Hope, disappointment and renewed hope

As Muhammadu Leko Buhari warms up for swearing in for a second term in office as President and Commander-in-Chief of Nigeria’s defence forces two days from now, there is no more befitting time for an appraisal of his governance processes in the first term. And there is no better time than now to tell him the road he should take if Nigeria would ever prosper economically.

Nigeria’s is a democracy hungry for tangible economic growth. Any democracy which economic growth does not support is a weak one that will always breed unhappy and miserable people. It is, perhaps, for that reason that Wendell Berry in his classic on the importance of a strong economy in a democracy declares that: ‘‘We do need a ‘new economy’, but one that is founded on thrift and care, on saving and conserving, not on excess and waste. An economy based on waste is inherently and hopelessly violent, and war is its inevitable by-product. We need a peaceable economy….”

Indeed, the people of Nigeria felt they needed a ‘peaceable economy’ four years ago when Buhari defeated an incumbent president and was sworn in as the President of Nigeria. That development came with high hopes and expectations of ushering in a new era in the economic circumstance of the ordinary Nigerian.

Indeed there was a glimmer of hope for a rapid turnaround in the economy. This was predicated on the fact that the Buhari campaign ran on a “Change” mantra, which made robust promises to the electorate – to deliver in a short time, a well-functioning economy that worked for all. The promises made cover all sectors of the economy. Nigerians were promised that power generation would reach 40,000 megawatts of electricity by February 2019, that the refineries would be repaired and new ones built, that government would create three million jobs annually through agricultural expansion, industrialisation and massive public works programme including the building of a new national railway system, roads and ports, that the subsidy for refined premium motor spirit (PMS) was a fraud and that the N87 per litre, which it met when it came into power would be drastically reduced to about N45 per litre.

Besides, the administration then promised that it would make the economy one of the fastest growing, emerging economies in the world with a real GDP growth averaging at least 10-12% annually. The list went on and on, on the exchange rate, on education, on creating at least four million new home owners by 2019 by enacting a national mortgage single digit interest rates for purchase of owner occupier houses and so on!

These are just a few of the many promises made to Nigerians in 2015 but instead of things looking up, the economy nose-dived when the new administration came into power. Apart from the fall in the price of crude oil, another excuse given by the government has been the extent of the “rot” it met on taking office, especially meeting an “empty treasury.”

This has been orchestrated by the Buhari administration for most of the past four years. It spent a lot of energy and time blaming the current state of the economy on what it called “grand corruption” and lack of savings by the past administration. Though this position is subject to intense debate, the fact remains that the government has failed to take any responsibility for the poor performance of the economy, which is not a sign of good leadership. Many analysts believe the economy was truly not in a very good shape in 2015 but it is agreed the Buhari administration merely met a bad situation it has only made even worse. The policy framework it initially put in place, in addressing the problems of the economy has been of a “command and control” posture. Prices were not allowed to find their true market value. In particular, for the exchange rate and prices of petroleum products, it took a long time for government to allow for partial deregulation in some of these markets so much that the parallel market became very strong with the dollar-naira exchange rate getting to as high as N520 per dollar earlier during its tenure. It was only a quick reversal of policy that brought some sanity to the exchange rate market as well as the market for petroleum products with the price of (PMS) raised to N145 per litre.

Over the past four years, attention has been called to the deteriorating state of the economy in many observations. Some of the most recent ones being: “2018 Budget Deficit and the Debt Service Gains” on July 2, 2018, “Truth about Nigeria’s Economic Growth” on July 9, 2018 “Halt Nigeria’s Rising Debt Profile” on August 27, 2018, “Nigeria’s Uncertain Economic Outlook” on October 23, 2018 and “Nigeria’s poor economy and the blame game” on January 1, 2019.

In order to further constructively engage government along these lines and help to set an agenda for good governance in the next four years, a number of issues would need to be addressed by the Muhammadu Buhari administration to turn around the economy, deliver good performance to the Nigerian people and stop the recurrent narrative of blaming others for its problems.

First is the issue of the performance of the Economic Recovery and Growth Plan, ERGP, a medium-term plan it put in place to cover the 2017-2020 period for the purpose of restoring economic growth. Data from the National Bureau of Statistics indicate that the ERGP has largely underperformed, regarding most of its projections. The ERGP projected a 4.5% real GDP growth rate for 2019 but it is currently in the region of 2%. Even the Minister of Budget and National Planning recently stated that the 7% real GDP growth rate projected for 2020 is not attainable. Also, the projected sectoral growth rates have been hardly attained. Unemployment has ballooned! Unemployment rate in Nigeria increased to 23.10 % in the third quarter of 2018 from 22.70 % in the second quarter of 2018. This is worse than the ERGP projections of 14.5% in 2018 and 12.9% in 2019.

The only progress made are in the reduction of inflation and other externally induced factors such as the international price of crude oil and the level of oil production. Government, therefore, will need to revamp the ERGP for better performance after May 29.

Another area that should worry the government is the management of the country’s debt profile, particularly with the debt service payment to revenue ratio exceeding 50%. This is not healthy for the economy. Apart from its intergenerational implications, the inability to function effectively in financing government operations is enough for a functional debt management strategy to be put in place to avert an impending disaster within the next four years.

The Buhari government should not be fooled by the narrative that the country is currently under-borrowing, using the debt to GDP ratio argument which does not address the core issue of ability to service debts in the present term. Other areas of worry are the shady issues relating to the fuel subsidies, which currently appear unsustainable. Making the Nigerian National Petroleum Corporation, (NNPC) the sole importer of refined petroleum products is an anomaly, as clearly stated by experts at the 2019 Annual Public Lecture of the Nigerian Economic Society held in Abuja earlier in May 2019, which focused on the “fuel subsidy puzzle, facts, fallacies and the way forward.” The gathering appropriately called for a phased removal of this subsidy with funds diverted to other sectors of the economy.

Government, therefore, needs to look into this and handle issues therefrom with caution. These have implications for the inflation rate and the benefits workers will derive as the new minimum wage of N30,000 is implemented across the country. Whatever be the case, the renewed Buhari government should never resort to printing money to address these issues, as this would be counterproductive ultimately.

The state of physical infrastructures in the country still leaves much to be desired. Not much has been done, as is being proclaimed by government and it should focus squarely on this. For example, the railway lines across the country are still largely in the realm of promises, while it must be admitted that some progress has been made. The Lagos-Kano rail line is below 30% completion while the Lagos-Calabar line and Port-Harcourt-Maiduguri lines are just subjects of discussion and little action. The new term of the administration should be used to address these issues.

Meanwhile, unemployment in the country is still very high. This is worrisome and represents a time bomb that should be defused immediately. Government should open up the economy with business-friendly policies that would make the private sector thrive and create the necessary jobs to engage the youth population currently being churned out of the tertiary institutions in hundreds of thousands on an annual basis.

President Muhammadu Buhari has his work cut out for him in this second term and he should hit the ground running. There should be no excuse for any delay in constituting a cabinet as soon as possible. He should also aim at working harmoniously with the incoming legislature. Many bills that relate to the great performance of the economy were not signed into law by the president during his first term. That should be avoided as much as possible in this new term as Nigerians cannot afford to have a lacklustre performance. While the pain of unfulfilled expectations in the first term is real, a stellar performance in the second term beginning in two days will restore hope in all Nigerians that their country can still work. It is left for Muhammadu Leko Buhari to be a retailer of hope or a harbinger of despair.

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