For a moment, take your attention away from the troubled rerun elections in Rivers state. Rivers’ politics is a terminable disease. Rather, keep tab on two major events that started in Abuja yesterday. The outcome could have profound implications for the economy, and by extension, the living standard of Nigerians and businesses that have experienced harsh consequences as a result of the bad state of the economy.
The first of these epochal events is the National Economic Council (NEC) Retreat, which kicked off at the Presidential villa yesterday. It is presided by the Vice President, Prof. Yemi Osinbajo and state governors as members. It will end today, and the outcome will recommend decisions that will drive the economy. The second event of equally profound importance is the meeting of the Monetary Police Committee (MPC), the highest decision-making organ of the Central Bank of Nigeria (CBN). This meeting, which also ends today, is presided by the Governor of the CBN, Godwin Emefiele.
Expectedly, issues that will dominate discussion at the meeting of the MPC, the second this year, will include, but not restricted to rising inflation, foreign exchange (Forex) volatility and, stunted economic growth. Coming at such a crucial period when prices of oil in the international market has fluctuated between $30 and $40 per barrel, and inflation figures at double digit figure of N11.4 percent year-on-year (yoy). These issues may influence local and foreign investors’ interest in Nigeria’s economy.
Altogether, how these two events – the NEC Retreat and MPC meeting turn out, will by all means determine the direction of the economy. It will also determine if President Muhammadu Buhari has finally found an economic roadmap or still searching for ‘change’. Addressing the opening session of the NEC retreat yesterday morning the President, listed key sectors he wanted the economic team to focus its attention on. These, he said, are power, agriculture, housing, manufacturing and health care. He admitted that one year into his administration, little has been done to cause positive changes in these sectors.
The President was right on point. On power, for instance, despite promises to generate 10,000 mw, power generation in the country now is less than 1.6 mw. This has had far reaching negative consequences on the economy. It has indeed had negative multiplier effect on the manufacturing sector and other sectors that drive the economy. If the economy must be diversified, away from the present dependence on oil revenue, agriculture, manufacturing, and solid minerals are sectors that the NEC must provide recommendations that will yield the much-expected results that will stimulate economic growth.
For now, all the sectors identified by the President are tottering. One of the immediate consequences is that the living standard of Nigerians, which largely reflects the state of the economy through disposable income of the citizens has reached an all-time low.
The latest figure from the National Bureau of Statistics (NBS) shows that consumer price index (CPI) which measures inflation has increased to 11.4 percent, a rise of about 1.8 percent over that of February and 9.6 percent in January. It tells a bad story that government and the CBN have not found an answer yet to the problems of the economy. Indeed, the rise in inflation negates the ideal and effort of the CBN to keep inflation in check. This will no doubt affect economic growth in the first quarter of this year.
This is also the more reason why the outcome of the MPC meeting will be a major talking point throughout the week. Attention will be on the apex bank’s solution to the FX situation, inflation and its unpleasant development for the economy and its induced cost-effect on the manufacturing sector. At present, manufacturers still import 40 percent to 60 percent of their raw materials and this is done through Foreign Exchange. The banking sector is one major area the MPC will likely take far-reaching decisions. With the country already in recession (whether government accepts it or not), the question is: what steps will CBN and NEC recommend to revive growth in key sectors of the economy?
For months now, the Buhari administration has gone relentlessly hammer and tongs after its predecessor for been responsible for major problems facing Nigeria today. We stated recently in this column that blaming everything on Jonathan presidency, including massive corruption and the current economic woes, seems to me the most popular poison to demonize the past government. It shouldn’t be so.
There are fears that the rise and fall of the national currency will continue until the government puts in place a clearly defined economic direction. President Buhari should be aware and must come to grips with the threat that the crisis in the economy poses to his presidency. Any country can only be as strong or weak as its economy. Moreover, the president needs reminding that there’s a seasonal cycle to every presidency. The first year of an administration is a period the president ought to lay out his programmes. The second and third year, he mends his fences politically and runs for re-election if he so wishes and if his party believes he has done enough to merit a second term.
We are approaching Buhari’s one year in office, yet the economic direction of his government remains largely uncertain. The unrelenting depreciation of the naira has, among other things, increased the Consumer Price Index that has seen a steep increase in the price of essential food items in the market.
The challenge now is not just to assemble a good team of hands-on experts capable of designing a framework for reforming and boosting the economy, it marks a failure of government’s economic advisers, including the Ministers of Finance that of Planning and Budget and the Central Bank of Nigeria (CBN) to initiate comprehensive policies and programmes, fiscal and monetary measures that will strengthen the fundamentals of the economy and ensure inclusive growth.
There’s no doubt that turning the economy around will not be easy, but that is why Buhari was elected. He knew the economic skies were not bright when he took over. And it was one promise he said Nigerians should hold him responsible if he fails to deliver on that promise. Therefore, no excuse if he fails. It bears repeating that the power sector holds the key to unlocking the potentials in other sectors of the economy such as: agriculture, manufacturing and so on. With the economy bleeding on all sides, we expect the NEC and MPC to take a composite view of the economy and come up with recommendations that will stimulate growth in both short term, medium and long terms.
Whatever decisions these two organs come up with today, it’s all about a fresh charge, a reminder to the President to focus on the economy like a laser. No more excuses.