Nigeria’s best head of state since independence?

On 1st October of this year, Nigeria will mark its Diamond Jubilee, the 60th anniversary of its independence. The country has so far been ruled & governed by 12 heads of states, an average of five years in the office per leader. But only eight of these leaders were in power for more than two years. If you’re up-to-date with Nigeria’s leadership history, which of the leaders do you think was the best? And how is this measured?

I answer these questions simply using two economic variables: the price of oil and growth in gross domestic product (GDP). Rising oil prices represents the inflow of resources, an opportunity being presented for a leader to finance economic progress – to lay the foundation of unprecedented prosperity. On the other hand, growth in GDP reflects what the leader did with the opportunity, an outcome of what the oil fortune was used for.

That said, let us plough through the numbers as we shovel out some stylised facts shown in the table below:

Please be aware, the aim of this comparison is not to rip open old wounds & heighten tensions between the devotees of the leaders, but to provoke and inspire the next generation of leaders in the country.

Notes: (i) Obasanjo appeared twice: as a military head of state & as a civilian president. (ii) Real oil price vs nominal oil price: the correlation coefficient = 8144 (81 percent). 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 because of two reasons. First, oil has been the defining feature of the Nigerian economy, accounting for over 90 percent 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+ percent of total government revenues are from oil. Therefore, the revenue is significantly influenced by 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.

General 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. 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 four cups. Nigeria, the leading producer of oil in Africa could lose up to $3.6 billion per month in oil revenue to COVID-19 and the ill-timed Saudi-Russia oil price-war as these have sunk the price of oil from roughly 67 dollars a barrel to 20 dollars.

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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. The world oil market was booming, and oil prices were at all-time high. 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 simple illustration to drive home a point.

Suppose leader A produces 2.6 percent GDP growth with $100 per barrel price of oil. And leader B also generates 2.6 percent 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.”

Addressing potential concerns in the mind of the reader

Questions such as, Nigeria’s population was lower in the 60s than it is now, the value of the naira was stronger: prices goods and services have risen (inflation) and that much of government revenue was from non-oil sources, e.g. agriculture and other minerals.

I now take these considerations into account. I replaced growth in GDP with growth in GDP per capita. The GDP tells us how rich the country is. The GDP per capita (GDP divided by the population) tells us how rich the people are, and therefore their standard of living.

I replaced the price of oil with real government revenue per capita or per citizen. That is, the total government revenue (oil revenue plus non-oil revenue adjusted for inflation) and divided by the population. For instance, according to figures from the central bank of Nigeria, the total federally collected revenue in Nigeria in 1966 was roughly 612 million naira ($858 million). In today’s, that is, its value after more than 50 years, is now close to N2 trillion, or $6.5 billion dollars.

From the chart above, although Obasanjo recorded the highest growth rate in GDP per capita, he’s not deemed the best-performing leader. Gowon is. This is because the average of total revenue per person per month (adjusted for inflation) during the Obasanjo years is more than double Gowon’s but Obasanjo’s growth was not more than double Gowon’s. The final scoring and ranking are presented in the table below: