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Analysis

Recession: We must never walk this way again – VP Osinbajo

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8 years ago

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By Professor Yemi Osinbajo
The story of the Nigerian recession must be told often, and more importantly, truthfully. There are two reasons why; the first is so as to ensure that never again, do we experience the horrors and deprivations of a recession, the second is that we cannot afford another recession, not now or in the future. Permit me to quickly retell that story as I understand it, of how we got into a recession. Three reasons: one, we were running an unstable economic structure. Oil alone contributed 70% of budgetary revenues and 90%, perhaps more than that, of our foreign exchange revenues.

Up to 50-53% of the non-oil sector was dependent on the oil sector. Consequently, the fortunes of up to 60% of the Nigerian economy, rested on this volatile sector. This shaky foundation was masked in the past by high oil prices, but as soon as oil prices fell, the weakness showed.
The second weakness in our economic structure is that it had mainly been consumption driven with a high propensity to import. Worse still, we were importing food, food that we could grow. Our unsustainable food importation bill at some point, was over N1trilion, it was particularly damning for the economy as foreign exchange revenues dried up. In 2015, oil prices fell to as low as $28 at some point. But worse still, throughout 2016 we lost almost a million barrels a day in oil production due to vandalization and sabotage of oil facilities and pipelines. We lost something in the order of about 60% of our revenues. Yet we could have survived without going into a recession, I think Dr. Teriba so ably stated that, we could have survived if we had savings. But we had no savings only debt.

As economists would say, and as Dr. Teriba had said, we did not have the fiscal buffers to enable a counter-cyclical approach. In other words, we lacked the savings to see us through the lean times.  Why? Why did we lack savings, when so much money was being made? This is the elephant in the room. This leads us to the second reason for the recession – corruption! Unbridled corruption and waste. I think it is important for us to emphasize that, so that we do not think that the recession was just something that occurred in a cyclical fashion – just another economic occurrence. No! It was not another economic occurrence, it was unbridled corruption on a scale that was unprecedented anywhere in the world, is what we experienced in Nigeria. It is important that we emphasize it so we don’t walk this way again.

The figures speak for themselves. Between 2013 and 2015 with oil prices averaging up to $110 per barrel, sometimes going to as high as $150, the government of the day somehow contrived to increase national debt from N7.9 trillion to N12.1 trillion while reducing external reserves from $45 billion to $28 billion as of May 2015. Of course, we all know that there was very little by the way of investment in infrastructure and capital projects. In fact in 2015, capital spend was less than 11%. So there was very little to show for where this money went.

I don’t want to keep repeating some of the incredible things that happened, a few weeks before the last elections; how large sums of money, a 100billion in cash ostensibly for security. Another $289million in cash was paid out in the same period. No country can survive that kind of unbridled waste and corruption. We must never forget, that corruption is perhaps, the most outrageous cause of our economic decline. Aside from barefaced stealing or waste of resources, the inflation of contracts and other procurements ensures that the cost of infrastructure necessary for development will always be unaffordable. So if what we should spend on building a 200km road ends up being spent on a 20 km road, there is no way we are going to make any progress and there is no way we won’t end up in some kind of economic decline or the other.

Today, we can say that despite the 60% or even more reduction in revenues from oil, we are bailing out the States and our capital spend in 2016 was close to N1.3trillion, the highest yet in the country’s history. So with more prudent management, it is possible to do more with far less money. Permit me to comment on two of the other major causes for the deepening of the recession.  One is the intractable delays in the budget approval process and two the long procurement processes. If the budget process takes up to 5 months of the financial year and procurement is another 3months we have already ensured that the economy will be at a standstill for most of the year. The truth is that no developing economy can afford the luxury of prolonged executive/legislative wrangling over the budget. Developed economies with strong and independent private sectors may be able to cope, but Nigeria simply cannot.

Budgetary delay in a situation of national economic emergency, and the hardship encountered by so many, is simply wrong and unacceptable. Neither the executive nor the legislature can excuse itself. It is wrong for us to hold up the budget for that long.  The delays of course, will ensure that money will not flow into the economy, and that capital projects will not be done.mLet us go back to the 1st reason why we must remind ourselves about the recession story. It is so that we do not go down this road again, how do we make sure we don’t?

It was clear to this government, that the solution to getting Nigeria out of recession, requires focused and determined leadership to take immediate and long-term measures to tackle our weak economic foundations.  This found expression is in the Economic Recovery and Growth Plan of Government.

The recovery intended in the Plan was truly to take the economy out of recession, but in addition, it was to stem the slide in growth that occurred since 2014.  We accordingly prioritized, actions to restore oil production at home through a New Vision for the Niger Delta, while working with our international partners to stabilise oil prices. The results are clear, with oil production now at 2million barrels per day (including condensates which are not part of the OPEC quota) and our external reserves now stand at about $34billion.  A second plank of immediate actions taken was ensuring that consumption and investment did not contract any further.  The Federal Government did paid its own salary obligations and extended support to the States to pay the backlog of salaries.

In addition our social intervention programmes put money in the hands of Nigerians through N-Power jobs for young graduates, about 200,000 have been engaged and another 300,000 are in the pipeline for engagement, microcredit loans for market women and artisans, and indirectly, by paying for meals for primary school children through our home grown school feeding programme. The capital spend of about N1.3 trillion in the 2016 budget was unprecedented, but it was important in ensuring that money would go into the economy. This capital spend had the dual purpose, one – boosting growth through government spending but also to provide infrastructure to underpin what we hope would be a fast-growing, dynamic and diversified economy.

Moreover promoted the productive sectors of agriculture, manufacturing and solid minerals.  It is well known that the agricultural sector continued to grow even during the recession due to the emphasis that we placed on sector through schemes like the Anchor Borrowers Programme and the Presidential Initiative on Fertilizer. I will return to this point briefly. Industry returned to positive growth in the second quarter of this year after nine successive quarters of decline since 2014.  This was of course due to the increased availability of foreign exchange for imports of intermediate goods and raw materials, more spirited efforts being made by local industries to source for raw materials, and also less onerous business conditions. Indeed, our efforts to create a more business friendly environment yielded fruit only a few days ago when we exceeded our target of moving up on the World Bank’s ease of doing business rankings. We moved up 24 places instead of our target of 20 and we were named one of the 10 best reforming economies in the world.

It is important to emphasize that the Presidential Enabling Business Environment Council is a collaboration between the Executive, legislature and the private sector. I must commend the legislature for playing its part promptly and faithfully by passing two watershed pieces of legislation on the credit bureau and movable assets. These two legislatures were critical in the way that our economy was viewed by the World Bank and investors in the economy. The Economic Recovery and Growth Plan remains our blue print for actions going forward, but let me just emphasize a few points.  First, we will continue to provide strong macroeconomic management, by increasing revenues and getting out more delivery of infrastructure and services with every naira spent.  We will also maintain efforts to bring inflation down, stabilize the exchange rate and reduce interest rates.  Similarly, our debt will be kept within sustainable limits while borrowing will be used strictly for capital expenditure and to rebalance the ratio of domestic to external debt.

Increasing productivity in agriculture and industry is critical. We simply must produce, productivity is crucial.  This is easier said than done but it must be done. We have focused on agriculture and the agro-allied value chain with our focus on cheaper and improved inputs, local fertilizer production, cheaper credit for farmers through the Anchor Borrowers’ programme —productivity in the agricultural sector is at an all-time high. Rice imports have dropped by 70%. And we are fast becoming one of the largest producers of paddy rice in the world. Now we are producing about 7metric ton of paddy rice. Agriculture is providing more jobs than ever before, as it contributes more to GDP. More investments are coming into agriculture; Walcot, one of the agro-allied companies, a few months ago, opened its 120,000 metric ton rice mill in Kebbi.

The Indorama opened a 3million metric ton fertilizer plant in Rivers State also a few weeks ago. Dangote is investing in a total capacity of 1million metric tons of rice mills and that will be ready by May 2018.  Olam’s poultry and feed mill which recently opened in Kaduna is the largest in the country today. In the same vein, we will continue to lay emphasis on adding value to our oil and gas resources.  Thus, in addition to ensuring the availability of premium motor spirit and other refined petroleum products by supporting the building of additional refineries, including modular ones, we are also seeing viable investments in fertilizer, petrochemical and gas liquefaction plants.

Ensuring the availability and sufficiency of electricity remains a major priority for the Federal Government. It seems to have almost gone unnoticed, that our discussion about power generation has gone from talking about 4000 MW to 7000MW, alongside an increase in transmission capacity. In addition, we remain focused on implementing the Power Sector Recovery Plan, the eligible customer arrangement and boosting the contribution of renewable energy to our national energy mix. Transport infrastructure is one area in which Nigerians come into contact daily because roads, air and rail are essential for commerce, especially the movement of people and goods.  While the Federal Government is making steady, but strategic progress on both the narrow and standard gauge rail lines, it is quite evident that it does not have the resources to repair and rebuild all of the road network that we all desire to see.

This is why the Federal Executive Council recently approved the revision and deepening of the Road Trust Fund. A scheme that would enable the private sector to develop roads of interest to them in exchange for tax credits.  We already have several expressions of interest in this and there are already agreements that are going into operation in relation with this road trust fund. We are confident that with this scheme, and other related ones such as handing over key roads to State Governments to repair would lead to a much improved road network in a short period. Diversification of our revenue earnings from dependence on oil is a key policy objective for us. Aside from developing exports, effective tax collection is key.  Federal and State authorities are being pushed to aggressively collect taxes. Without increasing taxes, if we spread the tax net, if we increase collection of taxes, we will be doing far better in terms of revenue than we are doing today.

The focus on oil, has also given rise to a complete dependence by the federal government but more so the States on the monthly federal allocation. Most States today, earn less than N1billion a month from internally generated revenue. 15 States earn less than N500million a month and about three states earn less than N300million a month from internally generated revenue. Of course, these are outrageously low earnings from taxation.

Before oil, all that the three regions we had at the time, was agriculture and taxes. Yet the West, just to cite an example, was exporting cocoa, built the tallest building in Africa, the first television station in Africa, hundreds of miles of roads, farm settlements and industrial estates.
The same territory and more people are available today. So there is absolutely no reason we can’t ramp up taxes, but federal and state taxes. Lagos, Rivers and Ogun States have shown what is possible with effective taxation and promotion of industry. Lagos generates more revenues now than 31 States put together. The revolution started in 2004 when President Obasanjo seized the local government funds of Lagos State.

With almost 40% loss of income from FAAC Lagos begun an aggressive reform of its tax system.  The results is what we see today, that the State can survive without any recourse to Federal allocation. Rivers States earns roughly N85billon annually, Ogun State earns N72billion. Ogun State is somewhat interesting because, unlike Rivers State which has a captive market of oil companies, Ogun State has had to aggressively attract industry and use its strategic proximity to Lagos to offer a  cheaper deal to investors. So it has been able to ramp up its taxes. I think that taxes are so crucial, collecting taxes, VAT, income taxes and corporation taxes will be crucial as we increase our revenues.

Finally, why is that we cannot afford another recession now or in the future? Simple, every year we are growing at the rate of 2.6% percent per annum. We can only create jobs and feed our people if our growth rate is at least double that figure. In other words, if we are able to increase our economy and possibly, double or triple that figure. By 2050, we will have the fourth largest population in the world. Over 60% of that population will be young men and women who will need education, jobs and a future for their families.

There is no society yet on earth that has had that size of population and did not have the technology, educational facilities and other infrastructure to sustain it. The cost of being the first such nation will be too grave to bear. Honorable members, distinguished colleagues, the obligation that history and providence has thrust upon us today is to honestly do all we can to ensure that the future of our people is secure and prosperous. We must not walk this path of recession again.

  • Professor Yemi Osinbajo is the Vice President of the federal Republic of Nigeria
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Analysis

As EU plans Russian Gas exit, Ministers to convene in Paris to chart Africa’s export potential

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2 weeks ago

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November 19, 2025

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In the wake of seismic shifts in the European energy landscape, the Invest in African Energy (IAE) 2026 Forum in Paris will host a Ministerial Dialogue on “Unlocking Africa’s Gas Supply for Global Energy Security.” This strategic session will examine how Africa can turn its untapped gas reserves into a reliable and sustainable source of supply. With Europe seeking to diversify away from Russian gas, the dialogue highlights both the continent’s growing role in global energy markets and the opportunity for African producers to attract long-term investment. Recent developments underscore the urgency of Africa’s role in global energy security. Last month, EU countries agreed to phase out their remaining Russian gas imports, with existing contracts benefiting from a transition period: short-term contracts can continue until June 2026, while long-term contracts will run until January 2028. In parallel, the European Commission is pushing to end Russian LNG imports by January 2027 under a broader sanctions package aimed at limiting Moscow’s energy revenues.

Africa’s role in this rebalancing is already gaining momentum. Algeria recently renewed its gas supply agreement with ČEZ Group, ensuring continued deliveries to the Czech Republic. In Libya, the National Oil Corporation (NOC) has approved new compressors at the Bahr Essalam field to boost output and reinforce flows via the Greenstream pipeline to Italy. These developments complement the Structures A&E offshore project – led by Eni and the NOC – which is expected to bring two platforms online by 2026 and produce up to 750 million cubic feet per day, supporting both domestic and European demand. West Africa is pursuing ambitious export routes as well.

Nigeria, Algeria and Niger have revived the Trans-Saharan Gas Pipeline (TSGP), with engineering firm Penspen commissioned earlier this year to revalidate its feasibility. The proposed $25 billion Nigeria–Morocco pipeline is also advancing as a long-term corridor linking West African gas to European markets. Meanwhile, the Greater Tortue Ahmeyim (GTA) project off Mauritania and Senegal came online earlier this year, with its first phase targeting 2.3 million tons of LNG annually. In June, the project delivered its third cargo to Belgium’s Zeebrugge terminal, marking the first African LNG shipment from GTA to Europe. Together, these milestones underscore a strategic convergence: African producers are accelerating efforts to scale up exports just as Europe intensifies its search for reliable alternatives to Russian gas.

Yet, as the ministerial session will explore, unlocking Africa’s gas supply demands sustained investment, regulatory alignment, environmental management and community engagement. For Europe, diversification of supply is a strategic necessity; for African producers, it is an opportunity to accelerate development, build infrastructure and secure long-term capital. At IAE 2026, these shifts will be examined by the officials and stakeholders driving them. The Ministerial Dialogue brings African energy leaders together with European policymakers, industry players and investors in a setting that supports practical, solution-focused discussion on supply, export strategies and future cooperation. As Europe adapts its gas strategy and African producers progress major projects, the Forum provides a direct platform for ministers to outline priorities and for investors to engage with key decision-makers.

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Analysis

Authorities must respond as digital tools used by organized criminals accelerate financial crime—IMF

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3 weeks ago

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November 18, 2025

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International Monetary Fund IMF, has said that criminals are outpacing enforcement by adapting ever faster ways to carry out digital fraud. The INF in a Blog post said the Department of Justice in June announced the largest-ever US crypto seizure: $225 million from crypto scams known as pig butchering, in which organized criminals, often across borders, use advanced technology and social engineering such as romance or investment schemes to manipulate victims. This typically involves using AI-generated profiles, encrypted messaging, and obscured blockchain transactions to hide and move stolen funds. It was a big win. Federal agents collaborated across jurisdictions and used blockchain analysis and machine learning to track thousands of wallets used to scam more than 400 victims. Yet it was also a rare victory that underscored how authorities often must play catch-up in a fast-changing digital world. And the scammers are still out there. They pick the best tools for their schemes, from laundering money through crypto and AI-enabled impersonation to producing deepfake content, encrypted apps, and decentralized exchanges. Authorities confronting anonymous, borderless threats are held back by jurisdiction, process, and legacy systems.
Annual illicit crypto activity growth has averaged about 25 percent in recent years and may have surpassed $51 billion last year, according to Chainalysis, a New York–based blockchain analysis firm specializing in helping criminal investigators trace transactions. Bad actors still depend on cash and traditional finance, and money laundering specifically relies on banks, informal money changers, and cash couriers. But the old ways are being reinforced or supercharged by technologies to thwart detection and disruption.
Encrypted messaging apps help cartels coordinate cross-border transactions. Stablecoins and lightly regulated virtual asset platforms can hide bribes and embezzled funds. Cybercriminals use AI-generated identities and bots to deceive banks and evade outdated controls. Tracking proceeds generated by organized crime is nearly impossible for underresourced agencies. AI lowers barriers to entry. Fraudsters with voice-cloning and fake-document generators bypass the verification protocols many banks and regulators still use. Their innovation is growing as compliance systems lag. Governments recognize the threats, but responses are fragmented and uneven—including in regulation of crypto exchanges. And there are delays implementing the Financial Action Task Force’s (FATF’s) “travel rule” to better identify those sending and receiving money across borders, which most digital proceeds cross.
Meanwhile, international financial flows are increasingly complicated by instant transfers on decentralized platforms and anonymity-enhancing tools. Most payments still go through multiple intermediaries, often layering cross-border transactions through antiquated correspondent banks that obscure and delay transactions while raising costs. This helps criminals exploit oversight gaps, jurisdictional coordination, and technological capacity to operate across borders, often undetected.
Regulators and fintechs should be partners, and sustained multilateral engagement should foster fast, cheap, transparent, and traceable cross-border payments. There’s a parallel narrative. Criminals exploit innovation for secrecy and speed while companies and governments test coordination to reduce vulnerabilities and modernize cross-border infrastructure. At the same time, technological implications remain underexplored with respect to anti–money laundering and countering the financing of terrorism, or AML/CFT. Singapore’s and Thailand’s linked fast payment systems, for example, enable real-time retail transfers using mobile numbers; Indonesia and Malaysia have connected QR codes for cross-border payments. Such innovations offer efficiency and inclusion yet raise new issues regarding identity verification, transaction monitoring, and regulatory coordination.
In India, the Unified payments interface enables seamless transfers across apps and platforms, highlighting the power of interoperable design. More than 18 billion monthly transactions, many across competing platforms, show how openness and standardization drive scale and inclusion. Digital payments in India grew faster when interoperability improved, especially in fragmented markets where switching was costly, IMF research shows These regional innovations and global initiatives reflect a growing understanding that fighting crime and fostering inclusion are interlinked priorities—especially as criminals speed ahead. The FATF echoed this concern, urging countries to design AML/CFT controls that support inclusion and innovation. Moreover, an FATF June recommendation marks a major advance: Requiring originator and beneficiary information for cross-border wire transfers—including those involving virtual assets—will enhance traceability across the fast-evolving digital financial ecosystem.
Efforts like these are important examples of how technology enables criminal advantage, but technology must also be part of the regulatory response.
Modernizing cross-border payment systems and reducing unintended AML/CFT barriers increasingly means focusing on transparency, interoperability, and risk-based regulation. The IMF’s work on “safe payment corridors” supports this by helping countries build trusted, secure channels for legitimate financial flows without undermining new technology. A pilot with Samoa —where de-risking has disrupted remittances—showed how targeted safeguards and collaboration with regulated providers can preserve access while maintaining financial integrity without disrupting the use of new payment platforms.
Several countries, with IMF guidance, are investing in machine learning to detect anomalies in cross-border financial flows, and others are tightening regulation of virtual asset service providers. Governments are investing in their own capacity to trace crypto transfers, and blockchain analytics firms are often employed to do that. IMF analysis of cross-border flows and the updated FATF rules are mutually reinforcing. If implemented cohesively, they can help digital efficiency coexist with financial integrity. For that to happen, legal frameworks must adapt to enable timely access to digital evidence while preserving due process. Supervisory models need to evolve to oversee both banks and nonbank financial institutions offering cross-border services. Regulators and fintechs should be partners, and sustained multilateral engagement should foster fast, cheap, transparent, and traceable cross-border payments—anchored interoperable standards that also respect privacy.
Governments must keep up. That means investing in regulatory technology, such as AI-powered transaction monitoring and blockchain analysis, and giving agencies tools and expertise to detect complex crypto schemes and synthetic identity fraud. Institutions must keep pace with criminals by hiring and retaining expert data scientists and financial crime specialists. Virtual assets must be brought under AML/CFT regulation, public-private partnerships should codevelop tools to spot emerging risks, and global standards from the FATF and the Financial Stability Board must be backed by national investments in effective AML/CFT frameworks.
Consistent and coordinated implementation is important. Fragmented efforts leave openings for criminals. Their growing technological advantage over governments threatens to undermine financial integrity, destabilize economies, weaken already fragile institutions, and erode public trust in systems meant to ensure safety and fairness. As crime rings adopt and adapt emerging technologies to outpace enforcement, the cost is not only fiscal—it is structural and systemic. Governments can’t wait. The criminals won’t.

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Analysis

Multilateral development banks reaffirm commitment to climate finance, pledge innovative funding for adaptation

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3 weeks ago

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November 13, 2025

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Multilateral development banks have reaffirmed their commitment to climate finance, pledging to scale up innovative funding to boost climate adaptation and resilience. “Financing climate resilience is not a cost, but an investment.” This was the key message from senior MDB officials at the end of a side event organised by the Climate Investment Funds (CIF) on the opening day of the 30th United Nations Climate Conference (COP30) in Belém, Brazil.

The conference runs from 10 to 21 November. During a panel discussion titled “Accelerating large-scale climate change adaptation,” MDB representatives, including the African Development Bank Group, outlined how their institutions are fulfilling Paris Agreement commitments by mobilising substantial and innovative resources for climate adaptation and mitigation. Ilan Goldfajn, President of the Inter-American Development Bank Group, emphasised that “resilience is more than a concern for the future: it is also essential for development today.” He announced that MDBs are tripling their financing for resilience over the next decade, targeting $42 billion by 2030.

“At the Inter-American Development Bank, we are turning preparedness into protection and resilience into opportunity,” Goldfajn added. Tanja Faller, Director of Technical Evaluation and Monitoring at the Council of Europe Development Bank, stressed that climate change “not only creates new threats, but also amplifies existing inequalities. The most socially vulnerable people are the hardest hit and the last to recover. This is how a climate crisis also becomes a social crisis.” Representatives from the Islamic Development Bank, the Asian Infrastructure Investment Bank, the Asian Development Bank, the World Bank Group, the European Bank for Reconstruction and Development,  the European Investment Bank, the New Development Bank and IDB Invest (the private sector arm of the Inter-American Development Bank Group) also shared concrete examples of successful adaptation investments and strategies for mobilising new resources.

Kevin Kariuki, Vice President of the African Development Bank Group in charge of Power, Energy, Climate and Green Growth, presented the Bank’s leadership in advancing climate adaptation and mitigation. “At the African Development Bank, we understand the priorities of our countries: adaptation and mitigation are at the heart of our climate interventions.” He highlighted the creation of the Climate Action Window, a new financing mechanism under the African Development Fund, the Bank Group’s concessional window for low-income countries.

“The African Development Bank is the only multilateral development bank with a portfolio of adaptation projects ready for investment through the Climate Action Window,” Kariuki noted, adding that Germany, the United Kingdom and Switzerland are among key co-financing partners. Kariuki also showcased the Bank’s YouthADAPT programme, which has invested $5.4 million in 41 youth-led enterprises across 20 African countries, generating more than 10,000 jobs — 61 percent of which are led by women, and mobilising an additional $7 million in private and donor funding.

Representatives from Zambia, Mozambique and Jamaica also shared local perspectives on the financing needs of communities most exposed to climate risk. The panel followed the official opening of COP30, marked by a passionate appeal from Brazilian President Luiz Inácio Lula da Silva for greater climate investment to prevent a “tragedy for humanity.”

“Without the Paris Agreement, we would see a 4–5°C increase in global temperatures,” Lula warned. “Our call to action is based on three pillars: honouring commitments; accelerating public action with a roadmap enabling humanity to move away from fossil fuels and deforestation; and placing humanity at the heart of the climate action programme: thousands of people are living in poverty and deprivation as a result of climate change. The climate emergency is a crisis of inequality,” he continued.

“We must build a future that is not doomed to tragedy. We must ensure that we live in a world where we can still dream.” Outgoing COP President Mukhtar Babayevn, Azerbaijan’s Minister of Ecology, urged developed nations to fulfil their promises made at the Baku Conference, including commitments to mobilise $300 billion in climate finance. He called for stronger political will and multilateral cooperation, before handing over the COP presidency to Brazilian diplomat André Corrêa do Lago, who now leads the negotiations.

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