From Uche Usim, Abuja
President Muhammadu Buhari assumed leadership in May 2015 amid robust goodwill from an expectant electorate who took to the bank his campaign promises of making a dollar equal to the naira, creating wealth and tackling energy crises.
Unfortunately, hopes have been dashed as the direct opposite has played out and experts insist that the outgoing President squandered eight irretrievable years he could have used to better the economy, if he had assembled sound minds to manage it.
Aside from wasting over six months to constitute the Federal Executive Council, the President showed a weak grasp of economic matters, such that investors and other players in the economic space tried, albeit unsuccessfully, to understand his policy direction through the famed “body language.”
Amid widespread terrorism, low oil prices and lack of clear-cut economic direction, many investors withheld their investments and gradually pulled out of Nigeria. These unfortunate developments saw the naira crashing at discomforting momentum.
Food prices hit stratospheric heights under the Buhari administration, as banditry and turf wars saw many agrarian villages lost to criminal gangs.
When experts tried to warn the administration against its knee-jerk approach to administering fiscal policies, politicians loyal to the President snatched the mic and politicized the message.
Buhari mounted the saddle when a naira was N197 to a United State dollar. It is now N750.
Sovereign debt at June 30, 2015, was $10.32 billion (now $103.11 billion as at March this year); petrol that was at N87/litre is now N195/litre. Diesel was N155/litre in 2015 but has galloped to N880/litre; inflation stood at 7% (now 22.2%), 45 million people were poor in 2015, but today 133 million Nigerians are peppered by multidimensional poverty. This is despite trillions of naira reportedly channelled into various social investment programmes.
Unemployment rate was 11% in 2015 but now stands at 40.6%, among other frightening numbers that speak to a traumatized population struggling to survive in a terribly-weak economy.
According to analysts, three major albatrosses of the Buhari administration are institutionalized corruption, terrorism and an opaque subsidy regime.
These three blights have left the country poorer and served as conduits through which corrupt politicians and technocrats sucked the nation dry.
The giant of Africa, as Nigeria prides itself, overtook India in 2018 to become the poverty capital of the world with 87 million people in extreme poverty at the time, compared with India’s 73 million.
While India has retaken the first position, Nigeria is battling the worst insurgency and other home-grown challenges that have fractured the economy.
In 2022, Nigeria’s debt service-to-revenue ratio was at 80.6% — a figure far above World Bank’s suggested 22.5% for low-income countries like Nigeria.
The International Monetary Fund (IMF) had said Nigeria may spend almost 100 per cent of its revenue on debt servicing by 2026.
But the Finance Minister, Mrs. Zainab Ahmed, said Nigeria plans to cut its revenue spending on debt servicing to 60 per cent in 2023, adding that the current ratio is not sustainable.
She added that economic growth in 2023 will be driven by increased revenues from the “non-oil sector and also the beginning of the pick-up of revenues from the oil sector itself.”
According to the World Bank, Nigeria spent 96.3 per cent of revenue on debt servicing in 2022 from 83.2 per cent in 2021, which shows how the fiscal deficit has worsened the nation’s public debt stock.
The aforementioned issues aside, some economic assessors are cutting Buhari some slack, saying he took office when there was a sharp drop in crude oil prices.
But the challenge was compounded by inadequate diversification efforts.
Consequently, Nigeria experienced its first recession in 2016, the first in over two decades. The economy contracted by 1.6 per cent due to negative oil price and oil production shocks, which spilled over to the non-oil sectors. Oil GDP shrank by 14.4 per cent, and non-oil GDP contracted by 0.2 per cent.
Oil exports plummeted by 25 per cent in 2016 (in US dollar terms); however, imports contracted even faster (33 percent) due to constraints on foreign exchange, resulting in a positive current account balance (0.7 per cent GDP) in 2016.
Low oil revenues and the lack of major tax policy reforms to significantly increase non-oil revenues led to large revenue shortfalls at all levels of government in 2016. Monetary policy remained accommodative, with broad money growth at 18.5 per cent, driven by increased lending from the Central Bank to the government to finance budget deficit. After a sharp depreciation of the exchange rate following the June 2016 liberalization of the naira, the Central Bank of Nigeria (CBN) maintained the inter-bank exchange rate at around N305 per USD.
There was another recession in 2020 occasioned by the rampaging COVID-19 pandemic that forced many economies to survive on ventilators, literally speaking.
The Nigerian economy shrank by 1.8 per cent, its deepest decline since 1983. The COVID-19 crisis drove the economic slowdown; the external context was marked by capital outflows, intensified risk aversion, low oil prices, and shrinking foreign remittances.
According to KPMG, multinational consulting firm, in a released report tagged “KPMG Global Economy Outlook report, H1 2023,” unemployment will continue to be a challenge due to the slower-than-required economic growth and the inability of the economy to absorb the 4 to 5 million new entrants into the Nigerian job market every year.
“Unemployment is expected to continue to be a major challenge in 2023 due to the limited investment by the private sector and low industrialisation. Although the National Bureau of Statistics recorded an increase in the national unemployment rate from 23.1per cent in 2018 to 33.3per cent in 2020, we estimate that this rate has increased to 37.7 per cent in 2022 and will rise further to 40.6 per cent in 2023,” it said.
In the administration’s efforts towards poverty alleviation, in 2016, Buhari launched the National Social Investment Programme, currently the largest such programme in Africa and one of the largest in the world. The National Social Register (NSR) of poor and vulnerable Nigerians now contains more than 50 million persons from more than 12 million poor and vulnerable households, identified across more than 150,000 communities in the 36 states of the country and the FCT.
From this number, close to two million poor and vulnerable Nigerian households are benefiting from the Conditional Cash Transfer (CCT) programme, which pays a bimonthly stipend of N10,000 per household.
In January 2019, Buhari launched Nigeria’s Micro-Pension Scheme – which allows self-employed persons and persons working in organisations with fewer than three employees to save for the provision of pension at retirement or incapacitation.
There was also the establishment of the Survival Fund, the National Youth Investment Fund, National Special Public Works Programme (774,000 beneficiaries across 774 LGAs nationwide), and the Central Bank’s COVID-19 N300 billion Targeted Credit Facility (TCF) to support millions of small businesses, households and young people with federal grants, loans and stipends.
By the end of 2021, Development Bank of Nigeria (which commenced operations in 2017) had disbursed N482 billion in loans to more than 200,000 MSMEs, through 51 Participating Financial Institutions (66% of the beneficiaries are women-owned MSMEs while 27% are youth-owned).
The Bank of Industry (BOI) has disbursed more than N1 trillion in loans to over three million large, medium, small and micro enterprises, since 2015. The BOI’s Growth Platform is Africa’s largest executor of MSME interventions, with a portfolio currently valued at more than $472m.
Commenting on the Buhari administration, Nigeria’s first professor of the capital markets, Prof. Uche Uwaleke said: “In the area of the economy, any objective assessment must take into consideration the 2016 economic recession occasioned by a sharp drop in crude oil prices as well as the unprecedented negative impact of COVID-19 on the economy. Prior to the pandemic, the economy was witnessing relative macro stability, especially with respect to inflation rate and exchange rate. There’s no denying the fact that the CBN under the administration did a lot in stabilizing the economy and even stimulating growth through its interventions, especially in agriculture. The bank’s Anchor Borrowers Programme, which ensured near self-sufficiency in rice production, readily comes to mind.
“There is also noticeable improvement in roads and rail infrastructure. Overall, the non-oil sector got some traction in terms of revenue generation and dethroned the oil sector as the major economic growth driver.
“Having said that, a major area where this administration has yet to make a meaningful impact is job creation and poverty reduction. The conditional cash transfer and other social intervention schemes of this government do not seem to have made any significant impact. You are aware of the latest disturbing numbers by the National Bureau of Statistics on multi-dimensional poverty level involving over 130 million Nigerians.
“Unemployment and underemployment rates are quite high due in part to the challenge still posed by the power sector. Regrettably, inadequate electricity and scarcity of refined petroleum products which are key dependencies for any meaningful development have remained largely unaddressed. The inability of the government to truly diversify the export base of the economy away from oil which still accounts for a significant proportion of forex earnings equally leaves a red ink on the scorecard.”