Time to Give the Economy Urgent Attention


Traders are expectant of a better bargain in the economy

A recent opinion poll conducted by NOI Polls on the performance of the President Muhammadu Buhari administration, especially the economy, has raised some issues on the way forward, report Kunle Aderinokun and Olaseni Durojaiye

The last 12 months have been very challenging for Nigeria on many fronts but the most telling one remains the economy, particularly because it affects every facet of the nation. Since assumption of office by President Muhammadu Buhari, the nation’s economy had been bedevilled with myriad headwinds- from the plummeting oil prices at the international market to the forex crisis in the country due largely to market restriction.

Perhaps two sectors most affected by the forex crisis are the real sector and importers of petroleum products. While the manufacturing sector have been most loud in their criticism of the forex regime lamenting that it has led to factory closure and laying off of workforce, petroleum importers have lamented that the scarcity is affecting their ability to import premium motor spirit (PMS), which led to scarcity of the product.

Within the time still, the government and its agencies came up with several measures aimed addressing the drift in the economy but much of the desired result are yet to be seen.

Among the measure were fixing the official exchange rate of the green back to between N197 – N199 to a dollar; excluding bureau de change and a number of items from those allowed to access the green back from the official forex market. Others were import substitution and backward integration among others. But all of the measures have not really been impactful or jump-start the economy as desired.

Before the latest opinion poll conducted by NOI Polls Ltd, a handful of reports have rated the country low in ease of doing business, among others. Some of the reports have also pointed to areas they feel the federal government can focus attention on in the short to mid-term, if the country must get out of the woods even though they insist that the country has sectors that possess potential that will attract foreign investor.

NOI Polls Report

The NOI Polls results revealed that “in terms of specific indicators, Nigerians rated the president’s performance on corruption (55 per cent) and National Security (47 per cent) as average; while he was rated very poorly on Job Creation (14 per cent) and handling of the Economy (21 per cent). Finally, when asked of the most important issue President Buhari’s administration should focus its attention on addressing over the remaining three years of his tenure, Nigerians identified unemployment (21 per cent), Power (17 per cent), and the Economy (16 per cent) as the top priority areas. These are the key findings from the Presidential Approval Rating polls conducted between June 2015 and May 2016.” Nevertheless, overall, Buhari was given average 64 per cent approval ratings for his administration’s performance in the last one year.

Views on Ratings

Speaking with THISDAY, Lagos-based economist with a leading economic advocacy group, Rotimi Oyelere, that states that the NOI assessment of the performance of the current administration is a representation of current realities noting that the indices are there for all to see from negative growth in the economy- double digit inflation and biting unemployment among others.

“The assessment is a representation of the economic realities on ground; it conforms with the round and the indices are telling enough. The negative growth, huge unemployment rate and inflation rate, which is put at 13.9 per cent and which is likely to even go higher in June on the back of the recently increased fuel pump price, increased price of food commodities,” he points out.

Oyelere, however, adds that, “it must be noted that the rating is a function of perception; it may not be based on the performance of the government.”

In his own analysis, Port Harcourt-based economist, Ezeh Wordu, states that, “the report, to a large extent, is a reflection of what obtains in the country, particularly in the economy.”

“You will recall that different sectors of the economy, particularly the real sector have been severely affected. Many factories have had to close shop and lay off their workers since they are unable to access foreign exchange to purchase critical raw materials to continue manufacturing. The few ones that are still in operation have resorted to sourcing raw materials locally, even at that, their operations have not been helped by the issue of power supply and other constraints; so if you ask me I think the assessment is correct,” he adds.

However, Director General, West African Institute for Financial and Economic Management (WAIFEM), Prof. Akpan Ekpo, who also says he agrees with the NOI Polls report, noted that, the President has done well regarding his promise to fight corruption and insurgency.

According to him, “the corruption crusade has revealed to the country the unprecedented looting of the treasury in its 56-year history. Also, the war against insurgency is going on fine.”

Ekpo, however, gives the economy a poor mark as all indices have pointed to that.

“On the economy I would score the economy an F. The rates of inflation and unemployment continue to rise in addition to negative growth in the first quarter of 2016. If the growth of the economy in the 2nd quarter goes negative then the economy has entered a recession. The misery index continues to rise and thus life for the average Nigerian is extremely difficult. The management of the economy is in disarray; all macroeconomic fundamentals such as inflation, unemployment rate, lending rate, exchange rate etc. are moving in the wrong direction,” he points out.

Hope for the Economy?

Going forward, the professor of economist prescribes that, “the economy must be reflated fast.”

“As a matter of urgency the power sector must be revamped to enhance growth. The problem is now not only structural but also inadequate demand. Workers in majority of the states have not been paid for months. This slows down economic activity. Workers need spending money. The unintended consequences are that millions of households and families would enter the poverty trap,” he stresses.

For Oyelere, he believes in the short to medium term, the economy may witness an improvement of about “30 per cent and this is because one of the priorities of government is to pay contractors so that they can mobilise their workforce and return to site.” “If this is done, it will help to reduce unemployment in the country even though a greater number of jobs in the sector are for low skilled workforce including labourers and artisans,” he added.

Incidentally, good percentage of the respondents polled by the NOI Polls fall within the category of workforce in the construction sector.

According to the report, “Interestingly, of the proportionate sample of 12,000 completed interviews conducted over the 12 months period, 51 per cent were male respondents, while 49 per cent were female respondents. Also, almost 6 in 10 (59 per cent) respondents were youths aged between 18 and 35 years of age; and almost 4 in 10 (38 per cent) were adults between the ages of 36 and 60 years. A meagre 3 per cent of the sampled respondents were aged 61 years and above.

“In addition, 24 per cent of respondents were resident in the North-West geo-political region of the country; while 20 per cent were resident in the South West; 15 per cent each in the North-Central & South-South regions; as well as 14 per cent from the North-East and 12 per cent from the South-East region. Furthermore, 29 per cent of the respondents were Self-employed traders, 18 per cent were Civil servants, 13 per cent were Students, 11 per cent were Unemployed persons, 8 per cent were Artisans, and 7 per cent were Professionals amongst others.”