Nigeria is still on a shaky ground
More than two years after he was elected and just a few weeks to the half-term of his administration, President Muhamadu Buhari last week launched a four-year Economic Recovery and Growth Plan (ERPG) in Abuja. While questions remain as to why a government that came in with a promise to revive the economy would allow so much damage to be done before coming up with ideas on recovery plan, there are also issues around the workability of the programme to which there are neither costs nor timelines for specific deliverables.
Incidentally, at about the same time that Buhari was launching the ERPG in Abuja, Muhammadu Sanusi ll, the Emir of Kano, a former Central Bank of Nigeria Governor, was taking inventory of the Nigerian economy in Kaduna where he passed a gloomy verdict: “The Federal Government of Nigeria is spending 66 per cent of its revenues on interests on debts, which means only 34 per cent of revenues is available for capital and recurrent expenditures. The model cannot work”, said Sanusi.
Using the 2017 budget as an example, Sanusi expressed serious concern about the current fixation with borrowings that are not targeted towards investment. “In the 2017 budget presented by the federal government, the amount earmarked for debt servicing is in excess of the entire non-oil revenue of the federal government, but that is not the problem. The problem is that it is even going for more debts,” said the emir.
Barely 24 hours later, the International Monetary Fund (IMF) added its own warning about the growing perception of a lack of clear direction that may already be stoking social tensions in the country. In a 90-page report on “an administration praised by many for its anti-corruption efforts, but accused of not having delivered on the economy, notably for the most vulnerable”, the IMF gave a damning conclusion: “Policy uncertainty, crowding out and FX market distortions would continue to drag on activity, with non-oil non-agricultural output staying relatively flat throughout the medium term. This would lead to worsening labour market and poverty outcomes.”
To be fair to the Buhari administration, the challenges on ground are daunting. A plethora of scandals which dominate media headlines daily revealed the profligacy of recent years and how the treasuries were practically bankrupted; the state of infrastructure is deplorable and most rural areas are yet to experience any meaningful form of development in spite of the annual budgetary allocations for that purpose. But making excuses about these conditions, as the government finds convenient to do, is no solution.
Although the nation’s market size is one of the biggest in Africa and Asia, many investors find it difficult taking the risk of setting up in Nigeria for such other factors as high and multiple taxation, excessive regulatory regimes, unpredictable foreign exchange policy and other actions which impact negatively on the production cost and therefore affect return on investment. To compound the problem, the power sector remains practically comatose. Although the behemoth Power Holding Company of Nigeria (PHCN) has been unbundled through the creation of private distribution companies, the nation’s electricity generation capacity remains abysmally low, epileptic, and grossly unreliable.
In launching the ERGP, President Buhari declared that his administration would henceforth drive aggressive economic growth with the same zeal it has deployed to fight corruption and insecurity. “We are determined to change Nigeria from an import-dependent country to a producing nation. We must become a nation where we grow what we eat and consume what we produce. We must strive to have a strong naira and productive economy”, said Buhari in his speech which, like others before it, contains no more than mere aspirations.
The challenge remains on how to walk the talk.