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Nigeria loses N1trn to strike

Experts say the opportunity cost of the strike could be as high as $1 billion or N165 billion per day

Nigeria may have lost about N1trillon as the nationwide industrial action entered the fifth day.

With the grounding of commercial activities across the country and zero revenues from major economic points such as air and sea ports, Nigeria is tottering.

The petroleum industry labour unions have also threatened to shut down crude oil exports if the Federal Government failed to heed the yearning of the Nigerian masses.

Nigeria’s Gross Domestic Products (GDP) was $197 billion in 2010 and analysts at FBN Capital have estimated that the GDP for the 2011 fiscal year might be around $201 billion. 

The analysts said with the move by the National Bureau of Statistics (NBS) to reweight and rebase its series, Nigeria’s GDP is estimated to be between $260 billion to $300 billion.

Using a conservative estimate, the experts said the opportunity cost of the strike could be as high as $1 billion or N165 billion per day for a full calendar year of 365 days.

Analysts at GTI Capital however, noted that average loss per day due to the strike might be more than N200 billion, citing Nigeria’s large informal sector and shadow financial transactions that have traditionally not been adequately captured in national accounts.   

“We acknowledge that the true cost goes beyond our $710 million to $1 billion per day estimate. However, it provides an idea of the scale of the impact of the strike,” analysts at FBN Capital said.

FBN Capital, however, noted that the lopsided nature of the economy and national accounts including structural problems such as low financial intermediation and overdependence on crude oil export would ironically shield the Nigerian revenue profile from the true impact of the strike.

The threat to shut down oil exports might escalate the adverse impact on the economy, raising concerns over the realisation of the 2012 budget which already has built in deficits of more than N1.1 trillion.

The financial services, manufacturing, services, agriculture and retail sectors are expected to bear more of the burdens of the general strike. Average loss per day at the Nigerian interbank market is estimated at more than N83 billion. 

Although the Nigerian stock market has sustained skeletal operations through the remote trading facility of the Nigerian Stock Exchange (NSE), market analysts are worried the strike might jeopardise the much-anticipated recovery of the Nigerian stock market.

Investment analysts said the strike might adversely impact on the inflow of foreign direct and portfolio investments, citing global anxieties over socio-political uncertainties.