I was still in Secondary Technical School Ovim when IBB was the president, and as a village kid, my problem was never food. You were guaranteed one loaf of Ezioma bread (15 kobo) in the morning. On the days after the main Oriendu Market, you could upgrade to Our Society bread. Our Society bread was “imported” from Enugu, from the bakery of Chief Umunna, who never forgot his village even though he was serving Enugu people.
I do conclude that IBB was a good operator even though he scaled many bad economic policies in Nigeria. I mean he anchored Abuja, 3rd Mainland Bridge, etc. Yet, he messed up with SAP (structural adjustment programme), and in the bid to recover, he liberated the banking & financial sector at scale, without connecting it to manufacturing. Yes, Nigeria became a trading floor with margins!
Today, from GTBank to Zenith Bank, and beyond, some of the leading banks in Nigeria were created within 1989 to 1993, and a policy framework made that possible. Just like that, the financialization of Nigeria began, and that started the erosion of the core pillars of Nigeria. IBB made finance better but ignored manufacturing! Why build factories when you can add your “percentage” on a financial transaction?
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The late 1970s and early 1980s:
The illusion has been that the late 1970s and early 1980s were great because we had the oil boom. Not really, as we still have an oil boom today. In the 1980s, we pumped about 400,000 bpd at about $36 per barrel. Today, we do close to 1.2 million bpd at close to $80 . Even if you adjust for population, Nigeria has more resources today than the late 1970s! (Under constant US dollar, we made $14.4m daily vs $96m today which under constant currency is a 6.7 factor. Population in 1981 was 75 million for today’s 210 million which is a factor of 2.3. In other words, we have scaled oil revenue faster than population, meaning the boom of today is greater).
So, do not say the late 1970s and early 1980s were better because of oil. Something is missing and here is it: Nigeria has stopped making things in Nigeria. Today, we have financialized Nigeria’s economy, as banking and financial services rose, and manufacturing faded. In the 1980s, the known entrepreneurs in Kano, Aba, Abeokuta, etc made things. Today, we grow apps, and have mastered how to pay, receive and move money!
Simply, Nigeria’s problem is not that oil money has stopped; our problem is that post the 1980s SAP, our economy was reconfigured with finance houses, banking, etc and people found out that you could invest N1,000 and wait for a 20% return without doing anything. With that financial engineering everywhere, everyone joined the club and starved the manufacturing (old, modern, hybrid and services) sector. Of course, with easy money, productivity dropped, corruption demons grew, and a nation began the descent.
How do I know? Nigeria creates policies for financial services at more than 8:1 which means for one policy on manufacturing, we have 8 on financialization. Do you want the test? Tell me the last 8 things you know about the banking circulars and remind me of one you know for the manufacturers. You have no chance for the manufacturers but you can list those bank-focused policies.
From the Tang dynasty to the Song dynasty to modern America, and after looking at 2000 years of global GDPs, I have noticed one thing: such financial engineering unlinked to making things will destroy any decent economy.
The Financialization of Nigeria
Let’s talk about the financialization of Nigeria. Since the 1980s, despite greater resources, our economy has shifted dramatically away from making things and heavily towards financial services. This pivot, accelerated by SAP, has created a policy environment favoring finance over manufacturing at an alarming 8:1 ratio. The consequence? A drop in productivity, a rise in corruption, and frankly, a national descent. We must remember that true advancement comes from building and producing, not just shuffling finances.
On a related note, let’s consider the rise of Bureaux de Change (BDCs) and POS agents. The introduction of BDCs back in 1989, and the more recent explosion of POS businesses, highlight this financialization. It’s concerning when POS agents effectively “tax” citizens as the Naira becomes a commodity in their hands. The Central Bank’s own data shows over 90% of cash in circulation is outside banks, significantly flowing through the POS system.
To address this, I firmly believe we need a strategic recalibration. National banks must have a presence in all local government areas to reduce the reliance and cost associated with POS agents. Furthermore, the operations of BDCs should be fully digitized, with a long-term vision of integrating their functions into the banking system itself. Nigeria’s prosperity hinges on a return to a productive, manufacturing-based economy, supported by a financial sector that truly serves that purpose, not the other way around.
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