Tag Archives: IMF

IMF forecasts 0.8 per cent economic growth for Nigeria

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The International Monetary Fund (IMF) has given Nigeria’s economic recovery plan a pass mark, commending efforts made by government to reduce vulnerabilities and enhance resilience.

The Fund however, advised the Federal Government to lift remaining foreign exchange restrictions and scrap the multiple exchange rates system.The fund also forecast that the economy would grow 0.8 percent this year. The outlook came in the Washington-based fund’s Article IV consultation, which is a regular assessment of a country’s economy.

While recognising that the Nigerian economy has been negatively impacted by low oil prices and production, it noted that the management strategy, like increasing fuel prices, raising the monetary policy rate, and allowing the exchange rate to depreciate was in line.

According to the IMF, the country’s external current account, which turned into a surplus in 2016, was a result of import compression that has continued to offset falling exports, rather than expanding trade.

The recent Federal Government’s economic blueprint: Economic Recovery and Growth Plan (ERGP), drew the attention of the multilateral institution even as it reiterated that without stronger policies the objectives may not be achieved.

IMF said priority should be given to increasing non-oil revenue- raising Value Added Tax and excise rates, strengthening compliance, and closing loopholes and exemptions.
Meanwhile, the Central Bank of Nigeria has unveiled plans to offer licensed Bureau De Change operators foreign exchange twice weekly, with effect from Monday.

Accordingly, BDC operators are required to fund their accounts with the CBN on Mondays and Wednesdays preceding delivery day of Tuesdays and Thursdays.The amount to each BDC has been increased to $10, 000 weekly from $8, 000.

By this development, BDC operators would now heave a sigh of relief following sharp appreciation of the Naira against major foreign currencies as a result of which speculators have been counting their losses.

In another development, the Accountant-General of the Federation, Alhaji Idris Ahmed has issued a circular extending the tenure of the capital elements of the 2016 budget until May 5, 2017 or the passage of the 2017 budget, whichever is the earliest.

 

Source: The Guardian

CBN increases forex sales to BDCs after IMF commendation

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The Central Bank of Nigeria has announced that it would increase the amount of forex apportioned to Bureau de Change operators (BDCs) to $10,000 weekly from $8,000.

This action comes after directors from the International Monetary Fund (IMF) praised the apex bank for easing foreign exchange restrictions in Nigeria.

“Directors underscored that external adjustment is necessary to protect foreign currency buffers and reduce vulnerabilities,” IMF said in a statement after its Article IV consultations in Nigeria.

They commended the recent easing of some exchange restrictions and urged the authorities to remove the remaining restrictions and multiple currency practices, thus unifying the foreign exchange market and helping regain investor confidence.

“Directors emphasized that these policies should be supported by tighter monetary policy and fiscal consolidation to anchor inflation expectations and to limit the risk of exchange rate overshooting, as well as structural reforms to improve competitiveness.”

In a statement signed by Isaac Okorafor, the apex bank said it would announce new rates on Monday, April 3.

“In continuation of its determination to sustain liquidity in the foreign exchange market, the Central Bank of Nigeria (CBN) wishes to inform market participants and the general public that it will commence twice weekly forex sales to Bureaux de Change(BDCs) from Monday, April 3, 2017.

“Licensed BDC operators are therefore required to fund their accounts with the CBN on Mondays and Wednesdays, while they receive their purchases on Tuesdays and Thursdays respectively.

“The sale amount to BDCs is hereby increased to $10,000 weekly ($5,000 per bid) and a new rate will be announced on Monday, April 3, 2017.”

On Monday, March 27, CBN announced new rates for commercial banks, directing them to sell at 360 to a dollar as against previous rates of 375.

 

Source: The Cable

Nigeria needs credible policies before 2019 elections – IMF

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The International Monetary Fund (IMF) says Nigeria’s window for bold reforms is gradually closing, and the country needs coherent and credible policies before 2019 elections.

“On Nigeria, it is currently facing a challenging outlook. As we have said before, the authorities have initiated some measures, but more remains to be done,” Gerry Rice, IMF director of communications, said at a press conference in Washington.

“Urgency is needed in implementing a coherent and credible package of monetary, fiscal and structural policies as the window for bold reforms is closing as the 2019 elections are approaching fast.”

Rice confirmed that Kemi Adeosun, the minister of finance, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), or any other government official, has not approached the IMF for a loan.

He said the fund is however providing technical assistance for Nigeria and is willing and ready to help, if the need arises.

“It is true the Nigerian authorities have not approached the IMF for a programme, as such, there are no discussion, negotiations going on, regarding a programme with Nigeria,” he adds.

“As we have said before, the fund continues to render technical support and we stand ready to help, should the country make a request for financial assistance”.

The IMF said it would conclude its “Article IV Consultations” with Nigeria in March 2017, and would give an update on the global economy at its Spring meeting, scheduled for April, 2017in Washington.

“IMF is not bad, but we don’t need their loan”, Finance Minister Kemi Adeosun declares.

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Kemi Adeosun, minister of finance, says the International Monetary Fund (IMF) is not bad, but Nigeria does not need the fund’s borrowing programme.

In an interview with CNBC Africa,  Adeosun said the IMF loan programme has made a “huge national debate,” but the country see IMF as its last resort.

“For us, the IMF is really lender of last resort when you have balance of payments problem. Nigeria doesn’t have balance of payments problems per se, it has a fiscal problem, which is that major revenue source has lost so much value,” Adeosun said.

“What IMF does for you is that it gives you programmes for reforms, we are already doing as much reform as any IMF programme would impose on Nigeria.

“Nigerians want to take responsibility for their future. We must have our home-grown, home-designed programme of reform, that Nigerians take ownership for,  because they are painful reforms.

“When you go through this type of adjustment of your economy, these reforms are very painful, and they have to be home-grown. We have to take responsibility for this ourselves, so that when it succeeds, Nigerians would say; yes, we did this.

“I am not saying the IMF are bad, but I’m saying right now, we don’t see that need. we feel this is a problem Nigerians created and Nigerians will solve.

 

Source: The Cable

IMF, World Bank no longer fit for purpose, says Okonjo-Iweala

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Ngozi Okonjo-Iweala, two-time minister of finance, says the World Bank and the International Monetary Fund are no longer fit for purpose.

Speaking at the World Economic Forum in Davos, on the theme ‘Who can lead a Multipolar world?’, Okonjo-Iweala called on the Bretton Woods institutions to adapt to the world we live in+ and prepare for the realities of the future.

The former vice-president of the World Bank was joined by Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy of the National University of Singapore.

Mahbubani, who spoke ahead of Okonjo-Iweala, called on the United Nations to evolve and change its structure, which was largely built for 70 years ago.

“The west believes it can continue to dominate. My favourite example, Ngozi, hope you dont mind me saying this is that the Europeans believe that the head of the IMF must be European, and the head of the World Bank must be American. Excuse me, those rules were made in 1945, in a different world,” he said.

“You still haven’t had a single Asian or African run these places, clearly these rules are out of date…and that is the core of the problem we face.

“The composition of the UN security council: One of the most provocative things I say is that UK and France are only member of the security council only because they won World War II in 1945. Surely it is time for UK and France to make way for India, or Brazil or Nigeria.”

When it was her turn to speak, Okonjo-Iweala said: “Just to follow up on what Kishore just talked about. If you look at the fact, in terms of contribution to economic growth, emerging countries are contributing more than 50  percent to global growth.

“President Xi said it, China alone is contributing 30 percent. The global south is playing a very important role already, the frustration is that these role is not being recognised.

“There has been evolution of systems to move us from a system of the G-7 to G-20, but even the G-20 leaves out significant important countries. We need a global covenant system that recognises the contribution of developing countries in a much more robust way.

“Coming on to the economic institution, I think if we didn’t have them, the global institutions will need to invent them; we still need those institutions, but the problem is that now they are not fit for purpose.

“They are not following the changes that are faster happening. One, on the different economic shares, two, one the fast move of knowledge and technology, the fact that the world and the workplace is changing very fast.

“We need a global covenant system that would help  developing countries also adapt faster. So it is anomalous not only in terms of the leadership  of the institution, but also in terms of the shares of different countries in these institutions.

“You cannot have a situation where smaller European countries have a greater share in, say, the World Bank or the IMF than China or India.”

She said the systems needed to be adjusted, so that countries could feel an ownership of these institutions. She also said the institutions themselves needed to be adjusted to recognise that knowledge is moving really very fast.

 

Source: The Cable

UPDATE: Lagarde will continue as our MD despite conviction, says IMF board.

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The executive board of the International Monetary Fund (IMF) says Christine Lagarde must continue with her “outstanding leadership”, despite being convicted by a French court on Monday.

 

Lagarde was convicted of negligence in the misuse of public funds, but after the IMF board reviewed her situation, it expressed its “full confidence” in her work.

 

“The Executive Board met today to consider recent developments in the legal proceedings in France involving Managing Director Christine Lagarde,” the board said in a mailed statement.

 

“The Executive Board took all relevant factors into account in its discussions, including the Managing Director’s outstanding leadership of the Fund and the wide respect and trust for her leadership globally.

 

“In this context, the Executive Board reaffirms its full confidence in the Managing Director’s ability to continue to effectively carry out her duties.”

 

It added: “Under the Fund’s governance framework, the Managing Director is appointed by the Executive Board and performs her duties under the Board’s direction.

 

“In the exercise of its oversight responsibilities, the Executive Board has met regularly, since the Managing Director’s appointment in 2011, to consider whether developments in the legal proceedings in France relating to the Managing Director have affected her ability to lead the Fund.

 

“The Executive Board looks forward to continuing to work with the Managing Director to address the difficult challenges facing the global economy.”

IMF to consider Christine Lagarde’s fate shortly.

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The International Monetary Fund (IMF) says it will be meeting shortly to consider the fate of its managing director, Christine Lagarde, who was convicted in France on Monday.

 

In a statement, Gerry Rice, director of communications at the International Monetary Fund (IMF), said the board of the fund had met to consider the case against Lagarde and would do so again with the most recent conviction.

 

“The executive board has met on previous occasions to consider developments related to the legal proceedings in France,” Rice said. “It is expected that the board will meet again shortly to consider the most recent developments.”

 

Despite the eight-year old allegation of negligence in the misuse of public funds, Lagarde was reelected head of the fund in February 2016.

 

Lagarde, who is in her sixth year as the managing director of the organisation, hasd been expected to resign, following the allegations of misdeeds in public finance.

 

Experts say the global financial institution may not ask her to step down.

 

Lagarde is one of the most powerful women on earth.

BREAKING: IMF boss, Lagarde, convicted for negligence in misuse of public funds.

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French judges on Monday found International Monetary Fund managing director Christine Lagarde guilty of negligence for failing to challenge a €400 million state arbitration payout to a business tycoon in 2008 when she was French finance minister.

Despite the ruling the judges did not give any sentence in the case on her decision to allow the rare out-of-court arbitration payment. She has denied the negligence charges.

Her lawyer said immediately after the ruling that his team would look into appealing the decision.

The ruling risks triggering a new leadership crisis at the International Monetary Fund after Ms Lagarde’s predecessor Dominique Strauss-Kahn resigned in 2011 over a sex assault scandal.

Gender Inclusion Will Reduce Income Inequality- IMF

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The International Monetary Fund (IMF) has said that gender inclusion will not only support economic growth, but can reduce income inequality as well.

The IMF Managing Director, Christine Lagarde, said this in a speech titled: “The Business Case for Women’s Empowerment,” she delivered at a summit in Peru.

According to her, over the past few decades, women all over the world have pushed the boundaries on educational attainment, economic participation, and even political representation.

According to the World Economic Forum’s latest Global Gender Gap Report, Latin America is the region with the largest absolute improvement over the last ten years, followed by Asia and the Pacific region. So in some respect, APEC is leading the way. And yet, this great progress has not been enough to close the gender gap.

Globally, only 55 percent of women have the opportunity to participate in the labor force, compared with 80 percent for men, the IMF boss stated.

Furthermore, she disclosed that women still earn about 50 per cent less than men for the same type of work, and they represent only 20 percent of parliamentarians across the world.

“Clearly, in many places, gender equality remains an elusive goal. The moral case for gender equity is clear. So is the economic case. As countries around the world struggle to grow their economies more quickly and to reduce inequality, tapping into the huge potential of women can be a game changer. I would even go further to say it is a no brainer.

“The work that we have done at the IMF clearly demonstrates that there is a compelling business case for women’s empowerment. And everyone – government, the private sector, and international financial institutions – has an important role to play,” Lagarde added.

While arguing that women empowerment remains a game changer, she said she had said repeatedly that world growth has been too low, for too long, and benefiting too few.
Some countries are facing transitions, such as adjusting to low oil prices; others are contending with the immutable force of population aging and its impact on the labor force and productivity growth, Lagarde said.

In addition, she said women’s empowerment can boost growth and reduce inequality, saying “if we want everyone to have a bigger piece of the pie, the pie has to grow.”
“Our research has shown that increasing women’s labor force participation can deliver significant macroeconomic gains. For example, if Latin American countries raised their female labor participation to the average of the Nordic countries (about 60 percent), GDP per capita could be up to 10 percent higher.

Read More: thisdaylive

Why oil economies will remain pressured – IMF

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Despite the relative stability in the international price of crude oil in recent times, oil exporting countries’ revenue will not break even soon, as the commodity’s prices will continue to face headwinds.

Besides, the turmoil in financial markets, secular drop in petroleum consumption in advanced countries, plus a strong dollar, have put downward pressure on oil prices and the persistence only points to a “lower for longer” scenario for oil prices.

At the weekend, the International Monetary Fund (IMF) Global Economy Forum, noted that the price of the commodity will not return to the high levels that preceded their historic collapse two years ago.

While reduced investment in the sector has been projected this year, even resulting to lower production by non-member countries of the oil cartel, production will still exceed consumption.

The report said many experts have also projected that oil markets will balance in 2017, albeit with high level of inventory, a development that will not improve the earnings of the oil economies.

According to it, shale oil production has permanently added to supply at lower prices, while demand will be curtailed by slower growth in emerging markets and global efforts to cut down on carbon emissions.

The report said: “it all adds up to a ‘new normal’ for oil.”

“Shale has been a game changer. Unexpectedly strong shale-oil production of five million barrels per day contributed to the global supply glut. That, along with the surprising decision by the Organization of the Petroleum Exporting Countries (OPEC) to keep production unchanged, contributed to the oil price collapse that started in June 2014.

“Although the price collapse led to a massive cut in oil investments, production was slow to respond, keeping supply in excess. Shale drillers have significantly cut costs by improving efficiency, allowing major players to avoid bankruptcy,” the reported noted.

It also pointed out that there is uncertainty regarding supply, especially regarding the cost associated with extraction, as well as production from so-called shale “fracklog”- drilled but uncompleted wells.

Indeed, while the anticipation of an OPEC production cut in cooperation with other exporters has boosted prices to the current level, the success of Shale and the challenging global growth, particularly that of the emerging markets are threatening oil price rise.

The uncompleted wells, the report noted, can add to production flows in a matter of weeks and hence considerably change the dynamics of production compared to conventional oil—that features long lead times between investment and production.

While OPEC members have recently agreed to cut production, that agreement is yet to be finalized and emerging data, according to IMF, suggest that shale-oil production may be once again more resilient than expected.

IMF said that falling prices spurred demand to a record high of 1.8 million barrels per day in 2015, but now expected to slow to the trend level of 1.2 million barrels per day in 2016 and 2017.

The global institution said that a sizable share of oil demand is attributable to the price drop rather than income gains, hence with limited scope for further declines in prices in dollar terms, increases in oil demand will depend largely on prospects for global economic growth.

“The outlook for demand growth isn’t encouraging. In the past couple of years, oil demand has been driven by China and other emerging-market and developing countries.

“While China accounts for just 15 percent of world oil consumption, its contribution to oil demand growth is significant because its economy is growing much faster than those of advanced nations. Further slowdowns in emerging and advanced economies can change the demand picture significantly,” the report added.

IMF Report: Nigeria’s economy is the biggest in Africa.

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A new report from the International Monetary Fund (IMF) has projected Nigeria as Africa’s biggest economy, in spite of its current challenges.

Nigeria is placed ahead of South Africa and Egypt which are second and third respectively.

In August, Nigeria was reported to have lost its position as Africa’s biggest economy to South Africa, following the recalculation of the country’s Gross Domestic Product (GDP).

But the IMF’s World Economic Outlook for October, puts Nigeria’s GDP at 415.08 billion Dollars, from 493.83 billion Dollars in 2015, while South Africa’s GDP was put at 280.36 billion Dollars, from 314.73 billion Dollars in 2015.

According to the report, Egypt’s 2016 data is not available, but its 2015 size remained at 330.159 Dollars while that of Algeria, one of the largest economies on the continent, is put at 168.318 billion Dollars.

The United States, China and Japan maintain their spots as the largest economies in the world, ahead of Germany, United Kingdom and France.

According to a review in September, the current economic recession will outlast 2016, with a Gross Domestic Product (GDP) contraction of 1.7 per cent.

The IMF had predicted that Nigeria’s economy would grow away from a recession in 2017.

The country last witnessed a recession, for less than a year, in 1991, and experienced a prolonged one that started in 1982 and lasted until 1984.

President Muhammadu Buhari’s administration has so far disbursed over N700 billion in capital expenditure this year, part of a record N6.06 trillion (30 billion Dollars) budget for 2016.

Obasanjo Blames Jonathan For Recession

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Former President Olusegun Obasanjo yesterday took a swipe at the administration of President Goodluck Jonathan, declaring that his advice on the prevailing economic crisis was ignored two years ago.

 

Obasanjo also blamed Jonathan for lifting the ban on importation of products like toothpick, which he said could have been taken over by local industries without encumbrances.

At the official opening of the National Council on Finance and Economic Development (NACOFED) in Abeokuta yesterday, Obasanjo said the only way Nigeria could urgently step out of the current economic recession is for it to seek foreign loan.
Obasanjo, who was the Father of the Day at the opening session, said he had warned the former President on the impending recession in November 26, 2014 When he joined others to celebrate the birthday of retired Justice Akanbi.
“I reminded the government that we were spending more than we were earning. that very soon, the country would not be able to fund the budget. Unfortunately, the government then refused to listen to my advice,” he told the gathering.
Obasanjo shocked the gathering when he recalled how it was discovered that the ban on the importation of toothpick was reversed by the Jonathan administration, saying he had visited Jonathan in Abuja to ask why he lifted the ban on toothpick and Jonathan said he did not read before he approved.
Speaking further on the way out for Nigeria, Obasanjo said there were three options, explaining,
“The three options are we have to spend less, we must endeavor to earn and then the last one is to borrow, and this if we must, we do it fast and now. “

 

He however cautioned against doing the bidding of the World Bank and Inernational Monetary Fund (IMF).

I’m Not In Nigeria To Negotiate IMF Loan – Lagarde

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Managing Director of International Monetary Fund (IMF) Christine Lagarde on Tuesday said that her visit to Nigeria was not meant to negotiate loans but rather to promote physical discipline and favourable monetary policies.

 

Lagarde stated this while fielding questions from State House correspondents after a closed-door meeting with President Muhammadu Buhari.

 

She said that she had an “excellent discussion” with President Muhammadu Buhari on the challenges facing Nigeria occasioned by the drastic fall in oil price.

 

let me make it clear that I’m not here nor is my team in this country to negotiate a loan with conditionalities.

 

We are not into programme negotiations and frankly at this point in time, given the determination, resilience displayed by the President and his team, I don’t see why an IMF programme will be needed.

 

So, of course, discipline is going to be needed, of course, implementation is going to be key for the objectives and the ambitions to serve the country well, in order for it to be actually sustainable.’’

 

 

On the assertion that IMF programmes are always anti-people, Lagarde described such view as outdated, saying IMF programmes were in favour of the less-privileged members of the society.

 

She said that the IMF policies and programmes were not meant to impoverish poorer member countries but rather to assist them with quality policy advice, technical assistance and capacity building.

 

According to her, about 150 out of the 188 member- countries of the IMF had so far benefited from the institution’s technical assistance and capacity building.

 

“If I may say, I think that you have slightly outdated idea of the IMF.

 

Certainly, the last four and a half years, since I have been managing director of this institution, this is not the recipes we adopted and this is certainly not the feedback I have received from the countries that we have worked with.

 

I just want to point out that we are majorly involved in three kinds of activities.

 

The first one, which is the most traditional one, is under which we give policy advice to our members, we have currently 188 countries that are under this institution and it is our duty and accountability to them to review their economy every year to give them report about their economy.

 

We don’t push them, we don’t do things necessarily to please them; we say things as we see them.

 

The second activity, which is the fastest growing one in the institution, is technical assistance and capacity building, and there is plenty of that is available to all the countries of the world.

It gives us pride to see that about 150 countries have had the benefit of technical assistance and capacity building.’’

 

 

Lagarde, who pledged more technical assistance and capacity building for Nigeria, however, stressed the need for the country to develop a strong tax department, efficient debt management and customs authority to achieve a strong economy for the country.

 
She commended the determination of the President Buhari’s administration to fight corrupt practices and to bring about transparency and accountability at all levels of the economy.

 

 

(NAN)

Again, IMF Urges CBN, Others To Weaken Currencies To Absorb Shocks

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The International Monetary Fund (IMF) has advised the Central Bank of Nigeria (CBN) and other central banks in Africa to allow their currencies to depreciate in order to absorb shocks to their economies.

The multilateral donor agency pointed out that resisting currency pressure depletes foreign exchange reserves and results in weaker imports.

The IMF stated this in its 134-page Regional Economic Outlook for October 2015 posted on its website yesterday.

It said that central banks in a growing number of countries had started tightening monetary policies, concerned that these developments may affect inflation expectations where inflation rates are near or even surpass the highest point of established bands.

According to the IMF, in a few highly dollarized economies on the continent, the recent exchange rate depreciation could also increase financial sector vulnerabilities.

It also noted that the recent depreciation of some currencies on the continent would increase the value in local currency of dollar-denominated liabilities, and hence the debt service burden for unhedged borrowers.

This would potentially expose banks to losses—even though banks themselves generally have only limited currency, it stated further.

Credit: ThisDay

Nigeria Under Pressure By IMF To Devalue Naira

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The IMF is pressing Nigeria to further devalue its naira currency amid uncertainty over the political and economic outlook for Africa’s biggest oil producer and economy.

Analysts said there’s disappointment that President Muhammadu Buhari’s long-awaited Cabinet list — five months in the making and still not finalized — includes no economic stars to guide much-needed reform.

“There’s no economist on the (Cabinet) list that can suggest to the government ways to improve revenue generation and how to run the economy,” said Garba Kurfi, managing director of APT Securities and Funds.

Credit: AP

IMF Proposes Devaluation of Naira

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Executive Board of the International Monetary Fund (IMF) has called for the implementation of reforms, including devaluation, to shield the country from risks presented by uncertainties characterizing the economy. The call follows the IMF directors concluding the Article IV consultation1 with Nigeria last week.

According to IMF, during the consultation, executive directors commended the authorities for progress in promoting Nigeria’s economic diversification and for their macroeconomic response to collapsing export prices.  “Directors noted, however, that vulnerabilities remain high in view of the uncertainties about oil price, security, and the political situation, and concurred that additional policy adjustments and broader structural reforms will be necessary in the period ahead to reconstitute buffers, mitigate risks, and meet pressing development needs,” read a statement made available to this publication.

According to the statement, the directors agreed that tightening fiscal policy and allowing the exchange rate to depreciate while using some of the reserve buffer were appropriate responses to the recent fall in oil prices. “Nonetheless, Directors stressed that achieving the authorities’ fiscal targets will require a careful prioritization of public spending and a cautious implementation of capital projects. They also highlighted the importance of improved budgeting at the level of state and local governments to help better manage their fiscal adjustment.”

IMF said directors agreed that mobilizing additional non oil revenues is critical to open up fiscal space and improve public service delivery over the medium term.  They welcomed ongoing initiatives to strengthen tax administration, and encouraged the authorities to also rein in exemptions, keep tax rates under review, persevere with subsidy reform, and improve the management of oil revenue.  “Furthermore, Directors saw merit in reviewing the current revenue sharing arrangements to help address regional disparities over the longer term and ensure that social and development needs are addressed,” read a statement.

IMF said its directors welcomed the recent unification of the foreign exchange rates, noting that greater exchange rate flexibility could help cushion external shocks. “As the largest single supplier of foreign exchange, it will be important for the central bank to intermediate this supply in a transparent, efficient, and fair manner.”

Credit: CAJ News

China, World’s Largest Economy; Overtakes U.S.

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Us Dollar Versus China Yuan

Chris Giles at the Financial Times flagged up the change. He also alerted us back in April this year that it was all about to happen.

The simple logic is that prices aren’t the same in each country: A shirt will cost you less in Shanghai than San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.

So the IMF measures both GDP in market exchange terms, and in terms of purchasing power. On the purchasing power basis, China is overtaking the US right about now and becoming the world’s biggest economy.

Also, according to the IMF by the end of 2014, China will make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion).

IMF, Google Public Data Explorer Adjusted for purchasing power, the IMF thinks China’s economy is now the world’s largest.

It’s not all sore news for the US. It’ll be some time yet until the lines cross over in raw terms, not adjusted for purchasing power. By that measure, China still sits more than $6.5 trillion lower than the US and isn’t likely to overtake for quite some time. But in terms of the raw market value of China’s currency, it still has a long way to go.

 

Leadership: What Goodluck Jonathan can learn from Stephen Keshi – Ogunyemi Bukola

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Keshi-JonathanSuccessful leadership, be it in business, politics or sports, operates on identical underlying principles. As such, successful leaders learn from one another across the different sectors of life and terrain of leadership in which they operate. Nigeria’s president, Goodluck Jonathan, has a lot to learn about leadership, and he has plenty of options to choose from. But he needs not look far. In his mostly unremarkable government, the sports sector, especially football, especially the national male football team, Super Eagles, have enjoyed unprecedented success. This due in no small parts to the efforts of the Glo/CAF African Football Awards 2014 Coach of the Year, Stephen Keshi.

Since his appointment in 2011, Keshi has led Nigeria to qualification for the 2013 Africa Cup of Nations, which they went on to win, becoming one of only two people (along with Egypt’s Mahmoud El-Gohary) to have won it as both a player and a coach, secured qualification to the 2014 World Cup and is through to the semi-final of CHAN2014. Keshi’s success has not been accidental, and in his handling of the team, some particularly stellar leadership attributes shine through that the man from Otuoke can learn from.

Leaders deliver results, not excuses: Jonathan has a readymade excuse for why nothing is working in Nigeria. From corruption to terrorism to poor state of infrastructure nationwide, none is due to Jonathan’s inability/failure to effect change. Past Nigerian leaders, the opposition, the children of anger, some aggrieved ethnicities, these are the groups responsible for everything that is wrong with Nigeria. And this has gone a long way in entrenching the culture of complacency in his largely incompetent team who know they are not to blame for failure. Keshi as Super Eagles manager has an opposite philosophy, get results and you won’t have to give excuses. And this has worked for him, as the team knows a bad pitch or weather and even biased officiating is not a reason to lose.

Leaders make sacrifices, especially big sacrifices: “To save Nigeria, we must all be prepared to make sacrifices. On the part of Government, we are taking several measures aimed at cutting the size and cost of governance, including on-going and continuous effort to reduce the size of our recurrent expenditure and increase capital spending. In this regard, I have directed that overseas travels by all political office holders, including the President, should be reduced to the barest minimum” – Goodluck Jonathan (January 2012)

“Our administration believes that the cost of governance in the country is still too high and must be further reduced. We will also take additional steps to stem the tide of corruption and leakages. Foreign travel by government personnel will be further curtailed” – Goodluck Jonathan (January 2014)

In the two years between the two statements from Goodluck Jonathan above, he has spent over N3 billion on foreign trips, recurrent expenditure has increased to 72% of overall government spending, Aso Rock feeding and entertainment budget has stayed at N1 billion and Mr President is planning to acquire an 11th aircraft for the presidential fleet.

Keshi and his assistants on the other hand are being owed a total of 7 months’ salary and allowances running into about N78 million. In the face of this, he has ensured that no player is owed match bonuses and has not failed to deliver results on the pitch. Jonathan and his aides are living in obscene opulence while asking Nigerians to make sacrifices for the nation’s development. Errrrr, it all starts with you sir.

You are only as good as your team: Since his accidental ascendancy to the highest political office in Nigeria, Mr Jonathan has managed to assemble arguably the worst Federal Executive Council since return to democratic rule in 1999. Men and women of low competencies, questionable character and proven records of corruption/mismanagement have been given control of sensitive positions in return for political devotion. Mr Jonathan has shown that he values political loyalty above competency, and that is politics, not leadership. In this regard, he should learn how Keshi picks his team, making sure the best available players are selected, not those who spent more time with the press praising his managerial skills.

Leaders know what and when to celebrate: One of the most disappointing moments of Jonathan’s presidency for me was when he told CNN’s Christine Amanpour during an interview that power situation in Nigeria has vastly improved and Nigerians are happy with his administration in that regard. Amanpour went ahead to disprove this claim so effortlessly. In truth power generation had increased to more than 4000MW then, but that hardly calls for celebration and smugness considering that Nigeria needs about 20,000MW to stand any chance of being one of the top 20 economies in the world by 2020. Jonathan stops short of calling a party for every hundred MW added to the national grid or every kilometre of road patched. Mister, it’s like celebrating victory after winning the first free-kick in a football match. Keep calm and get to work, like Keshi does. Don’t pop the champagne until the trophy is in the cabinet.

Leaders know the people are priority: I do not understand the polimathics of FIFA rankings, and I got even more confused when in December 2013 Nigeria slipped three places from 33 to 36 despite having arguably the best year of all African teams. So was Keshi, but something struck me about his response:

“I am shocked (by the latest rankings). We won the Africa Cup of Nations this year, qualified for the World Cup and four-time world champions Italy held us to a draw, so I am surprised. We should continue to win and make Nigerians proud because that is what is most important to me and Nigerians. If we remain in wherever we are in the ranking and keep winning and Nigerians are happy, then I am happy.”

This contrasts sharply with the selective acceptance game Jonathan’s government plays with global governance and human development rankings. It is not unusual to see Mr Jonathan’s media aides base their principal’s successes on positive comments from international organizations like the World Bank and IMF. When however, the spotlight is on corruption and poverty, in which the report is almost always unfavourable, they swing to action and give a thousand and one reasons why such reports are inaccurate.

Failure to realize that democracy is a government of the people, and the most acceptable index is the people’s assessment, is the foundation of Mr Jonathan’s woeful performance as Nigeria’s president. And as long as he continues to seek acceptance from local power blocs and international organizations at the detriment of the wishes of the people, the story is not likely to change.

If Jonathan is to record any success worth remembering as he enters the final year of his presidency, he should learn from how Keshi has managed to turn around the fortunes of a Super Eagles team that failed to qualify for the nations cup into African champions. While Keshi has proven to be Nigeria’s most successful football coach, Mr Jonathan might just be the worst president in Nigeria’s modern democratic history. It’s all about leadership.

Ogunyemi Bukola (@zebbook) writes from Lagos, Nigeria.