COST OF GOVERNANCE
Forty percent decline in oil price has been partly blamed for recession and economic crises in Nigeria. However, Saudi Arabia government whose economic mainstay is oil like Nigeria has reduced ministers and legislators salary by 20%. In comparison, salary of legislators and executives in Nigeria is still significantly higher than that of their counterparts in Saudi Arabia. Nigeria legislators earn basic salary of more than $100,000 vs $64,000 in Saudi Arabia. Legislators Salary to GDP/capita ratio in Nigeria is 40 vs 3 in Saudi Arabia. (The figure has taken into account recent devaluation of Naira)
GDP PER CAPITA
Saudi Arabia and Nigeria benefitted from oil boom in the past, however, Saudi Arabia enjoyed higher marginal growth than Nigeria during these periods. GDP per capita for Saudi Arabia currently stands at $53,000 while that of Nigeria currently stands at $6,000. The gap between the GDP/capita for the two countries remain wide since 1990 but the gap started growing wider in 2002 which continues till date.
Inflation rate in Saudi Arabia for the past three decades has remained within single digit and stable over same period. However, inflation rate in Nigeria is a direct opposite of what is obtainable in Saudi Arabia. Inflation rate in Nigeria currently stands at 16% and remains highly volatile as depicted in the graph below over a long period of time. This signifies that Saudi Arabia economy is healthier than that of Nigeria.
The aforementioned indicators point to the fact that Nigeria economy is relatively unhealthy compare to that of Saudi Arabia despite that both countries largely depend on revenue from oil and gas. Saudi Arabia is leading Nigeria in all the economic indicators; stable exchange rate, lower unemployment rate, lower interest rate, strong PMI, higher FX reserve with the exception of one variable — cost of governance where Nigeria is leading the rest of the world.
Despite Saudi Arabia leading Nigeria in all economic indicators, the country just slashed the salary of government officials including ministers’ salary by 20% while Nigeria government is still blaming lower oil price and declining revenue for economic recession.
Did declining oil price decline prevent Nigerian government from reducing obscene legislators/executives emoluments? No! Nigerian main problem is not lower oil price, government and politicians are.