From the first decade of its independence to date, Nigeria has so far been led by 12 heads of state. Nine of them were in power for at least more than two years. Which of them was the best? And how is this measured?
I answer these questions using just two economic variables: GDP growth rate and the price of oil.
- President Jonathan (in power from 2010 - 2015) had the highest oil price and Gen Gowon the lowest.
- President Yar’adua (2007 - 2010) had the highest growth rate and Shagari the lowest followed by Buhari.
- President Buhari (2015 - 2019) is having the 3rd highest oil price, 11 times Gen Gowon's.
- Gen Gowon (1966 - 1975) recorded the 3rd highest growth rate, 15 times Buhari's (2nd lowest). However, Buhari has a few years left to improve his numbers. But unfortunately, the price of oil is now on a free-fall, signalling a grimmer economic prospect. The world now values coffee drink more than it values crude oil. Nearly a decade ago, a barrel of crude oil was worth 75 cups of coffee but is now worth about 4 cups. Woe betides low-income oil-producing & oil-dependent countries?
Zeroing on a single measure
You may say, “in fairness to the lagging leaders, their better-performing counterparts are achieving higher growth numbers because their spells in office coincided with good times (of course for oil-exporting countries given that Nigeria is one) in the world oil market in that the price of oil was high during their regimes.” That’s a cool observation and the reason I’m adding this section. I now introduce a composite – yet straightforward – gauge, a single number that discounts (or augments) economic growth as a function of what the price of oil was during the respective reigns of the leaders in power. I call this “ability-specific score" which is defined as the regime's average GDP growth rate divided by the regime's average price of oil [=GDP growth/oil price]. It can be used as a crude ranker of leadership performance through an economic lens, a quantifier of a leader's progress based on the level of resources available to the leader.
A hypothetical case
Suppose leader A produces 2.6 per cent GDP growth with $100 per barrel price of oil. And leader B also generates 2.6 per cent GDP growth but with a higher oil price of $200 per barrel. Leader A will be ranked as the best leader because (2.6/100) is greater than (2.6/200) = 0.026 > 0.013. He achieved, with lesser resources, the same growth rate as leader B.
If a leader generates zero economic growth, no matter the price of oil, his score will be zero because 'nothing' divided by any real number equals 'nothing.'
| Leader | Period | Score | Rank |
| 1966 - 75 | 1.1781 | 1 | |
| Obasanjo** | 1976 - 79 | 0.2504 | 2 |
| 1985 - 93 | 0.1920 | 3 | |
| 1999 - 07 | 0.1760 | 4 | |
| 2007 - 10 | 0.0946 | 5 | |
| 2010 - 15 | 0.0590 | 6 | |
| 1993 - 98 | 0.0566 | 7 | |
| 2015 - 19 | 0.0068 | 8 | |
| 1979 - 83 | -0.2144 | 9 |
Notes:
(i) *Obasanjo as a military head of state & ** as a civilian president.
(ii) Real oil price vs nominal oil price: the correlation coefficient = 0.8144 (81%). That means even if one uses real values, the individual scores will change by almost the same rate but the rankings will remain the same. Gowon will still be ranked No.1 and Shagari No. 9
(i) *Obasanjo as a military head of state & ** as a civilian president.
(ii) Real oil price vs nominal oil price: the correlation coefficient = 0.8144 (81%). That means even if one uses real values, the individual scores will change by almost the same rate but the rankings will remain the same. Gowon will still be ranked No.1 and Shagari No. 9
I used the price of oil as a proxy for what defines the availability of the resources because of two reasons. First, oil has been the defining feature of the Nigerian economy, accounting for over 90 per cent of its exports. Second, the standard deviation of the price of oil is higher than the standard deviation of oil production. Expressed differently: the price of oil (and not the number of barrels of crude extracted from the ground) drives the oil revenue of the country. Keep this in mind: 70+ per cent of total government revenues are from oil. Therefore, the revenue is significantly been determined by the price of oil.
The potential bias or downside of my measure i.e., why a leader may be erroneously deemed to have a low score despite having high oil prices. Example: If a predecessor leaves behind a huge amount of debt to his successor, paying or servicing this debt will certainly scoop away a substantial part of any potential oil windfall revenues assuming the current regime is fortunate to exist in an era of high oil prices. Implication: limited financial resources. Limited resources mean a limited capability to drive growth-inducing spendings, forcing the leader to run a squeezed budget.
Blog by @dapelzg
It is nice that Gowon came top of your score. It is equally accepted that Nigerians who grew up in that era had the best of Nigeria!
ReplyDeleteThis is actually a score board for our past leaders and an eye opener for new generation leaders. How to manage the little resources for the good of all and sundry.
ReplyDelete