The recent economic report of the International Monetary Fund IMF on Nigeria is certainly not too reassuring. The report asserts that Nigerians are getting poorer, particularly since the inception of the current All Progressive Congress, APC-led federal government under President Mohammadu Buhari. It acknowledged the economic recovery recorded and the end of recession by the second quarter of 2017 through a positive gross domestic product, GDP growth rate. It however noted that the recovery came from developments in the oil sector with oil prices above $60 in recent times. This is a return to oil dependence and is little cause for cheer.
In reality the current government actually inherited an economy in crisis, when it came into power in 2015. The level of inclusiveness in the economic growth over the pre-2015 era was largely very low such that for most of the budgets then, the focus was on the pursuit of inclusive growth. The drastic fall in oil price in 2014 led to the excess crude account and the foreign reserves being depleted. With the coming of the Buhari administration, which had campaigned on the promise to immediately usher in prosperity and reduce poverty in the land, as well as grow the economy to enviable heights, hope was rekindled. Some of the very scintillating promises it made include: the reduction of fuel pump price to N45 per litre in the first year of the administration, the payment of N5,000 each to 25 million jobless Nigerians every month, the creation of 3 million jobs every year and the placing of every graduate on allowances after their youth service until they find employment, among many others. On discovering the enormity of the task ahead, the government later disowned some of these promises, and limited itself to the three-pronged focus of security, fight against corruption and the development of the economy. The extent to which this focus has impacted on the economic well being of the ordinary Nigerian is a subject of interesting evaluation.
From the National Bureau of Statistics, NBS data, GDP contracted (year-on-year) in real terms for five quarters from the first quarter of 2016 to the first quarter of 2017. By the second quarter of 2017, the economy exited recession with a 0.55% GDP growth rate, due largely to positive developments in the oil sector. The generally acknowledged factors that were responsible for the plunge into recession included the near-total dependence on oil revenues amidst fall in crude oil price, the low savings in the boom years and the change in government, with a different economic governance approach. The increases in food & energy prices and exchange rate depreciation, among others led to the rising of inflation rate to about 18.72% in January 2017. This however, reversed in Feb 2017 and is currently about 15% – though, still higher than what the government inherited in 2015. Unemployment and underemployment rates had increased with youth unemployment becoming very worrisome, at about 45.65%. Other stylized facts on the state of the economy, under the recession are the record decline in capital importation, which thankfully, has reversed with an increasing trend in portfolio investments. Though the external reserves have currently risen to about $46 billion, there is a rising public debt profile as well as a rising debt servicing burden – particularly for domestic debt.
Hence, the challenge to sustain the recovery with appropriate policy interventions has become compelling. Over the period, the Central Bank of Nigeria, CBN took a tight monetary policy stance with the monetary policy rate, MPR sustained at about 14% for most of the period under Buhari. The policy interventions since 2015 have been an expansionary fiscal policy and a tight monetary policy stance. In addition to this the government put in place the Economic Recovery and Growth Plan, ERGP of 2017-2020, launched in 2017 – to enhance economic recovery and growth over the medium term. The three broad strategic objectives of the ERGP which are restoring growth, investing in the people and building a globally competitive economy have largely not been attained. Economic diversification has largely remained a mere rhetoric with the bulk of government revenue still derived from the oil sector. Many of the various projections in the ERGP were largely unattained for 2016 and 2017 as well as so far in 2018. This includes the targets for GDP growth rate, the sectoral growth rates, inflation and unemployment. The hope of having a single-digit inflation rate by 2020, as projected, appears dim. Under the ERGP, the enhancement of job creation and youth empowerment with a target 11.23% unemployment rate by 2020 and about 15 million new jobs in total or 3-7 million jobs per year appear to be far-fetched. In actual fact, the economy has experienced more of job losses than job creation, over the period. The question thus arises: how effective have these policies and plans been in addressing the poverty question in Nigeria, since 2015?
The obvious evidence that abound regarding the efficacy of the policies and programmes of the Buhari administration are contrary to the fine projections of the ERGP. First, the positive developments in the agricultural sector are not being helped by the growing insecurity largely due to the menace of herdsmen in the South and Middle Belt. Internally Displaced Persons (IDPs) abound in states like Benue, Borno, Adamawa, Taraba and others, even Cross Rivers (Bakassi), with broad implications for food production and food security.
The efforts of the Buhari-led government in tackling the persisting poverty and other economic problems were slow in coming at inception. It took a long time before the economic policy thrust of the government was known to economic agents such as investors, thus creating uncertainty in the market place and an increase in capital flight. This, with policy incoherence, exacerbated various crises. Currently, the Nigerian economy is still far from being competitive. The poor state of infrastructure, the growing insecurity and an emerging concern over lack of transparency as well as increasingly intractable corruption have become quite worrisome. There is slow progress in addressing key infrastructure across the country with the fear that the recent improvement in the ease of doing business indicator, may just be a flash in the pan. Economic diversification is still more of lip service, as in previous years.
In spite of APC’s campaign promises to enhance incomes, they have actually remained low or static across both the public and private sectors of the economy. This has affected consumer demand for goods and services over the past three years. The exchange rate depreciation and the increased price of premium motor spirit from N87 to the current N145 over this period have had their toll on the incidence of poverty. Food inflation is still higher than headline inflation. With increased inflation, relative to 2015, massive job losses, relative instability in the foreign exchange market, poor road infrastructure and lack of meaningful progress in the power sector, life is becoming increasingly difficult for the average Nigerian. Indeed, in line with the IMF assertion, Nigerians are getting poorer. The mass exodus of young Nigerians to Europe through Libya is quite instructive of the level of widespread deprivation the ordinary Nigerian currently faces.
What is needed is concerted government action to arrest the negative trend. Government needs to support the small and medium scale enterprises by providing the necessary conducive environment for their operations. There’s the need to harmonise monetary and fiscal policies to engender sustainable economic recovery and growth. This will create room for job creation and the thriving of the private sector, particularly the micro, small and medium sized enterprises. The plan to broaden the tax base (not necessarily tax rate) is very positive in enhancing government revenue but this should be done with a human face in view of the numerous challenges confronting the people. In as much as the fight against corruption is a noble one and should be prosecuted with all might, attention needs to be focused on the growth of the economy to address the basic needs of the people.
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