Experts Groan As Buhari Hands Over Struggling Economy
The current regime inherited a frail economy. Despite Nigeria’s economy growing by over six per cent in 2014, economic growth slowed to about three per cent by 2015 – reported as the lowest in the democratic era. When Buhari was elected in 2015, Nigerians remained hopeful that the bringer of change would get to work immediately in stabilising the economy while plotting for the future.
However, the Buhari regime’s economic policy got off to a shaky start. It is widely believed that the President didn’t make the most of the widespread support he had at the outset of his term to advance bold measures during the honeymoon period.
For a long time after he took office, Buhari reportedly did nothing to improve the economy. He took a rather hands-off attitude to economic management, as seen by his inability to appoint federal ministers until about six months after to took over. Economic experts said the President’s failure to appoint his whole cabinet until 166 days after taking office led to a period of uncertainty that accelerated capital flight and weakened trust in the economy.
Late in 2015, when the regime finally showed signs of life, the economy was in shambles and on the verge of its first yearly recession since 1991.
Meanwhile, the CBN’s foreign exchange control policy, which was adopted with the President’s implicit consent, devalued the naira even further and exacerbated the pressure on domestic and international firms. Despite widespread support for a switch to a market-based exchange rate, which would have helped the economy recover more quickly, the CBN has doubled down on its policies, strangling the foreign exchange market and, by extension, the economy. For the first time ever, one dollar went for over N500 at parallel market in the beginning of 2017.
Nigeria’s outgoing President on Sunday defended his record on the economy. However, available data shows that the country’s economy is performing poorly. Buhari came into office in 2015 after promising to reboot the economy and end corruption and insecurity, but it seems the problems have worsened under his watch.
Poverty And Unemployment
The National Bureau of Statistics recently disclosed that 133 million Nigerians were multi-dimensionally poor. Reports also showed that Nigeria surpassed India as the country with the largest number of people living in life-threatening poverty in the world. A World Bank report titled, “A Better Future for All Nigerians: 2022 Nigeria Poverty Assessment,” released early this year, noted that poverty reduction had stagnated in this country since 2015, with more Nigerians falling below the poverty line over the years.
Also, Nigeria’s unemployment rate in the last quarter of 2015 stood at 10.4 per cent. The figure went up to 14.2 per cent at the end of 2016. At the end of 2017, it moved up to 20.42 per cent. It moved up to 23.1 per cent in 2018, and the latest figures from the NBS indicated that the unemployment rate stood at 33.3 per cent as of 2020, translating to about 23.19 million unemployed people.
GDP
The GDP report of a country is significant because it gives information about the size of the economy and how it is performing. The growth rate of real GDP is often used as an indicator of the general health of the economy. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well. The administration before Buhari had 6.07 per cent growth in four years, but the NBS said the economy grew by an average of 1.40 per cent under this regime. However, due to naira redesign policy and the consequent cash crunch, which resulted in severe hardship for Nigerians, the nation’s GDP declined by 2.31 per cent in the first quarter of 2023, according to the NBS.
Almost all sectors of the Nigerian economy have been experiencing excruciating strains in the past seven years, according to various economic reports.
In the non-oil sector (the biggest contributor to Nigeria’s GDP), agriculture, finance, insurance and transport are struggling. Nigeria’s inclement economic environment has slowed them down. A large number of farmers can’t access their farms due to the activities of terrorists; manufacturing continues to plunge while crude oil production is sliding.
The World Bank, in its 2022 Nigeria public finance review report titled, ‘A Better Future for All Nigerians’, said Nigeria’s development had stagnated since 2015.
“Nigeria’s development progress has stagnated. Between 2001 and 2014, Nigeria was a rising star in West Africa, with an average growth rate of seven per cent per year, and it ranked among the top 15 fastest-growing economies in the world”, the bank noted.
“However, this trend ended abruptly in 2015, as oil prices fell, the security situation deteriorated, macroeconomic reforms were reversed, and economic policies became increasingly unpredictable,” it added.
Inflation
Nigeria’s inflation rate was 9.01 per cent in 2015 when Buhari assumed office. According to the NBS, the country’s inflation rate skyrocketed in the first quarter of the transition year and hit 22.22 per cent in April —the fourth consecutive increase in 2023.
In 2015, a bag of rice was sold at N8,000 while a litre of petrol was N87. As of May 22, 2023, a bag of rice sold for N40, 000 while a litre of fuel is more than N200. A loaf of bread, which sold for N200, now goes for N1,000.
The exponential rise in the cost of commodities, hitting harder on commoners – aside from the global inflation following the pandemic – tells how Nigeria failed to ramp up production in the last eight years, thereby affecting the import-to-export ratio to its economic disadvantage.
Foreign Exchange
In 2015, when Buhari assumed office, the dollar was exchanged at N198/$ in the parallel market. By 2018, it was N306 to the dollar, and in 2019 it went up to N360 to the dollar and eventually exchanged at N520 in 2021.
From 2021 till date, the dollar at the parallel market has been exchanging for between N600 and N760.
Experts have called for reforms that will affect the country’s exchange rate, forex availability, interest rate and cash flows, noting that these will impact local production and business growth.
For an administration that met naira at N198/$1, leaving it at N460 (at the official rate) — and an outrageous parallel market rate of N760 — shows how the country’s currency has lost its value in the last eight year, economists posit.
Debt Burden
Former President Goodluck Jonathan had approved a N4.5tn budget, which was already running before Buhari assumed office in 2015. Despite the country’s infrastructure deficit, only N755bn made it into capital expenditure that year.
However, Nigeria’s budget grew exponentially to N6.08tn in 2016, N7.29tn in 2017, N9.12tn in 2018 and N8.92tn in 2019.
Despite shortfalls in revenue targets, hinged hugely on oil price performances and taxes, Nigeria’s budgets rose to N10.80tn in 2020, N13.60tn for the 2021 fiscal year and N21.3tn in 2023 — Buhari’s last fiscal year.
Nigeria’s budget deficit has increased as the budget expands. Since the government started experiencing a significant shortfall in revenue, it has relied heavily on the central bank to finance its expenditure programmes via Ways and Means, which balance, as of December 2022, stood at N22.7tn. Also, the Debt Management Office which reported Nigeria’s debt profile as N12.12tn in June 2015, now put it at N46.25tn. This includes the debt of the 36 state governments and the Federal Capital Territory.
Economic Performance
Incoming President Bola Tinubu is inheriting a weak economy, record debt and shrinking oil output. Double-digit inflation, which has eroded savings and wages, is one of the biggest issues confronting him when he is sworn into office.
In a recent declaration titled, “LCCI statement on Nigeria’s economic growth performance,” and signed by its Director-General, Lagos Chamber of Commerce and Industry, Dr Chinyere Almona, the chamber was apt when it listed forex challenges among factors putting a serious strain on the economy.
The LCCI said, “The economy has continued to struggle with many inhibiting burdens like inflation, weak revenue generation, degenerated infrastructure, forex challenges, unsustainable cost profile seen in debt services and subsidy payments, and the daunting threats of worsening insecurity.
“The chamber is concerned that if we continue in this trajectory, the economy may bleed away into a stagflation which will impact production cost, job losses, worsened forex crisis, and dampened growth in the medium term. ”
Also, a development economist, Dr Aliyu Ilias, noted that the country was not developing as it should.
He said, “We say we are having growth, but the growth is figurative and not reflecting development in the country.”
He added that the country was struggling with some issues, such as insecurity that has been threatening the agriculture sector. He noted that fuel subsidy was affecting oil revenue. As such, he urged the government to remove fuel subsidy and boost oil production.
Also, a professor of Political Economy and founder of the Centre for Values in Leadership, Pat Utomi, said the signs of a stagnant development had been visible since the inauguration of the president.
