Nick Agule
9 min readApr 25, 2021


By Nick Agule


Twitter: @NickAgule


This article will be better understood if part 1 titled — NIGERIA IS PRINTING MONEY — THE ROAD TO ZIMBABWE — is read via this link:


Since Gov Obaseki blew the whistle on the FG alleging that they are printing money to fund the federation account, this is what has emerged so far about ‘printing money’ which has now become a new lexicon on the lips of Nigerians:

1. Nigeria is indeed printing money as confirmed by the Gov of the Central Bank, Mr. Godwin Emefiele.

2. The printed money is NOT being used to fund the federation account with the March 2021 federation account allocation data published by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed. The National Economic Council (NEC) has also reaffirmed that NO printed money was used in funding the federation account.

3. The FG has conceded that the printed money is being used to fund the FG budget as confirmed by the DG of the Budget Office of the Federation, Mr Ben Akabueze when he appeared on Channels TV breakfast show — Sunrise Daily — on Monday, 19 April 2021. This is how Mr Akabueze put it:

“The reality then is that what the FG gets from FAAC is not adequate to meet its own obligations as FG and so it resorts to borrowing and sometimes that borrowing includes borrowing from the CBN”

With the confirmation by the FG that the printed money is funding the FG budget, nothing has changed from the allegations made by Gov Obaseki. It is as good as saying when the printed money funds the federation account, the FG takes 100% to fund the FG budget. Whether the printed money is funding the federation account or funding the FG budget results in the same grave consequences for the economy because printed money is NEVER to be used to fund either the federation account or the FG budget! Funding the FG budget with printed money places Nigeria on a sure foot on the road to Zimbabwe because it is injecting money into the economy for consumption without commensurate boost in output and this is a gross mismanagement of Quantitative Easing (QE).

QE as a monetary policy tool is meant to inject money into the productive sectors of an economy to jumpstart it. The central bank does this injection by buying back bonds or bailing out ailing industries. If the FG says it is using QE to buy back bonds, again this will be wrong because you do not inject more money into an inflationary economy by buying back bonds, rather you sell bonds to mop up liquidity.


Now that the FG has confirmed that QE is being implemented as a monetary policy, let us perform an assessment of the success or otherwise of the policy and the impact on the economy using QE’s twin objectives of controlling inflation and boosting output as well as the value of the Naira:

1. INFLATION — An effective QE policy will place inflation under control. Recent data released by the National Bureau of Statistics (NBS) however shows Nigeria’s annual inflation has climbed to a more than four-year high in March 2021, rising 82 basis points from a month earlier to 18.17%. Notably food inflation rose to 22.95%. The rising inflation has proved that Nigeria’s QE policy is having a negative impact on the economy rather than the intended objective of taming inflation.

2. INVESTMENT/OUTPUT — A successful QE will boost local output thus creating more jobs in the economy. However, NBS most recent data shows that Nigeria’s unemployment rate increased to 33.3% in Q4 2020 from 27.1% in Q2 2020. Unemployment rate among rural dwellers was 34.5%, up from 28.2%. Unemployment rate among young people (15–34years) was 42.5% up from 34.9%. Imo State reported the highest rate of unemployment with 56.6%, this was followed Adamawa and Cross River States with 54.9% and 53.7% respectively. The rising unemployment data is a clear demonstration that QE has failed to boost local production and hence the poverty index of Nigerians has gotten worse!

3. VALUE OF OUR CURRENCY — If QE was successful, local output of goods and services will rise meaning less imports and thus the value of the Naira is expected to strengthen. But the reverse is the case as the value of the NGN in the parallel market (which is the real market driven price) is currently N485 which is about N100 above the official rate! QE has failed to strengthen the NGN therefore it has failed!

Based on the appraisal above, whatever QE the CBN is doing is a colossal failure and must be stopped immediately. Inflation is galloping and unemployment is equally rising. The unemployment rate of our most energetic population (the youths) at over 42% is a clear demonstration that instead of QE boosting economic growth and hence jobs, it is killing the economy and must be suspended without any more money printed if we are to reverse ourselves on the road to Zimbabwe.


For those who may not be clear on the difference between the federation account which Gov Obaseki said the printed was going into and the FG budget which the DG Budget says the printed is funding, it is important to clarify so the context is properly understood:

1. Federation Account — In a layman’s terms, the federation account is the big pot where all revenues made by Nigeria is deposited for sharing to the 3 arms of Govt (Executive, Legislative & Judiciary) and the 3 tiers of Govt (FG, States & LGs). Every month these arms/tiers of Govt gather in Abuja at a meeting called the Federal Accounts Allocation Committee (FAAC) at which all the commissioners of finance from the states meet with federal officials to share the big pot.

2. FG Budget — Each of the arms/tiers of Govt make an annual budget which is a statement of their sources of revenue and their expenditure. So the FG also makes the federal budget which the President presents to the national assembly every year for approval. The main source of revenue for the FG budget is the money the FG expects to come from the federation account. State Governors similarly make budgets for their states with the main source of revenue from the federation account plus their internally generated revenue. So the relationship between the federation account (Nigeria’s pot) and the FG budget (FG’s pot) is that the federation account feeds the federal budget. So whether printed money funds the federation account or funds the FG budget amounts to the same thing! Bottomline is that the FG is using printing money for the wrong purpose!

At a time there was clamour to split the present role of the Accountant General of the Federation into two so that there will be an Accountant General for the Federation to be in charge of the federation account and Accountant General of the Federal Government to look after the FG accounts including the FG budget.


Why is the FG having to print money to fund the budget? The answer is that the FG of Nigeria is in financial distress. For 2021, the FG budgeted to spend N13.88 trn but the revenue including its share from FAAC is only N7.99 trn, thus revenue is only 56% of expenditure meaning the FG must fund 44% of the budget (N5.89 trn) from somewhere. The FG stated that the deficit will be funded from borrowing but nothing was mentioned of QE. The FG has been looking into different sources to fund the deficit including the sale of assets, mopping up of balances in dormant bank accounts and unclaimed dividends, borrowing from pension funds etc. It now appears that the FG having failed in securing sources to fund the deficit decided and tragically too to resort to printing money. But printing money to fund budget deficits is a dangerous endeavour and if the FG does not stop now, Nigeria will become a Zimbabwe only in a matter of time! It is not known when the FG began QE, the quantum of money printed so far, how much is planned to be printed and when QE is planned to end. THE ADVICE IS TO STOP NOW!!!

The FG cannot also continue borrowing to fund the budget deficit because even though our debt/GDP ratio is projected at 3.93% in the 2021 budget, which the FG says is low and therefore grants more window to borrow, a look at our ability to service debts paints a debilitating picture. Debt service in the 2021 FG budget is N3.52 trn which is 44% of our total revenue. What this means is that for every $1 the FG earns, 44c is given to our lenders (creditors), the FG is therefore basically working for the lenders and not Nigerians. When we add our recurrent expenditure of N5.99 trn to our debt service of N3.52 trn the result is N9.51 trn which is more than our total revenue of N7.99 trn. The grim picture is that the FG must borrow to fund recurrent/debt service commitments before we mention capital expenditure. Nigeria is thus living on borrowing and this situation is not sustainable. The FG must stop any further borrowing else the Govt will inevitably go bankrupt and unable to meet obligations to the lenders and unable to deliver good governance to Nigerians.


It will do a lot of disservice to the leadership of the country if we ask that QE and borrowings must stop without offering alternative solutions on how to fund the budget deficit. Five solutions were earlier on offered to include reduction in the cost of governance, taxation of the rich, diversion of the $1.5 billion PH refinery funds to boost agriculture, address power shortage and investment in rail infrastructure. Details of these solutions can be found in the paper titled — NIGERIA IS PRINTING MONEY — THE ROAD TO ZIMBABWE — via this link:


1. State Owned Enteprises (SOEs) — SOEs are Govt run businesses and they constitute a huge drainpipe on revenues of the FG. Most of them depend on the FG to fund their expenditure but they do not remit the revenue they earn to the federation account. The biggest SOE in Nigeria is the behemoth NNPC which losses N170 billion annually on the 4 refineries alone which are producing nothing! By simply shutting down these drainpipes, Govt will save money! And this is just the refineries. Most Nigerians do not realise that the NNPC is a business in the same category as Shell, Mobil, Chevron etc. If Shell et all are making huge profits year in year out, there is no reason for the NNPC which is doing business in the same market to be declaring huge losses. The FG must take immediate steps to change the operating structure of the NNPC and other SOEs to that of the NLNG which is an Incorporated Joint Venture (IJV) that consistently pays dividends to the FG.

2. Removal of subsidy — Govt must immediately exercise courage to liberalise the downstream sector of the petroleum industry to allow for full competition in the importation, distribution and sale of petrol. This will ensure that consumers get the best deal. Continuing to pay trillions in subsidies is clearly not sustainable. This alone will save N1 trn for the FG annually!

3. Stop forex for tourism and education — If the FG’s economic policy is to grow the local economy, it does not make sense that the CBN is emptying the foreign reserves to fund forex for the wealthy to travel abroad on holidays (BTA/PTA), pay fees in foreign schools and embark on medical tourism. These services are available in Nigeria and the CBN should encourage local patronage. These Nigerians are wealthy enough to source for forex in the parallel market by themselves without the help of the CBN to fund their lifestyle choices.

4. Bank interest rate — The lending rate in Nigeria is extremely too high which makes it impossible for the economy to grow because the cost of credit is unaffordable to most businesses. Nigerian banks pay interest on savings as low as 1–2% but charge interest on loans from 20% and above! The CBN must implement a lending policy that allows banks to charge interest on loans within a range of say 5–10 basis points above the rate of interest on savings. This means that if a bank pays only 1% on savings, such a bank cannot charge interest on loans above 6–11%. Cheap credit will open lines of financing to businesses to boost production which creates jobs and inevitably increases Govt revenues as more taxes are paid to Govt’s coffers.

Nigeria is a great country and hugely endowed. We have no business with poverty! It shall be well with us!!!