Few months ago Nigerians were told by the Finance Minister that Nigeria was not broke but now it is evident that Africa’s richest economy is borrowing money to pay salaries as it struggles through a “difficult cash crunch” brought on by halved oil prices, Nigeria’s finance minister revealed. As a matter of fact both federal and state government have continued to trade blames on the non-payment of salaries in many states of the federation. It has been reported that states like plateau, Bauchi, Rivers, Osun, Ekiti and few others still owe civil servants salaries ranging from 3 months to 8 months. While the state government give excuses of reduction in federation account allocation, the federal government accused its state counterpart of not setting priorities. But the truth is, even some federal parastatals and ministries still owe its staff salaries.
The news comes as just weeks before Muhammadu Buhari who won the presidential election in March was scheduled to take office with the nation’s currency remaining in a slump, hovering between 190 and 220 to the U.S. dollar. It was trading at N160/$ a few months ago.
Minister Ngozi Okonjo-Iweala tried to be upbeat in a speech after the legislature approved the 2015 budget thrice revised, because of the continuous drop in oil prices that provide 80 percent of revenue for the government of Africa’s biggest petroleum producer. The minister said revenue challenges have prohibited the release of any funds for capital expenditure this year but that food prices and single-digit inflation remain quite stable. She also insisted the economy still is on course to grow 4.8 percent this year.
Okonjo-Iweala told legislators that the nation had front-loaded the borrowing program to manage the cash crunch situation. “Out of the N882 billion budgetary provision for borrowing, the government has borrowed N473 billion to meet up with recurrent expenditure, including salaries and overheads. Thus, the nation is not broke but still need to borrow to pay salaries”.
It is thus bad news for the incoming administration which even before taking office had confessed that, constricted revenue and endemic corruption was threatening its will to deliver on development and reconstruction of areas devastated by a nearly six years of insurgency in the northeast.
When he starts work as Nigeria’s President come May 29, Muhammadu Buhari will inherit a deeply-divided country and one that faces a highly uncertain economic future. Oil on which Nigeria’s economy depends for the lion’s share of its revenues and foreign exchange earning has halved in price since July 2014. The naira has lost about 20 percent of its value since October 2014.
The grim picture of the economy was laid bare by vice president Prof Yemi Osinbajo at the opening of a two-day policy dialogue on the implementation of the agenda for change in Abuja where he stated that the Nigeria’s economy ‘is perhaps in its worst moment in history stressing that the debt servicing bill for 2015 is N953.6 billion, 21% of the country budget’. Not less than 110 million Nigerians are feeling the pangs of poverty with $60billion debt being inherited by the Buhari administration just as 21% of 2015 budget will be spent on servicing debts.
In the face of serious dwindling revenue, most of the 36 states almost wholly dependent on the federal government for a monthly allocation, which can no longer afford to pay the salaries of public servants.
Hence the need to explore a wide range of policy priorities including the diversification of the economy by engendering job-led growth, the revitalization of agriculture in pursuit of job creation and food security, improving the framework in our most strategic sphere of economic activity- oil and gas sector, improving access to qualitative and affordable health etc.
However the fight against corruption is expected to produce some part of the fund needed to bring change to a country where petroleum riches benefit a small clique while the majority of the 180 million people in Africa’s most populous nation live from hand to mouth.
Economic analysts have also blamed the financial crisis on the just concluded elections, which is tagged as most expensive election in the history of Nigeria. Though no one knows how much politicians from both sides spent during campaigns, it’s obvious from various reports of dollar sharing that, a lot of spending was made by politicians in order to secure political positions.
All these issues we are faced with as a nation has made concerned economists and investors to continue to search for answers to crucial questions such as; what will the new cabinet look like/ what sort of economic policies will the incoming government pursue? What is Buhari’s stance on privatisation? And as a former petroleum minister, serving in the late 1970s, what are his views on the petroleum industry bill awaiting the assent of Nigeria’s parliament?
The Director, Directorate of Policy Research and Strategy of Buhari’s presidential campaign council and former Governor of Ekiti state Mr. Kayode Fayemi said “the challenge of translating ideas into policy and praxis now looms large, given the degree of work that has been put in by the directorate and our well documented national programmes of policy implementation, the focus should now be evolving an institutional framework to deliver the agenda for change.”