Feature/OPED
History, Recession and a Sector in Progressive Decay
By Jerome-Mario Utomi
You cannot bring about prosperity by discouraging thrift. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by taking away man’s initiative and independence. You cannot help men permanently by doing for them what they could and should do for themselves. -Abraham Lincoln
Two days after the National Bureau of Statistics (NBS) announced on Saturday, November 21, 2020, that the Nigerian economy has slipped into its second recession in five years, and the worst economic decline in almost four decades as the gross domestic product contracted for the second consecutive quarter with the nation’s GDP recording a negative growth of 3.62 per cent in the third quarter of 2020, I stumbled on two opposing views about history.
The first emphasized the views that history promotes scepticism, a questioning attitude or doubt towards one or more putative instances of knowledge which are asserted to be mere belief or dogma, and sharpens one’s critical minds which give room for assessing programmes of development with reference to their historical antecedents.
For the other, history is a storehouse of practical lessons in human activities. To drive the argument home, it submitted; If Africans and, in fact, Nigerians could truly retain the knowledge that they were enslaved and colonized, they will strive to be developed and independent so that it will not happen again,
Without a doubt, it is a perfect disclosure. But the example is so ‘horrendous’, in parts, because they are the direct opposite of what Nigeria is all about. Here, it is always ‘convenient to forget and uncomfortable to remember’.
In line with the above piece of information, President Muhammadu Buhari on Monday in Abuja said that the downturn (recession) was caused by the COVID-19 pandemic including lockdowns, disruption in global supply chains, business failures and rising unemployment.
Mr President, who was represented by Vice-President Yemi Osinbajo, stated this while declaring open the 26th Nigerian Economic Summit with the theme Building Partnerships for Resilience and jointly organized by the Nigerian Economic Summit Group (NESG) and the Ministry of Finance, Budget and National Planning.
Peripherally, Mr President’s points look valid considering the fact that oil production fell to 1.67 million barrels a day from 1.81 million barrels in the previous quarter, and according to reports, the lowest since the third quarter in 2016 when the economy last experienced a recession. This is made worse by the awareness that crude oil accounts for nearly 90 per cent of Nigeria’s foreign exchange earnings.
It is, however, significant to underline, before going further the fact that this opinion article is written not to pass judgement against or wholeheartedly approve and endorse his claim but to consider and set record straight about how the rise of obnoxious policies/decisions lavishly made since 2015 serve only to exacerbate the decline of the nation’s economy and jeopardizes our democracy.
With the above highlighted, let us focus on and be guided by some specific comments credited to well foresighted and quietly influential Nigerians that reacted to the latest economic downturn.
To some, it is no surprise Nigeria entered yet another recession. Their argument is hinged on the premise that until Nigeria is led by an intellectually competent leader, with visionary politics backed by sound economic thinking and knowledge, the economic transformation will remain a dream. It’s for citizens to do the needful.
To others, “Recession didn’t just happen. People looted Nigeria into recession. The same people are regrouping for 2023.”
For the rest, for Nigeria to pull itself out of this economic recession, the second in the last 5 years, there’s a compelling need to cut the pork out of the budget and expenditure at all levels of government and redirect the economy from a wasteful consumption-based one to a productive economy.
Like faith which is a belief in things not seen, there are accompanying reasons and ingrained truth in the above arguments.
In the opinion of this piece, one silent point fuelling recession and economic stagnation/retardation in the country is the reality that the managers of our nation’s economy have continued to go against the provisions of the constitutions as an attempt to disengage governance from public sector control of the economy has only played into waiting hands of the profiteers of goods and services to the detriment of the Nigerian people.
While the nation continues to lie prostrate and diminish socially and economically with grinding poverty, the privileged political few continue to flourish in obscene and splendour as they pillage and ravage the resources of our country at will.
Supporting this assertion is the latest Ibrahim Mo Index of African Governance (IIAG) which reportedly scored Nigeria an embarrassing 26/100 for corruption in state institutions and 25/100 for corruption in public procurement.
Whilst the report went head to ranks Nigeria 34th out of 54 for overall governance and highlights “increasing deterioration” in the governance of our nation, it pointed plenty of “warning signs” for Nigeria, including the following scores: 21/100 for a functioning criminal justice system (ranking in the lowest-performing quarter of nations); 25/100 for political party financing; 30/100 for disclosure of financial information; 35/100 for law enforcement; 32/100 for equal political power (ranking us 38th out of 54).
Certainly, a striking human tragedy deepened by the awareness that it was avoidable. But more important than all of this regret is the realization of the fact that we were warned with mountains of evidence that recession was coming, yet, our leaders who are never ready to serve or save the citizens ignored the warnings describing it as a prank.
The World Bank gave a forecast that the Nigerian economy will contract by 3.2 per cent in 2020, assuming the spread of COVID-19 is contained by the third quarter. The International Monetary Fund forecast a contraction of 4.3 per cent.
In the same vein, a reputable media organizations in the country in one of its editorial comment early this year drew our attention to the sad reality that Nigeria would be facing another round of fiscal headwinds this year with the mix of $83 billion debt; rising recurrent expenditure; increased cost of debt servicing; sustained fall in revenue; and about $22 billion debt plan waiting for legislative approval.
It may be worse if the anticipated shocks from the global economy, like the Brexit, the United States-China trade war and interest rate policy of the Federal Reserve Bank go awry.
The nation’s debt stock, currently at $83 billion, comes with huge debt service provision in excess of N2.1 trillion in 2019 but set to rise in 2020. This challenge stems from the country’s revenue crisis, which has remained unabating in the last five years, while the borrowings have persisted, an indication that the economy has been primed for recurring tough outcomes, the report concluded.
Similarly, the Nigeria Extractive Industries Transparency Initiative (NEITI), a while ago told Nigerians that the nation loses about $4.1 or N123 billion annually due to poor crude oil production metering, stating that unless the government takes appropriate measures, limitations in the metering of crude oil production will continue to pose a serious threat to the nation’s revenue target.
Regrettably, Nigeria is the only oil-producing country without adequate metering to ascertain the accurate quantity of crude oil produced at any given time, the report concluded.
From the above accounts, we don’t need to be economic buffs to know that a country that services its debt with 50 per cent of its annual revenue has become a high-risk borrower. What the above tells us as a country is that the recession did not take the nation by storm. It announced its coming and we read the signs.
And the nation will continue to have its head stuck in recession mud until leaders recognize that as a nation, our economy is in progressive decay not because of our geographical location or due to absence of mineral/natural resources but because they failed to take decisions that engineer prosperity.
As this piece may not unfold completely the answers to these challenges, there are a few sectors that a nation desirous of development can start from. And the first that comes to mind is the urgent need for diversification of the nation’s revenue sources. Revenue diversification from what developments experts are saying will provide options for the nation reduce financial risks and increase national economic stability: As a decline in particular revenue source might be offset by an increase in other revenue sources.
In conclusion,, as the nation continues to bear the present challenge, it is important to inform Nigerians who witnessed recessions in 1984 but ignored the lessons to wonder in dilemma, that like every other socioeconomic challenge, corruption and lack of creative leadership that breeds recession will be difficult to fight or meaningful changes implemented on the nation’s political shore when the individuals/institutions who are the cause of the problems in the first place are still around. And attempting to engineer prosperity without confronting the root cause of the problems and politics that keep them going in the writer’s views is unlikely to bear fruits.
Nigerians need initiative and independent minds to do this as we cannot solve our socio-economic challenges with the same thinking we used when we created it.’
Jerome-Mario Utomi is the Programme Coordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA), Lagos. He could be reached via je*********@***oo.com or 08032725374.
By Blaise Udunze
Daily, the world watches Nigeria through a familiar lens in what appears to be a gory situation. Especially in cases when the news headlines tell stories of farmer-herder clashes, bandit attacks, kidnappings, villages reduced to ashes or deserted by the dwellers, as thousands of Nigerians have been displaced across states such as Zamfara, Plateau, Benue, Niger, Kaduna and Nasarawa. Subliminally, this is about to become a similarly ugly occurrence in southwestern Nigeria, which is fast becoming obvious if not nipped in the bud quickly.
Recorded data have shown that bandits, Boko Haram, and others killed over 190,000 Nigerians in 17 years and displaced 3.7 million people.
A human rights organisation, the International Society for Civil Liberties and Rule of Law (Intersociety), in its fearful revelation, has said that no fewer than 190,150 Nigerians have been killed by bandits, Boko Haram insurgents, and suspected armed herdsmen between July 2009 and March 19, 2026, as this calls for concern.
The dominant explanations often point to ethnic tensions, religious divisions, climate change, shrinking grazing routes or weak security institutions. No doubt, those factors are certainly part of Nigeria’s complex security crisis. Yet another question deserves serious examination.
What if, in some locations, the violence is also serving another purpose? What if some of the territories experiencing repeated displacement are the same places sitting atop some of Nigeria’s most valuable mineral deposits? More importantly, if such a pattern exists, who benefits when communities disappear?
Of a truth, these questions are uncomfortable, but undeniably they deserve careful investigation rather than dismissal.
For ages, Nigeria has been naturally endowed, and it is estimated to be rich in enormous significant reserves of gold, lithium, uranium, tin, columbite and other strategic minerals increasingly sought after in the global transition to clean energy technologies. As international demand for battery minerals continues to rise, these resources have become far more valuable than they were only a decade ago.
If one overlays publicly available geological information with maps showing persistent violence, some observers argue that striking geographical overlaps appear in several regions. Such overlaps alone cannot establish causation. Correlation is not proof of conspiracy. However, they raise questions worthy of independent scrutiny.
One issue attracting increasing attention and adequately yearns for answer is whether prolonged insecurity may inadvertently or deliberately create conditions that make mineral extraction easier.
Under Nigeria’s Nigerian Minerals and Mining Act 2007, mineral resources belong to the Federal Government, while mining rights are granted through licences and leases. Community engagement and land access are expected to form part of the licensing process, although implementation varies depending on circumstances. This raises an important policy question.
What happens when the communities expected to participate in those processes have already fled because of violence?
Displacement changes the dynamics of land ownership, consent and access. While no evidence automatically proves that attacks are orchestrated to facilitate mining, the sequence of violence followed by renewed commercial activity in some locations deserves closer examination by regulators, lawmakers and investigative journalists.
In conflict studies, researchers have long observed that wars often generate economic winners alongside humanitarian losers. Could elements of Nigeria’s insecurity also be producing economic beneficiaries?
Reports over the years have documented concerns about illegal mining operations across parts of northern Nigeria. Government agencies themselves have repeatedly acknowledged that criminal networks profit from the country’s vast mineral wealth. The unresolved question is whether isolated criminality has, in some instances, evolved into more sophisticated alliances involving political influence, financial interests and international supply chains. If so, the implications extend far beyond Nigeria.
Invariably, it is clearly known that lithium has become one of the world’s most strategic commodities, powering electric vehicle batteries and renewable energy storage systems. Gold has always remained one of the safest global investment assets during periods of uncertainty. Meanwhile, it is well confirmed that the global appetite for these minerals creates enormous financial incentives.
Suppose violent displacement reduces resistance to extraction. Suppose shell companies subsequently acquire mining interests. Suppose minerals then leave Nigeria through legitimate-looking export documentation while their true value remains understated.
These scenarios remain allegations unless supported by verifiable evidence. Yet they outline a framework that investigators may wish to test rather than ignore. Financial crime experts frequently identify trade mis-invoicing as one of the most common methods of illicit financial flows worldwide.
Could Nigeria’s solid minerals sector be vulnerable to similar practices? If valuable lithium ore is deliberately but inaccurately described as lower-value material on export documents, substantial wealth could potentially leave the country without reflecting its true market value. Likewise, if unrefined gold exits through privileged channels with limited scrutiny, questions naturally arise about oversight, transparency and accountability over criminal activities which have continued to stunt and disrupt the country’s socio-economic growth and at the same time cause carnage.
Such possibilities are not accusations against any particular institution or company. Rather, they illustrate why stronger monitoring systems are increasingly essential. Another question concerns logistics.
With the high level of criminal activities, industrial mining requires heavy machinery, diesel supplies, transportation networks and specialised personnel. These are not operations that can remain invisible indefinitely.
If certain territories are genuinely too dangerous for security agencies, how do industrial-scale extraction activities reportedly continue in some remote locations? If they do, who protects those operations? Who authorises their movement? Who verifies what is extracted? Who ensures royalties and export revenues reach public coffers? These are governance questions that demand institutional answers.
Equally important is the international dimension. Minerals extracted in Nigeria ultimately enter global supply chains. Gold may pass through international refining hubs before entering financial markets. Lithium may become part of battery manufacturing destined for electric vehicles, which are being sold across Europe, North America and Asia.
One known fact is that consumers purchasing products containing these minerals rarely know the full story of where they originated.
Increasingly, however, investors and governments are demanding ethical sourcing standards that trace minerals from extraction to final manufacture.
A critical factor that must be taken into cognisance is that if insecurity is creating opportunities for illegal or unethical extraction anywhere in the world, multinational companies have responsibilities alongside national governments, of which the onus falls on the Nigerian government.
Transparency cannot stop at the mine gate. Nor should accountability end at national borders. Another issue requiring attention concerns beneficial ownership.
Across many jurisdictions, shell companies can obscure the identities of individuals ultimately controlling commercial assets. If politically exposed persons or powerful business interests are hidden behind complex corporate structures registered offshore, identifying beneficiaries becomes significantly more difficult. This challenge is hardly unique to Nigeria.
Findings showed that from Latin America to Central Africa and Southeast Asia, resistant corporate networks have frequently complicated efforts to combat corruption and illicit resource extraction. That is precisely why open corporate registries, beneficial ownership databases and transparent mining licence disclosures are becoming global governance priorities. For Nigeria, the stakes could hardly be higher.
The country stands at the centre of the world’s emerging critical minerals economy. The Nigerian government can’t feign ignorance of the fact that, when handled transparently, these resources could finance infrastructure, education, healthcare, and industrial development for generations.
In no way would the government claim not knowing that when handled poorly, they risk becoming another chapter in the well-documented “resource curse,” where extraordinary natural wealth coincides with persistent poverty, insecurity and institutional weakness.
The ultimate challenge, therefore, is not simply about mining. It is about governance. It is about whether public institutions possess both the independence and capacity to ensure that natural resources benefit citizens rather than narrow interests. It is about whether conflict zones receive genuine peacebuilding efforts instead of becoming forgotten frontiers. And it is about whether international markets demand accountability with the same enthusiasm they demand raw materials.
None of these questions should be answered through speculation. They require rigorous investigations, forensic financial analysis, satellite imagery, mining license audits, customs records, beneficial ownership disclosures and courageous journalism.
They require governments willing to open their books. They require international cooperation capable of tracing money across borders. Most importantly, they require asking questions that have too often remained unasked.
Perhaps Nigeria’s security crisis is exactly what it appears to be: a tragic convergence of historical grievances, weak institutions, criminality and environmental pressures. Or perhaps, in some places, another layer of economic incentive deserves closer scrutiny.
Until those questions are thoroughly investigated, one possibility will continue to linger. Maybe the world’s attention has been fixed on the blood spilt above ground, while too little attention has been paid to the extraordinary wealth lying beneath it.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
Feature/OPED
What Does Nigeria’s $51bn Reserves Milestone Mean if Most New Foreign Money Can Leave Quickly?
Nigeria’s foreign reserves have climbed to about $51 billion, a decade-plus high, according to the Central Bank of Nigeria (CBN). EBC Financial Group (EBC) notes that this reflects stronger investor confidence, but the second half may show whether it holds, as the build rests on three cyclical drivers: oil earnings, short-term foreign money and a narrowing official-to-street naira gap.
Reserves rose from about $32 billion in April 2024, during a dollar shortage, to about $51 billion now, near the CBN’s target. Much came from two cyclical sources, strong oil earnings and money chasing high-yielding naira assets, so EBC expects the pace to slow or reverse. Fitch Ratings, a major international credit rating agency, expects a marginal decline to about $47 billion by the end of 2026, citing higher spending and external pressures.
David Precious, Senior Market Analyst at EBC Financial Group, said, “Nigeria’s reserve build is real but may not be durable yet, because nearly all of the new money is the kind that can leave quickly. Of the $10.37 billion that came in over the first quarter, the overwhelming majority was short-term portfolio funds rather than long-term investment, so a shift in oil prices, global interest rates or confidence in the naira might pull a large part of it straight back out.”
Most New Money Can Still Leave Quickly
The composition of the foreign inflows explains the caution over how long the build can last. The country attracted $10.37 billion in foreign investment in the first quarter of 2026, up 83.83 per cent year-on-year, according to the National Bureau of Statistics (NBS). Of that, $9.86 billion or 95.09 per cent, was portfolio money, largely short-term naira debt such as Treasury bills that investors can sell at the next auction, while foreign direct investment, the long-term kind that builds factories and jobs, was $135.08 million, or 1.30 per cent. Put simply, of each dollar coming in, about 95 cents can leave quickly, and barely one cent stays.
That money supports reserves while it stays. Dollars brought in to buy naira assets add to market supply, letting the CBN hold more reserves and steady the naira. It leaves when conditions change. Nigeria earns most of its export dollars from oil and gas, so lower oil prices mean fewer dollars, and as a member of the Organisation of the Petroleum Exporting Countries (OPEC), it cannot simply produce more, output capped by quota and reduced by theft and ageing fields. Higher global interest rates draw money toward safer returns abroad, and a weakening naira prompts investors to sell early. When oil fell in 2016 and 2020, foreign investors withdrew and could not convert naira to dollars as supply dried up, leaving the CBN to clear more than $7 billion in trapped obligations into 2024.
The Oil Boost is No Longer Certain
Oil looked like a dependable source of the dollars behind the reserves only months ago. Earlier in 2026, concern over disruption around the Strait of Hormuz lifted crude prices, and stronger receipts flowed in, with crude oil export earnings of $8.11 billion in the first quarter in the CBN’s balance-of-payments data. That support is now easing. The tension has subsided, and Brent traded near $72 on June 29, down about 24 per cent over the month, back to pre-conflict levels. With the price boost gone and output constrained, reserves are more exposed, leaning on non-oil earnings and investor patience rather than oil.
The Naira Still Trades at Two Prices
The naira has traded at two prices, an official rate and a higher parallel-market rate, and closing that gap into one trusted price is what many investors might watch most. Before committing funds, they may want assurance they can convert naira to dollars at a fair rate when they exit, and a wide gap revives the fear of being trapped that lingers from earlier shortages. The gap has narrowed to roughly N20 to N30, with the CBN’s official rate near N1,380 per dollar on June 26 against parallel-market quotes around N1,400. The International Monetary Fund (IMF) 2026 Article IV review urged Nigeria to depend less on this fast-moving portfolio money and to keep phasing out its multiple exchange-rate practices. The CBN’s Foreign Exchange Manual, in force from 1 June, is intended to make the market clearer, though such rules build confidence only once investors can freely trade dollars at the posted rate.
What could Make the Build Durable
A few signs that may show the build turning durable include a smaller gap between the official and street naira rates, more long-term foreign investment, and steadier oil earnings. A gap that stays small, now roughly N20 to N30, may mean investors trust the official rate and no longer need the street market. A clear rise in foreign direct investment, only $135 million last quarter against $9.86 billion of short-term money, might mean lasting capital is replacing funds that can leave at the next auction. Oil earnings that hold up, rather than sliding from the low $70s, should help keep reserves steady, since oil and gas bring in most of Nigeria’s export dollars.
“Reserves built on money chasing high yields can fall as fast as they rose, as they did after the last two oil shocks, when investors left, and the CBN spent years clearing a foreign-exchange backlog,” Precious added. “What holds through a downturn is slower money, direct investment, steady oil and non-oil export earnings and one credible naira rate, and that is the shift Nigeria has yet to make.”
By Olajumoke Bello
Across Nigeria, small and medium enterprises remain the backbone of economic activity. They drive trade, create jobs, and sustain millions of livelihoods. Yet, despite their importance, many SMEs continue to operate below their full potential due to persistent structural challenges.
Access to finance remains one of the most cited constraints. However, the issue today goes beyond the availability of capital. Many businesses struggle with financial readiness, weak documentation, and limited understanding of what lenders require. This often leads to missed opportunities, even when funding options exist.
At the same time, SMEs face gaps in market access and visibility. Business owners operate in highly localised environments, with limited exposure to broader networks that can unlock partnerships, new markets, and growth opportunities. This isolation can constrain scalability and reduce long-term competitiveness.
Equally important is the capability gap. Many entrepreneurs grow through resilience and experience but lack structured knowledge on critical areas such as financial management, export readiness, and digital adoption. Without this, even well-capitalised businesses can struggle to sustain growth.
These challenges point to a clear need for a more practical and integrated approach to SME support. It is no longer sufficient to offer standalone solutions. SMEs require ecosystems that combine knowledge, access, and direct engagement in ways that reflect how they actually operate.
A key shift is the move from centralised interventions to localised engagement. SMEs are deeply influenced by their immediate environments, whether markets, industrial clusters, or trade corridors. Solutions must therefore be brought closer to where these businesses function, allowing for more relevant support and stronger relationships.
Another important shift is from awareness to action. Business owners do not only need information; they need insights that they can apply immediately. This includes understanding how to structure their finances, how to access trade opportunities, and how to connect with the right partners to scale their operations.
There is also a growing need for continuity. Many SME-focused initiatives deliver strong initial impact but lack follow-through. For support to be effective, it must extend beyond one-off engagements into sustained relationships, with clear pathways for onboarding, advisory, and growth.
For financial institutions, this presents both responsibility and an opportunity. Supporting SMEs now requires moving beyond transactional banking to deeper partnership models. It requires understanding businesses at a granular level and co-creating solutions that evolve with their needs.
At Stanbic IBTC, this perspective continues to shape our approach to SME development. Our focus is on delivering practical support that translates into real business outcomes, helping enterprises grow, compete, and contribute more meaningfully to the economy.
As part of this commitment, we are extending our SME engagement to the regions through the Nigeria Business Summit Regional Tour. The tour will take structured, on-ground activations into key commercial hubs, where SMEs can access funding guidance, trade insights, advisory support, and direct engagement with financial experts.
The regional tour will take place across five strategic locations, bringing these solutions closer to business owners in Aba, Onitsha, Ibadan and Kano.
This approach reflects an important principle. When support moves closer to businesses and when solutions are delivered in ways that are practical and continuous, SMEs are better positioned to grow sustainably. In turn, this strengthens not only individual enterprises but the broader economy.
Olajumoke Bello is the Head of Enterprise Banking at Stanbic IBTC Bank
