slowed and continued the downward spiral

The real GDP started its downward spiral in Q2 of 2014 and by Q4 the decline accelerated. The NBS graph of 2015 GDP growth is proof that the economy handed to PMB was headed for a recession. The economic growth already slowed down as depicted in the graph.

You can see that there is a downward trend towards the recession that finally hits in 2016.

Could the govt have done something to prevent the recession as it was done in 2008? The answer lies in the FOREX reserve that many errconomists have decried. In 2008 Nigeria had over $60B in forex reserve - a fallback fund to help make up for the difference in lost revenue.

The foreign reserve was depleted at the same time that
1. Nigeria experienced the highest oil revenue ever.
2. Record borrowing.
By mid-2014 when the next oil revenue crisis occurred, FOREX reserve has dropped to about $35B. The drop in oil revenue only makes matter worse.

PDP govt continues spending down the Forex reserve while at the same time increasing borrowing to supplement the low revenue. They even borrowed to pay salary. By the time they handed over in May of 2015, Forex reserve was already reduced to about $30B. premiumtimesng.com/business/18254…

With a low oil revenue, the economy was destined for an avoidable recession if the previous government had listened to its own minister of finance.

Next, we look at research into the effect of oil revenue on economic growth

vanguardngr.com/2012/06/okonjo…

Research by Nweze Paul Nweze and Greg Ekpung Edame of Ebonyi State University Dept of Econs published in the European Scientific Journal September 2016 edition vol.12, No.25 concluded that oil revenue has a positive relationship with economic growth in the long run.

What this means is that changes in oil revenue have the same directional effect on economic growth in the long run. Put differently, A decline in oil revenue will in the long-run result in a decline in economic growth.

Since Nigeria government expenditure relies heavily on oil revenue we can postulate that this research explains why the oil revenue decline that started in 2014 took almost two years to cause a recession in 2016.

Read the piece where Okonjo Iweala warned Nigerians of a tougher economy in 2014. When she issued the warning in 2014 oil was selling at about $75/bbl which was the lowest price in a long time then. By May of 2015, oil has fallen as low as low as $31/bbl.

The days Okonjo Iweala warned us about finally arrived in 2016 and folks wanted to pin it on PMB.
premiumtimesng.com/business/17114…

Based on the trend of the economy from 2014, it is clear that the recession could have been avoided if the PDP had taken the right steps as suggested by Okonjo Iweala as far back as 2012. Save Save Save but they spend spend spend with nothing to show for it.

More graphs that showed the economy was going down.
Agriculture, manufacturing,

More proof that everything was going down when they handed over to PMB