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Friday, October 27, 2017

A review of Nigerian Economy under Buhari: 2015-2017

        Less than two and half  years is very short in the history of any country aiming to achieve revolutionary economic changes. Movement from the status of socalled developing country to industrialized country took decades for even the most successful countries in East Asia. It took China from 1980s to 2000s, South Korea and Taiwan from 1970s to 1990s, thus it is a long journey not something one shall expect in matters of months. Thus, in reviewing the performance of any government in power one must do  justice by looking all around. Including in reviewing governments who made campaign promises that were not (prior to announcing them) well planned and calculated in line with future expectations such as government revenues, expenditures and emergencies. One also has to look at poor judgements on the part of governments in failing to take advantage of opportunities that presented themselves at the time they do. It is a known fact that (at inception) Buhari government was very slow in responding to economic matters leading to some nicknaming him 'go slow' President. It took him about six months to appoint his ministers. His minister of finance was widely seen as not qualified for the job. Though, recent events have shown that she is a fast learner on the job. But, Buhari was also unfortunate to find himself in a period when the nation's major source of revenue was in declined, government treasury was empty and the nation political transition was in mess. It was in this atmosphere that Buhari thought the kind of economic prescriptions he used thirty years back would be applicable today. Alas, things have changed away from the economic thinking of that period.  You will all recall that in the 1980s there was nothing called Euro, China was restricted to it own geographical area, there was no information technology revolution that we see today, the forces of globalisation were slower, most African countries were under military rule, and the future prospects of oil exporting countries was positive. Within Nigeria itself things were then different from today, Nigerian population was under hundred millions, there was good power supply, roads, railways and airports were in better conditions, Naira was strongly valued, educational institutions were better than today,  and poverty rate was lower. Thus, it is not out of point if one say that Nigeria of today is different from Nigeria of 1980s by some 270 degrees (assuming we are moving in cycle).


Botswana, Burundi, Equatorial Guinea

Read more at: https://www.vanguardngr.com/2017/10/need-brighten-2018-fdi-prospects/
Even small African countries like Botswana, Burundi, Equatorial Guinea and medium economies like Egypt, Tunisia and Kenya, can confidently look forward to the influx of foreign investment.

Read more at: https://www.vanguardngr.com/2017/10/need-brighten-2018-fdi-prospects/
Even small African countries like Botswana, Burundi, Equatorial Guinea and medium economies like Egypt, Tunisia and Kenya, can confidently look forward to the influx of foreign investment.

Read more at: https://www.vanguardngr.com/2017/10/need-brighten-2018-fdi-prospects/
         Some Nigerians have forgotten the word 'Recession' but due to the devastating effects of negative growth on the Nigerian economy, the word has become very common on the mouth of Nigerians. From banks, manufacturers, retailers to consumers everybody was talking of recession. Most people you asked 'who is responsible for the mess we are in' would say Buhari not minding the condition the old man met the Nigeria economy.  Buhari was unlucky to unseat somebody who happened to come from the oil region of Nigeria. The result of that was sustained attacks on oil facilities which helped cripple Nigeria oil export. Buhari's slow phase at reforming the economy did not help matters. Unlike, the previous regime that did not 'side-step' the central role of economy in their transformation agendas, Buhari prioritized security and anti corruption over economy. Like some analysts had suggested, Buhari should have championed three agendas right from inception: security, economy, and anti corruption. Buhari failure to constitute a solid economic team was his major undoing. The collapsed of price of crude oil in the international market affected Nigeria in multiples of ways. One, it led to the drying off of government major source of revenue. This mean Buhari's government has little room for maneuver, hence, the resort to austerity measures. The result was immediate and very difficult to stomach by the Nigeria poor who were the major support base that brought Buhari into power. Due to lack of money various government projects were put on hold. Though, the federal government managed to pay salaries, the stories was different for state governments who failed to pay salaries. Two, the pump price of petrol was jacked up due to government inability to continue with subsidizing oil that went into billions of dollars. The result of that was seen in higher inflation where price of basic necessities and other commodities that depended on transportation increased. Three, the collapsed of foreign exchange earnings which depend on exportation of crude oil led Buhari to imposed restrictions on importations into the country, while the exchange value of Naira depreciated. One of the major sectors affected by this was food importation which led to  increase in the price of food items. The poor man was caught by surprised by this measure coming from Buhari government. An average Nigerian has never experienced any affluence living comparable to other oil producing countries of the world, even at the period when the international price of oil was high. The parasitic elites would not allowed that, to them the poor Nigerians  should not be allowed to test the luxury of modern world. Else they would revolt, thus instead of the ruling elites to compete with the elites in other nations at the same level of progress, their eyes were on the poor masses. Buhari came with tones of promises and an unprecedented expectation on the part of Nigerians, seeing him as a quick fixer. I remember telling some one that the expectation by most poor Nigerians that immediately after swearing-in of Buhari back on May 29th 2015, every body will started eating chicken in his home would have to wait.


       The developments in the last two quarters have restored some confidence and hope in the Nigerian economy. Unlike the negative and critical comments on Buhari economic agenda witnessed last year, the opinions of analysts have began to soften down a bit. The recent announcement of Nigeria departure from recession has helped a lot in this. But despite that, Nigeria is  yet to get back to its top position as  the biggest economy in Africa and top investment destination. In term of attracting foreign direct investment many other African countries are doing better than Nigeria. Countries such as Botswana, Burundi, Ethiopia, Guinea and Tunisia are performing better. This may not be unconnected with the negative economic headlines that came from Nigeria in the last one year. In economic diversification, Buhari can be put as performing fairly. His bulk of diversification has focused on agriculture. This is good in itself as it helps wean Nigeria off dependence on imported food stuffs such as rice. As claimed by Vice President Osinbajo recently, Nigeria now produces about 80% of the rice consumed in the country. Many foreign investors from India, China, and host of other countries have invested in local productions of rice and fertilizer; this too is part of achievement of Buhari government. Domestic businessmen such as Dangote, and Bua have turned their attention to farming promising to invest billions of Dollars. Importation of other agricultural products also reduced drastically due to the combined impacts of government focus on agriculture and exchange rate difficulties. But, diversification shall not only focus on the agriculture now that the price of food items has started to come down. Buhari government shall immediately turn it attention to industrialization and promotion of service sectors in order to boost employment generation. It shall implement policies that will drive local manufacturing and boost exports. Buhari shall embark on modernization of Nigerian economy in order to attract the most needed foreign investments. The level of prudence in managing resources achieved so far is commendable. The treasury single account policy has, from what many observers commented, reduced revenue leakages and give government control over its financial resources. This shall also be linked to government modest achievement in fighting corruption. Despite putting anti corruption war as the focus of his regime, Buhari need to do better than he is doing now. 


      The inflation level has fallen for eight successive month since  February this year. This was  achieved on the back of continue decline in price of food stuffs, stability in the market for domestic petroleum, relative stability in the foreign exchange market as well as gradual execution of federal government budget. Due to gradual appreciation of price of crude oil in the international market and government prudence in managing the economy, Foreign exchange reserves are up to $32 billion, from $24 billion a year ago. The return of stability in the oil producing Niger delta has help revamped Nigeria oil export to the world. Oil production is at nearly 2 million barrels per day, a significant improvement from 2016 when it languished for the most part below a million. This has helped in the gradual appreciation in  the value of Naira and our foreign reserve. These and the gradual move towards economic stability has resulted in increase in foreign direct investment coming to Nigeria. At about $1.8 billion, Capital inflows in the second quarter of 2017 were almost double the $908 million imported in the first quarter. The level of portfolio investment into Nigerian economy have also seen some improvements recently. The Nigerian Stock Exchange All Share Index (NSEASI) has seen dramatic gains in recent months, put at about 36% higher than beginning of 2017 value. Though, job generation programs such as N-power and school feeding program that provide indirect jobs more need to be done. Buhari government need to  be more creative when it comes to job creation. Close to 200,000 youths are benefiting from the N-Power Program, which recruits unemployed graduates to work as teachers, agric extension workers, and health extension workers. Nigeria must key into modern economic ideas to develop. Just like we are seeing in other countries around the world. Not far away from us, Ghana has been very creative in revamping her economy. Nigeria shall learn from countries like Ghana, Ethiopia and Morocco on how they go about modernizing their economies. The focus shall be on investing robustly in science, technology and innovation for productive knowledge. What happened to our education sector? Nigeria has only one university in  the top 1000 universities in the world. African countries such as South Africa, Egypt, Morocco, Algeria, Ghana, Uganda, Tunisia, and Ethiopia have better universities than Nigeria. Only a well plan program can rusticate the educational sector which serve as the spring board for Nigerian economic development. No country in the world depend solely on sending  her citizens to foreign universities to develope. Nigeria must stop the exportation of training of her people to other countries around the world who benefited handsomely at our expense. In term of infrastructural development, the government initiative at investing massively in railways, roads, and power supply  is highly commendable. This is one legacy that Buhari government is going to give to the Nigerian economy that will last for decades. The poor state of our infrastructures was a result of inability of previous governments to make wise use of oil windfall the country realized in the past. I wish this government the best!