Buhari and the Troubled Economy

Please put me in your prayers…
I will soon be going for eye surgery…
The situation is getting out of hand…
For more than two months now…
Anytime I look inside my wallet…
I hardly see anything again.

—A distressed Nigerian

It was a business lunch by a group of investors who had eagerly been waiting for information about the business climate in Nigeria. But their guest, top official of a multinational banking and financial services company, who had spent a week in Lagos and Abuja before returning to the United Kingdom, was evidently in no hurry as she sipped her drink. After a while, she looked in the direction of one of the four men at the table and said, “If I say 1 and 2 is equal to 12 what will 2 and 3 be?” The man did not need to think twice before he responded: “The answer of course is 23.”

Shaking her head, the lady replied: “You are wrong, the answer is 5”. Before the obviously confused men in the room could react to such algebraic manipulation, the lady posed another question. “What if I join 3 and 7, what would that give me?”

This time, the man decided to hedge his bet: “The answer will either be 10 or 37”.

Smiling, the lady responded: “You are wrong again. The answer is 21.” And then she added the clincher: “That is the best way to describe what is going on within the Nigerian economy today where all the variables are up in the air. The only thing that is predictable now is the unpredictability.”

The foregoing conversation, which I learnt on good authority, took place about two weeks ago in a high-class London restaurant, tells a compelling story. But we need no foreigner to tell us how tough the season is since we live it every day; even though Nigerians may have learnt to laugh at their problems, as can be glimpsed from the “poem” with which I opened the page.

To be sure, President Muhammadu Buhari is not the cause of our woes, as most of the problems predated his administration. However, some of the choices he has made (or refused to make) have compounded the situation while there are no visible signs in the horizon that things would get better any time soon. If anything, there are fears that things could actually get worse, unless he makes a course correction in his approach to serious issues of governance.

President Buhari was in Qatar in February this year, seeking investible funds. I understand the Qatari authorities requested that he quickly appoint the Nigerian ambassador to Qatar, someone with sufficient clout and authority to represent our country so that a productive conversation could begin. Five months after, such a simple task is yet to be accomplished. In fact, as at today, Nigeria has no ambassador to any country, not even to traditional allies like the United Kingdom or the United States.

More than a year after dissolving the statutory boards of regulatory institutions that are critical to the economy, they are yet to be reconstituted. From the Central Bank of Nigeria (CBN) to the Nigerian Electricity Regulatory Commission (NERC) to the Bank of Industry (BOI) to the Nigeria Investment Promotion Council (NIPC) to the Security and Exchange Commission (SEC) to the Nigerian Export promotion Council (NEPC) to the Nigerian Deposit Insurance Commission (NDIC) to the Sovereign Wealth Fund (SWF) to the Nigeria Communication Commission (NCC) etc. there are no boards. Some of these institutions do not even have substantive Chief Executives. Against the background that barely 24 hours after she became the British Prime Minister last week, Mrs. Theresa May named her entire cabinet, you wonder why our leaders find it so difficult to do the little things that matter.

The office of the Chief Economic Adviser (which has a full complement of staff, including some with doctorate degrees) is still vacant apparently because Aso Rock does not need advice on economic matters. Meanwhile, the president makes pronouncements which suggest he dictates both monetary and fiscal policies from the Villa, leaving investors wondering about the independence of critical institutions like the CBN. If political considerations (including nostalgia about some imaginary past) rather than sound economic judgments determine policy direction, which rational investor would want to risk his/her money in such an economy?

Speaking at the Ramadan breaking of fast with members of the business community last month, the president condemned what he described as “the ruthless devaluation of naira,’’ saying that he was yet to be convinced about the justification for it. “I don’t like the returns I get from the CBN…In August 1985, the naira was N1.3k to a dollar, now you need N300 or N350 to a dollar. I’m neither an economist nor a businessman (but) I fail to appreciate the economic explanation” said the president who incidentally provided the answer to a question he claimed not to understand: “What has happened to us now is that we have maneuvered ourselves into a mono-economy which led to the collapse we are seeing now.”

That, Mr. President, is precisely the point. The wrong choices we have made over the years landed us in this position but what we need right now are solutions to problems that are already getting out of hand. On Monday, the UN Office for the Coordination of Humanitarian Affairs (OCHA) categorised the North-eastern part of our country as severely food insecure. “This is about as bad as it gets. There’s only one step worse and I’ve not come across that situation in 20 years of doing this work and that’s a famine. We have to step in and quickly or we are going to have hundreds of thousands at risk of dying in the north-east of Nigeria” said Toby Lanzer, UN assistant secretary general and OCHA’s regional humanitarian coordinator for the Sahel.

Unfortunately, this challenge is not restricted to the North-east since hunger has become a national staple across the country as confirmed yesterday by the Minister of Agriculture and Natural Resources, Chief Audu Ogbeh. With majority of the states owing their workers, some for as many as six months, the situation in Nigeria today is very dire. And while the Buhari administration should be commended for its social intervention initiative, it is also obvious that we need a more robust agenda to reposition the economy away from oil.

For instance, in the ranking of states by the 2015 Internally Generated Revenues compared to the total receivables from the Federation Account Allocation between June 2015 and May 2016 done by the Economic Confidential, only three states (Lagos, Rivers and Ogun) internally generated above 50 percent of what they received from Abuja. 17 states generated less than 10 percent of their receivables from Abuja; another eight generated between 10 and 14 percent while the remaining eight generated between 15 and 30 percent.

This is a clear state of emergency situation that will take more than some episodic financial bail-outs or ad hoc solutions to deal with. It is a situation that requires the president providing a national platform for discussing the way out in a more sustainable manner at a period inflation is soaring while businesses are either closing down or sacking workers. So bleak is the outlook that the International Monetary Fund (IMF) which in April, just three months ago, predicted a 2.3 per cent expansion in the Nigerian economy, on Tuesday slashed its growth forecast, saying the combination of plunging oil revenue and weakened investor confidence would most likely push it into recession. The IMF now expects the economy to contract by 1.8 per cent this year. But what is the response from the administration?

At a most delicate period when there is an overflow of issues that require legislative input, the presidency and the National Assembly are merely tolerating one another. More depressing is the news that our lawmakers have just voted for themselves a two-month holiday at a time of national economic crisis. But what do you expect when the only notable contribution to national discourse by some of our “distinguished” Senators is that a female colleague has reached “menopause”?

Perhaps we should not be too hard on the lawmakers since the executive has not come up with any legislative initiative that requires their urgent attention. “I have, at least on three different occasions publicly requested the executive to, as a matter of urgency, send an executive bill on its intended reforms in the petroleum sector. We had hoped to avoid the situation in the past two assemblies (6th and 7th) where the PIB was sent to the National Assembly very late thereby guaranteeing failure to pass the bill” said the House of Representatives’ Speaker, Hon Yakubu Dogara, on Monday as he lamented a lack of urgency by the presidency in reforming the oil and gas sector.

While no objective person will blame President Buhari alone for the economic challenge we face today as a nation, many Nigerians nonetheless believe things do not have to remain the way they are. According to Dr. Aminu Usman, a lecturer in the Department of Economics, Kaduna State University, “the government can do better by coming up with clearly defined policies for each sector of the economy and move from wish list to the actual work of getting things done.” On a lighter mood, a friend suggested yesterday that, against the background of the current controversy in the Senate, the economy may also be going through the difficulty of being “impregnated” with fresh ideas!
With high incidence of unemployment, aging public infrastructure and a near-useless power sector that generates (for officials) only megawatts of excuses at a period the Niger Delta Avengers are daily wreaking havoc on oil and gas installations, there are three major issues begging for attention: Significant revenue shortfall from practically all sources; potential credit crisis because AMCON is already over leveraged and a seemingly intractable foreign exchange crisis that has shaken market confidence. To address these fundamental problems, it stands to reason that we need a serious economic management team but President Buhari still does not see any need for that.

Sadly, after a year spent blaming others, we are yet to see the economic direction of the Buhari administration or the policies and ideas that can possibly justify the endless aspersions on the past. Yet, whether his handlers realize it or not, this presidency will be judged not by how bad a leader Dr. Goodluck Jonathan was but by how much of a better leader he (Buhari) ends up to be.

In a four year presidential term, the first year is perhaps the maximum time allowed an incumbent to heap all blames on his predecessors. After that, he must take responsibility. Therefore, President Buhari can only imprint his legacy either in terms of his firm handling of the contemporary economic challenges or through the efficiency of the machinery of government he puts in place. As things stand today, a president who came to office with overwhelming public support may have worsened the problems he inherited, leaving the economy on the brink of recession.

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