It’s less than a week to another historic election day; the din of electioneering is of course loud and deafening. It’s sure not the best of times to discuss the arcana of economics. This is the hour of high wire propaganda, brick-batting and boisterous one-upmanship. Who cares about the numbers and the indices now? Much too late in the day you might say for any word on ways and means and the wheretofores of the variant baskets of our GDP in the past near four years.
But perspectives are never out of line or time; they are the compasses that would always guide us no matter the time or the route we might choose. This concise overview of President Muhammadu Buhari’s first term economics will serve many purposes. First, for those seeking last minute understanding of this era in practical and workable terms, this provides the best insight to be found. Two, for those who have been away from the fray most of these four years who have been suffused with a barrage of half-truths and propaganda, this will help mightily.
PMB’s era and his economics have been defined by three major factors: his deep-seated personal idiosyncrasies; the oil price movement and lastly, a few team members who turned up with high performance and turned out to be the chief economic drivers. Let us attempt to work through this maze. First we plod through the downside and then walk up to the bright side.
President Buhari is everything but an economist. In fact he may be described as a nationalist of the revolutionary kind. To the extent that modern economics and nationalism are akin to oil and water so it is that Buhari’s nationalism almost marred his economics as he ascended to power on May 29, 2015.
Thus was it that though international crude oil price had dropped to about half by May 2015 and foreign exchange inflow had dwindled considerably, yet the president out of nationalistic instincts, would not allow the naira to float beyond its old band for many months. Of course this brought a harsh toll to bear on the economy in terms of the reaction of foreign investors and crash of naira to about N525/US$ by first quarter of 2017.
Naturally by this period, recession had set it as inflation had hit a high of almost 19% from sub-10 in 2015.
This singular factor of upheaval in the oil market; the president’s genuine though outmoded intentions for the economy and the delay in forming a cabinet hurt the economy at the outset of this administration. And when the cabinet swung to action, there was not much of a strong economic driver in the mould of the erstwhile finance minister Dr. Ngozi Okonjo-Iweala. Thus the economy lapsed into a recession and was wind-tossed for about six quarters more as a result of persistent of uncertainties than any other combination of factors.
However, since the last quarter of 2017, the Buhari economics began to take a life of its own and the president got more sure footed and some critical members of his cabinet began to come to their own.
Fight against graft, one of the cardinal policies of the administration was revved up. Though some quarrel with the methods, there is no doubt that a lot of impact was made. The monster of impunity was defanged so to speak as public servants feared to walk their old ways of infamy.
Coupled with other strictures on government treasury like the treasury single account (TSA), there seemed to be more funds to be deployed to the economy regardless of the dwindled revenues from oil. According to the Central Bank of Nigeria report, one pointer to this fact is that by (December) 4th quarter of 2017, foreign reserve stood at $39.35 billion while a barrel of oil was selling at $62.38.
Compare this to September 2014 when price of crude was $103.40 and Nigeria’s reserve stood at $38.28.
Another notable indicator is dollar inflow and outflow through the CBN then and now. Whilst there was oil boom as price was above the $100 threshold, inflow of dollars through the CBN was low while out flow was higher resulting in negative net flows for most of 2014. On the contrary, though oil price is lower now, inflows through the CBN are higher, outflows lower and there has just been one negative outflow since September, 2017.
It may be said that the rampaging terrorists and the ethno-religious and herders-farmers crises jeopardized the Buhari economy much. Steady gains being made were buried under the gore and anguish of the northeast and north central upheavals and killings. Some of the major strides of the administration were likewise subsumed in this muck.
Notwithstanding, the CBN seemed to have grown into the role of the driving force of the economy, churning out measures to manage the recession and the forex crisis that ensued. The partial floating of the naira, the restricted access to foreign exchange for about 41 products and an unprecedented support for agricultural production all add up to buoy the economy.
The economy also rebounded on the wings of strong infrastructural overhaul by a few key ministries and agencies. For instance, the Ministry of Power, Works and Housing after an initial tiff with the legislature, picked up steam and embarked on massive civil constructions across all the zones of the country. So many abandoned crucial road projects were completed or even upgraded. Apart from giving some lease of life to the citizenry, the massive spending helped to create jobs and re-inflate the economy.
Power supply increased marginally as transmission and generation were ramped up considerably. A couple of power plants started by previous governments were completed and connected to the grid. The power ministry in conjunction with the Transmission Company of Nigeria, TCN, achieved a few major projects that allowed notable improvements in the power matrix.
But distribution remained an Achilles heel as the companies missed their five-year review targets. Metering was a big issue. But surely, power supply improved in the last four years.
The transport ministry also turned in a modest performance though save for the aviation leg of it which showed little sparks. The Kaduna-Abuja line, the Abuja metro, the Lagos-Ibadan and Itakpe-Ajaokuta rail lines were completed or at near-completion over this period. The modern terminal buildings at the Lagos and Port-Harcourt Airports were completed and put to use. These are notable landmarks not to be discounted.
Also sterling are such agencies like the Federal Inland Revenue Service (FIRS) which has been putting out glittering performances over about three years; the Nigerian Investment Promotion Council and its adjunct Ease of Doing Business as well as the Nigerian Bureau of Statistics have also shown a taste of what governance ought to be.
Final analysis: Buhari’s economics rallied late in his term because the president didn’t set up his team early in the day to pursue his programmes; so it was not until last quarter of 2017 that results started trickling in. This explains why much more was accomplished in 2018, a few months to the election.
There was no driver of the economy until the CBN moved in to take control, churning out remarkable policy interventions that steadied the ship and brought back confidence in the polity. Redundant cabinet members were not replaced in order to reinvigorate the team, thus the engine did not fire on all cylinders. While the politics of appointments seemed to have kept the very best at bay, on a scale, the Buhari economics yielded better results with less resource.
Source: The Nation.